Here’s a letter to The Daily Signal.
Editor:
Suppose I submitted to you an essay in which Thucydides is described as a first-century Roman senator who wrote a biography of Charlemagne – would you publish it? Of course not. The ignorance of such an essay would be palpable. But I would never write such a piece because, even though I’m an economist and not a classicist, I’m sufficiently knowledgeable about history to be aware that such a claim about Thucydides is laughably bonkers.
Yet the piece you published by the classicist Victor Davis Hanson about international trade is riddled with assertions no less ludicrous than would be a description of a 5th century B.C. Greek historian writing a biography of a Holy Roman Emperor (“Trump’s So-Called Trade War,” April 11).
Prof. Hanson, for example, presumes that the trade surpluses of various foreign countries are the results of clever cheating by those countries’ governments – cheating that yields unfair benefits to those countries as it damages the U.S. and inflicts on us Americans harmful trade deficits. He’s apparently unaware that countries that run trade surpluses also necessarily run capital-account deficits: global investors prefer, on net, to invest elsewhere than in those countries. In contrast, countries that are especially attractive to global investors run capital-account surpluses – another name for trade (or, more precisely, current-account) deficits.
Can Prof. Hanson tells us, his fellow Americans, why we should be worried that our economy continues to be a magnet for global investment? Can he tell citizens of foreign countries that run trade surpluses why they should be delighted that their economies are consistently less attractive to global investors than are the U.S. and some other trade-deficit countries?
The fact that Prof. Hanson believes that U.S. trade deficits justify Trump’s protectionism is alone sufficient to disqualify him from writing about economics. But he slips into error even more absurd by complaining about the U.S. trade balance with Canada and Mexico. There’s no surer example of economic bonkery than talk of bilateral trade surpluses or deficits. Note to Prof. Hanson: In a world of more than two countries, even if every country had balanced trade with the rest of the world, there is no reason whatsoever to expect any pair of countries to have ‘balanced’ trade with each other.
The dripping sarcasm of Prof. Hanson’s criticism of free traders is no substitute for knowledge. That sarcasm, instead, only further reveals his utter incompetence at economics. He should stick to the classics and leave economics to people who at least have passed ECON 101.
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
