21 November 2017

Mr. Kevin Kearns
U.S. Business & Industry Council

Mr. Kearns:

Your recently updated essay, “Trump Must Confront Massive Institutional Free-Trade Bias in Order to Balance Trade, Create Jobs” (Huffington Post, Nov. 12) is a very poor performance. First, you repeat several myths as if they are established truths. It is not true, for example that the middle class has been “decimated” by trade — unless by “decimated” you mean “became richer.” Compare Census Bureau data on inflation-adjusted household incomes today with those on household incomes in the mid-1970s, just before America began running large trade deficits. You’ll discover that the percentage of American households earning annual incomes in each of the lower and middle income ranges is today lower than in the mid-1970s, while the percentage of households earning incomes in each the upper-income ranges ($100,000 and above) is higher.* The data are clear: more and more American households are earning high incomes.

A more fundamental problem with your essay is your premise that Americans are enriched the more government succeeds at creating artificial scarcity. Merely stating your premise reveals its absurdity. But if your premise is correct, then your proposals are far too modest. Rather than confine itself to obstructing our access to imports — which are only 1/7th of U.S. GDP — government should create artificial scarcity more generally. By your logic, Americans would be made even richer if government employed vandals to annually destroy, say, 25 percent of the value of every American’s residence and possessions. Think of all the jobs that would thereby be created! More carpenters, plumbers, and electricians would be employed every year to rebuild the 25 percent of the housing stock intentionally destroyed by government vandals. Likewise, more farmers, truck drivers, and sales clerks would be employed to help consumers replace the 25 percent of their food, clothing, and furniture annually demolished by those same vandals.

You’ll insist that destruction of valuable goods by vandals differs from import restrictions. But you’ll be mistaken. You’ll be unable to identify a single essential economic difference between consumers having their access to valuable goods artificially restricted by vandals and consumers having their access to valuable goods artificially restricted by customs agents. (The fact that the latter are simply more familiar to us than the former doesn’t count as an economically essential difference.)

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

* https://www2.census.gov/programs-surveys/demo/tables/p60/252/table3.pdf