Here’s a letter to a frequent correspondent.
Mr. B__:
Writing that I “take a cheap shot” at Michael Lind, you complain that I “concentrate on a minor mistake to avoid substance, like Lind’s point about free trade ceding our EV production to China.”
I disagree that my criticism of Lind for describing a famously free-trading nation as one that prospered behind high tariff barriers is a cheap shot. That Lind is wrong about such a basic reality reveals much about his (in)attention to relevant details on other matters.
Nevertheless, I’ll address Lind’s point about EVs. Mistaking certitude for wisdom, he writes:
Using tariffs, subsidies, and other tools of industrial policy, state-supported Chinese firms have exploited access to American innovations and now seek to flood the American market with underpriced exports. Other than the obnoxiously anonymous lead writers at The Economist and a few libertarian dead-enders, who really believes that China’s crushing of the American EV industry would be a “free market” outcome that enhances American prosperity?
Lind unjustifiably simply assumes that we Americans would be more prosperous if we have an EV industry rather than importing EVs from China. Yet there’s no way he can know this to be true. The U.S. government’s new tariffs on EVs will of course encourage more EV production in America. But what production will these tariffs discourage? Lind doesn’t say, likely because it hasn’t dawned on him that whatever resources are drawn into EV production are drawn out of the production of other goods and services. And because EV production is high-tech, many of the resources that our tariffs will draw into EV production will be drawn out of other high-tech activities. What will Americans lose by this forced shrinkage of these other industries? Lind doesn’t say.
That Lind is apparently unaware of this inescapable trade-off suggests that he’s unaware that resources are scarce. And anyone who’s unaware of the scarcity of resources isn’t someone whose ruminations on trade are trustworthy.
Lind’s only possible defense is to claim that he and the tariff-imposing Biden administration happen to know that the benefits to us Americans of producing EVs domestically exceed the costs. But how can they possibly know this? What’s the source of this information – a source to which Lind and protectionists have access but that is mysteriously closed to entrepreneurs and private investors? Far from answering this all-important question, Lind seems not to realize that it must be asked in the first place.
More can be said in opposition to the EV tariffs, but the above suffices to expose the utter ineptitude of Lind’s efforts to justify protectionism.
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
