Here’s a letter to my new correspondent, Tony Dye. (The indestructibility of ludicrous myths about trade is breathtaking.)
Mr. Dye:
You write that “we’ve been taken advantage of too long by other countries growing their economies by dumping their exports on us.”
I’m sorry sir, but this assertion – while bleated repeatedly in popular and political discussions – is sheer nonsense.
First, other countries don’t ‘dump’ exports on us. We voluntarily purchase exports. I trust that you see the categorical difference between the two cases, just as you surely see the difference between your rude neighbors dumping their trash on your lawn and you voluntarily purchasing at Target a new coffeemaker or pair of jeans.
Second, countries that are said to grow by exporting in fact grow by importing. Exporting is merely a means of acquiring from foreigners goods and services the increasing possession of which constitutes economic growth. If the people of a country use scarce resources to produce goods for foreigners’ enjoyment and receive nothing in return, those people do not grow economically. Instead, they impoverish themselves as they enrich foreigners.
The Chinese, for example, are enriched by exporting to us only because, in return for their exports, we ship goods to them, either directly or to buyers in other countries that export to China. (Insofar as the Chinese use their export earnings to invest in America, our shipments of goods to them occur not in the current period but in the future.)
The core point is that the people of no country are enriched by the act of exporting itself. If a people are indeed enriched through exporting the reason is only that their exports return to those people – either today or tomorrow – an amount of imports that is greater in value than are their exports. And so you are mistaken to believe that foreign countries have grown through exporting at Americans’ expense, and that America will grow faster economically if Trump succeeds in having us export more and import less.
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
