Tuesday, September 1, 2015

WARNING Peter Morici Is An Unreconstructed Mercantilist

A Don  Boudreaux letter to the Washington Post:
Peter Morici claims that “The U.S. economy won’t be much hurt by China’s slowdown because it has purchased much less in the United States than it sells here” (“China’s turmoil good news for U.S. economy and stocks,” August 31).
This claim is ridiculous.  If the logic behind it were sound, it would mean that the typical American household wouldn’t be much hurt by the demise of supermarkets, clothing stores, and hospitals because these entities purchase much less from the typical American household than they sell to the typical American household.
In this op-ed as in many of his other writings, Prof. Morici gets matters backwards.  He mistakenly assumes that the benefit to us of economic activity lies not in the amounts of goods and services that we acquire from others for our use but in the amounts of goods and services that we must give to others for their use.
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.

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