Here’s a letter to the Wall Street Journal.
Editor:
Jason Riley eloquently decries President Trump and so many other Republicans (and Democrats) today for falling for the zero-sum mercantilist fallacies that were exploded 250 years ago by Adam Smith (“GOP Doesn’t Know Smith From Adam,” February 18).
The most pernicious of these fallacies serves as the explicit justification for Mr. Trump’s “Liberation Day” tariffs – namely, that a country that runs trade deficits necessarily loses wealth to other countries. This fallacy is also the one that Adam Smith spent most time and ink debunking. His conclusion, brilliantly backed by careful reasoning, is powerful and succinct: “Nothing, however, can be more absurd than this whole doctrine of the balance of trade.”
In a more-rational world, we would worry about our so-called “trade balance” with other countries no more than we worry about our trade balance with other towns, counties, and states – or, indeed, our trade balance with people whose hair or eyes are of different colors than ours. As it is, alas, our freedom of commerce is obstructed by our own leaders who are beguiled by this absurd doctrine.
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
