Neither Logic Nor the Laws of Economics Are Suspended by Political Borders
Here’s a letter to Jacobin.
Editor:
The mindlessness of so much allegedly cutting-edge thinking about international trade is nowhere more evident than in your introduction to an interview with Michael Pettis (“Remaking Globalization for an Era of Trade Wars,” December 7). You write:
Economist Michael Pettis argues that what is in fact distorting the US economy is global inequality, and that action needs to be taken to correct the imbalances that result from it. Mercantilist countries like Germany, Japan, and China, which aim to increase their wealth by increasing their exports, persistently consume much less than they produce and deal with the resulting excess by exporting goods and savings, principally to the United States.
Do people who express such thoughts ever pause to ponder what they express? Apparently not.
If the Joneses down the street stubbornly insist on spending their labor and resources producing goods in excess of what they consume and then supply these goods, along with the family’s savings, to other families in the neighborhood while declaring an intention to continue this practice indefinitely, everyone would realize that the Joneses are foolishly enriching other families at the Jones’s own expense.
And yet if Prof. Pettis replaces “Jones” with, say, “Germany,” he and many other people inexplicably see Germany as deviously enriching itself at other countries’ expense.
How, pray tell, are the people of a country enriched, rather than impoverished, when their government effectively compels them to produce and save in excess for foreigners? And how can the foreigners on the receiving end of this largesse possibly be made poorer by it?
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
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