Here’s a letter to a long-time critic of Café Hayek, Nolan McKinney:
Mr. McKinney:
Unlike you who find Duncan Braid’s May 6th harangue against supporters of free trade “devastating,” I find it to be tendentious. Braid writes triumphantly as if he’s caught us free traders in yet another of our Keystone Kops antics – specifically here, our effort to blame tariffs for inflation. Yet no competent economist or advocate of free trade is guilty of this ridiculous charge. If one were, Braid’s evidence of free-traders’ belief that tariffs cause inflation would consist of more than single link to a piece in, of all places, Vox.
If Braid were serious, he’d have searched for evidence for his charge in the works of trade scholars such as Jagdish Bhagwati, Daniel Griswold, Douglas Irwin, Pierre Lemieux, Scott Lincicome, Johan Norberg, Arvind Panagariya, Russ Roberts, and Razeen Sally (to name only a few). Finding no such evidence, Mr. Braid would not have written what he wrote. (Note: To point out, correctly, that tariffs raise the prices of the particular goods that are protected is not to argue that tariffs cause inflation, which is a rise in the price level.)
Further evidence of Braid’s unseriousness – or of his ignorance of a subject, trade, about which he writes so confidently – is his assertion that higher tariffs on U.S. imports “would help address the America’s $1 trillion trade deficit.” Never mind that U.S. trade deficits are not a problem that needs to be addressed. Braid should exert the effort to learn what is known by every adept economics major: Because a tax on American imports is, effectively, also a tax on American exports, raising tariffs won’t reduce the trade deficit – won’t reduce it, that is, unless U.S. trade policy becomes so very destructive of the American economy that global investors get scared away. Ironically, the policies peddled by Braid and his American Compass colleagues would, if implemented, so mutilate America’s economy that U.S. trade deficits would indeed disappear – and, along with them, Americans’ prosperity.
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
