Here’s another letter to Nolan McKinney:
Mr. McKinney:
You allege that my response to Mark Pulliam’s latest essay at Law & Liberty “avoids his strongest argument, which is one sided trade deals decimated our economy by exporting our jobs.”
Well. Thanks for providing me an opportunity to address that argument. (Actually, it’s less an argument than an assertion.) In doing so, I’ll here overlook his mistaken claims about the condition of the American economy.
By “one-sided trade deals” Pulliam, of course, means deals that enable the value of Americans’ imports to rise by more than the value of Americans’ exports. Yet the very fact that he regards such an outcome as harmful to Americans proves that he doesn’t know what he’s talking about.
When measured in money flows, an excess of U.S. imports over U.S. exports results in a U.S. trade deficit – which means that foreigners are especially eager to invest in the U.S. Because I’ve explained countless times at my blog and elsewhere that Americans should celebrate rather than bemoan being part of an economy that attracts unusually large sums of capital, I’ll not here bother to explain this reality yet again.
But a more fundamental point is warranted: Because the goal of each party to every trade is to give up as little as possible in exchange for as much as possible, it’s perverse to lament trade that enables Americans to receive more imports in exchange for a given amount of exports. If Pulliam really believes that Americans are harmed when we receive more imports in exchange for a given amount of exports, then he must also believe that he is harmed when he gets a raise. After all, a raise enables him to consume more goods and services in exchange for a given amount of work (that is, in exchange for a given amount of labor services that he exports to his employer).
Until and unless Pulliam demonstrates a willingness to work longer and harder in exchange for less income, his protests against “one-sided trade deals” should be ignored.
A closing note: Anyone who uses the term “exporting jobs,” as Pulliam does, thereby establishes beyond any doubt that he or she understands nothing about the economics of trade.
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
