This column by Greg Ip received a lot of undeserved attention.
Mr. G__:
Thanks for your email asking for my thoughts on Wall Street Journal columnist Greg Ip’s recent claim that “China’s growth is coming at the rest of the world’s expense.”
Here are my thoughts in a nutshell: Ip could not be more mistaken.
He writes about China:
In the past five years, its export volumes have soared while imports have flatlined. China is swallowing up a growing share of the world’s market for manufactured goods. This reveals an uncomfortable truth: Beijing is pursuing a “beggar thy neighbor” growth model at everyone else’s expense.
Let’s reword Ip’s passage to more clearly reveal the reality that it describes:
In the past five years, the goods it has produced and shipped to foreigners for their use have soared while the outputs it has gotten in return have flatlined. Those of us outside of China are benefiting from ever-more of China’s manufactured goods without our having to give to China in exchange any more of our goods. This reveals an uncomfortable truth for the Chinese people: Beijing is enriching the rest of the world by pursuing a “beggar thy own citizens” degrowth model.
A people are made poorer, not richer, when their government arranges for them to produce more output for foreigners’ use while simultaneously restricting what they receive in exchange from foreigners for their own use.
You, of course, would make your own household poorer, not richer, by obliging yourself, your wife, and your children to produce more goods for your neighbors’ use while preventing yourself, your wife, and your children from accepting from your neighbors anything more in exchange. The victims of your household’s bizarre, self-destructive trade policy wouldn’t be your neighbors; they’d benefit. The victims would be you and your family.
This economic reality isn’t changed if a government compels every household and firm within its jurisdiction to produce more goods for foreigners’ use while preventing these households and firms from accepting from foreigners anything more in exchange.
Economic self-destruction does not become economic self-help just because a government enforces self-denial on a national scale.
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
