Here’s a letter to a Cafe Hayek reader – Dale St. John – who is (in his words) “growing tired of [my] dogmatic opposition to Pres. Trump’s strong and sophisticated trade policy”:
Mr. St. John:
Thanks for your e-mail. You write that “It’s mathematically indisputable that we’d be richer if the Pres.’s policies raise our exports over our imports and keeps things that way.”
Not so. What is mathematically indisputable under that scenario is only that we would accumulate from foreigners more money. But money as such is not riches. We can neither feed nor clothe ourselves with money. Money cannot entertain us. It cannot transport us to our desired destinations. Money cannot educate our children or be enjoyed as toys by our grandchildren. It can’t light our homes, power our computers, or fuel our stoves. Money cannot cure our illnesses.
Money as such – money that we either cannot or will not spend – is no more useful than are stacks of yellowed old newspapers.
If you believe that we Americans are made richer by government policies that force us to accumulate money by artificially selling more to others and buying less from others, you should be pleased to have protectionist policies imposed on your own individual household. But I wonder.
Suppose that Trump shows up at your door, well-armed, and orders you not only to sell to your neighbor your t.v. and your wife’s jewelry, but also for the rest of your life to work more hours weekly than you wish. In return, you receive fair market prices and wages, all paid to you in cold, hard cash. Trump not only allows you to keep this cash for yourself, he demands that you never part with it.
Under Trump’s trade policy for the St. John household, you and your family are compelled to work more and to buy less. It is mathematically indisputable that your cash will accumulate year after year after year. After some years you will have several million dollars stashed in your basement.
But would you (as you imply in your e-mail) be richer? Clearly not. Trump’s imposition of a mercantilist trade policy on your household would impoverish you, with you receiving no consolation from your basement-full of unspendable cash.
What is true for your household is no less true for the collection of households throughout America.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030