Having Written a Book about the Scottish Enlightenment, He Should Know Better

by Don Boudreaux on July 21, 2020

in Complexity & Emergence, Hubris and humility, Myths and Fallacies, Seen and Unseen, The Economy, Trade

Here’s a letter to the Wall Street Journal:

Editor:

Arthur Herman’s case for repatriating U.S. supply chains is an unappetizing dog’s breakfast mostly of irrelevant factual claims and dubious assumptions (“Bring the Factories Home,” July 20).

For instance, while it’s true that “[m]ore than five million American manufacturing jobs have been lost since 2000,” it’s untrue that American manufacturing output has fallen. Quite the opposite: manufacturing output is up and America’s industrial capacity hit (before covid) an all-time high.

More fundamentally, the term “supply chain” is utterly misleading. It suggests that each output is the final link in an isolated and easily identified string of productive activities – a singular chain that government can wind into America as a mechanic winds an actual chain back onto its spool in his shop. In fact, however, each output is a node on a massive globe-spanning web of productive activities. Each output, even the most “important,” is the product of countless different economic processes, nearly all of which not only supply inputs for the production of thousands or millions of other goods and services, but which themselves use inputs from thousands or millions of other suppliers, only some of whom are located in the U.S.

To charge politicians and bureaucrats with the task of tracing out through this inconceivably complex web all sources of inputs used to supply “important” goods and services is to charge them to perform the impossible. And to empower these officials to repatriate these sources of inputs is to empower them to yank on interwoven fibers of economic connections in ways that, should they succeed in repatriating “supply chains,” must in practice unravel the highly productive global economy of which America is a major part.

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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