Friday, May 12, 2017

Jimmy Carter is Just as Bad on Trade as Donald Trump

Here’s a Don Boudreaux letter to the Washington Post:
Defending the Trump administration’s scheme to punitively tax Americans who buy lumber from Canada, Jimmy Carter confirms that his grasp of economics is just as feeble as is Donald Trump’s (“Trump is right. Canada’s lumber trade practices are unfair.” May 10).
First, Mr. Carter fails to understand that we Americans are enriched whenever the prices we pay for imports fall, whether these falling prices result from foreign-government subsidies or from improvements in foreign-producers’ methods of production.  The people made poorer by Canadian-government subsidies of Canadian lumber production are Canadians, not Americans.  And the people harmed by U.S. “retaliation” are Americans, not Canadians.
Even worse is Mr. Carter’s claim that “With moderate adjustments in management, there is enough timberland in the United States to supply the total American market with lumber.”  This statement reveals Mr. Carter’s appalling ignorance of that key economic consideration, cost.
The question here is not: Is it physically possible for America to be self-sufficient in lumber?  (Of course such self-sufficiency is possible.)  Instead, the question is: Is it cost-effective for America to be self-sufficient in lumber?  For America to be self-sufficient in lumber – or even just closer to self-sufficiency in lumber – requires greater use of American land, labor, and other resources to produce lumber.  An unavoidable consequence of increased lumber production in America is less American land, labor, and other resources available to produce wheat, tourism, aluminum, and other goods and services.
Therefore, government policies that artificially increase Americans’ production of lumber artificially decrease Americans’ production of other goods and services.  For these other goods and services, we are thus made less dependent on ourselves and more dependent upon foreigner suppliers.  And we are made poorer.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030
The above originally appeared at Cafe Hayek

1 comment:

  1. But it's all to help Jimmy's poor relatives! So it must be a good idea, right?

    The members of my family own about 1,800 acres of timberland, and the softwood (pine) tracts are mostly planted as seedlings (from 550 to 900 per acre) that even in our warm climate need to grow for at least 25 years before becoming large enough to sell for lumber. Unless in urgent need of cash income, we usually wait at least 10 additional years before harvesting and replanting. After this 35-year period, we sell our softwood timber — usually less than 100 acres a year — in a competitive and open process to Canadian sawmills to make lumber.

    With logs selling at the present price of $25 per ton, we can expect to realize a net income of about $875 per acre, or just $25 a year over 35 years, plus some secondary income for pulp wood and other products. Largely because of Canada’s unfair trade, the prices we receive today are the same as when I was in office over 35 years ago, although expenses from planting seedlings, thinning, removing unmarketable trees, periodic controlled burning and timber severance taxes are much greater.

    They should all just move to Detroit and start a lawn service in the summer and a snow plowing service in the winter.