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Here’s a letter to the Wall Street Journal:
Editor:
Robert E. Scott’s response to Peter Navarro’s casserole of confusion is a dish just as half-baked and unsavory (Letters [2], June 1).
First, U.S. trade deficits do not reduce American employment. This reality – revealed by overwhelming amounts of data* and explained by U.S. trade deficits arising only because non-Americans are net investors in America – isn’t changed by Messrs. Scott, Navarro, and other protectionists incessantly chanting, while jamming their fingers into their ears, the mercantilist myth that trade deficits destroy jobs.
Second, while Mr. Scott is correct that the dollar’s value against the Chinese yuan has recently ticked up by about 7 percent, it is now pretty much back to where it was when Pres. Trump first took office, and is still 17 percent below its value when China entered the WTO in 2001. This latter high value was no historical fluke: from 1994 through early 2008 the value of the dollar against the yuan was consistently higher – often much higher – than it is today [3].
Third and more fundamentally, contrary to Mr. Scott’s narrative, for Americans a strong dollar is good, not bad. The stronger the dollar, the higher is our purchasing power. A high dollar-yuan exchange rate is lamented only by those who believe that we Americans are enriched the more we work to satisfy Chinese consumers and the less we are paid in exchange.
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*
