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Abundance Does Not Impoverish

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Here’s a letter to a new Cafe Hayek reader (who apparently believes me to have multiple heads):

Mr. Ernie McDonald

Mr. McDonald:

You write that “our survival as a nation is threatened by never ending floods of cheap imports priced below their full value.” And after asserting that because I’m a tenured “heads up [my] ass” professor I “have no right” to criticize protectionists, you call me “gullible, blind and ignorant about the Real World.”

I’ll treat you here with the respect that you deny to me in your hostile and impolite letter.

First, like you I have a right to criticize or to praise anyone or anything I wish as long as I do so peacefully. You have no duty to listen to me, but my job status does nothing to strip me of my right to speak and to write freely.

Second and more substantively: How can it be that our “never ending” access to low-priced goods threatens our survival? Is your and your family’s survival threatened when you purchase goods that are on sale? If in a supermarket contest you were to win a lifetime of free groceries, would you tremble in fear and then refuse the winnings? I suspect not.

You will (mistakenly) reject my supermarket analogy as inapt. And so, third, I ask if you believe that our survival as a nation is threatened by never-ending floods of technological innovation. One of this year’s Nobel laureates, William Nordhaus, found that innovators capture, on average, only 2.2 percent of the full value of their innovations [2]. As a practical matter, this fact means that when innovators, in never-ending new streams, offer to us goods and services at prices that not only are below those of existing goods and services but a tiny fraction of their “full value,” we happily accept and, as a result, are all enriched.

Can you explain to me why, if the much-greater abundance brought to us routinely by innovation makes us richer, the greater abundance brought to us by trade threatens our survival?

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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