Thursday, October 8, 2015

An Open Letter to a Politician

Rep. Sander Levin (D-MI)

Dear Sir:

Interviewed yesterday on NPR, you asserted that “When currency was rigged by China, we lost – the estimate is several millions of jobs in the United States.” Your proposition, in other words, is that there’s a net decrease in the demand for labor in America whenever foreign governments take actions that lower the prices that Americans pay for imports. If your proposition is correct, it also implies that there’s a net increase in the demand for labor in America whenever foreign governments take actions that raise the prices that Americans pay for imports.

So do you believe that, say, when Chairman Mao was trashing China’s economy, we won? Seems likely that you do. After all, the Great Helmsman’s brutal command-and-control policies caused Chinese factories and workers to be far less efficient than they would have been otherwise. The resulting higher costs of production in China kept American imports from China fewer and, hence – according to your economics – artificially raised the demand for labor in America. We must have, as you would say, “won.”

Similar – and similarly happy – economic effects on the American labor market must also have been unleashed by every other man-made economic calamity during the past century, including Stalinism in Russia, Peronism in Argentina, and Castro-ism in Cuba. These economic policies, while horrid for the denizens of those devastated economies, must have increased employment or wages (or both) for Americans. (That is, if you’re correct.)

To prove to the American people the sincerity of your economic beliefs (or the depth of your understanding of the full implications of those beliefs), will you publicly proclaim your confidence in the proposition that much of the rise in Americans’ employment and real wages since the end of WWII until, say, 1980, was the consequence, not of Americans’ own entrepreneurship, innovation, hard work, and risk-taking but, rather, of the economic wreckage inflicted on foreign economies by their meddlesome governments? Unless you’re willing to thank such foreign governments for pursuing policies that reduced their people’s capacity to export goods to America, you should stop complaining about foreign governments for now pursuing policies that increase their people’s capacity to export goods to America.

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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