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Donald Boudreaux

Donald J. Boudreaux: No need for government to manage international trade

| Monday, Sept. 10, 2018, 11:13 a.m.

Soon after waking up in the morning, you spend $5 to buy a cup of coffee and a muffin at a neighborhood restaurant. You’re better off because of this trade; otherwise, you’d not have voluntarily given $5 to the restaurant in exchange for this breakfast. Also better off is the restaurant’s owner; otherwise, she’d have refused to trade with you on these terms.

Later in the day, you spend $100 to purchase a new tire to replace the one that’s flat on your car. You then send a check to your bank to pay, as you promised, your monthly mortgage bill. And you relax at night by spending $2.99 to download a movie to watch on television.

Like you, every one of your neighbors makes similar trades. Our lives include several such trades daily. Each of these trades involves a willing buyer and a willing seller. Therefore, except for the rare mistake and even rarer instance of fraud, each of these trades is a win-win. All parties to them gain.

Here’s a notable fact: No third party manages these trades. No one tells you what to buy for breakfast or to replace your flat tire. No government official instructs your neighbors on how to spend their money at the supermarket and at the yoga studio. These trades are managed individually, each and every one only by the parties to it. There is no overseer.

“Of course,” you yawn. “So what?”

So plenty. If your trade with your fellow human beings across town and across America need not be “managed” by government in order to ensure that this trade makes you and all other parties to it better off, why must your trade with your fellow human beings across oceans be so managed?

Answer: no reason. No reason at all.

Yet most people blithely accept as a law of nature the supposed necessity of government to manage trade that happens to be conducted across political borders.

When I ask — as I frequently do — proponents of government management of international trade to explain why trade with foreigners differs from trade with fellow citizens, I’m usually met with looks of astonishment. The difference seems so obvious that I must be blind to miss it.

But when I press for a specific answer, the astonishment turns to uneasiness. When obliged to identify a substantive and relevant difference between international trade and purely domestic trade, no one offers a good answer.

Some people who think my question is silly will suggest that dollars spent abroad don’t “come back” to America. But then I ask: “Do non-Americans so admire the likes of Washington, Lincoln and Franklin that they want to acquire and hoard as many as possible small monochrome portraits of these dead U.S. statesmen?” Obviously not.

Foreigners do with dollars the same things Americans do with dollars: spend them or invest them in the United States.

Others who think my question to be silly point to American jobs lost when Americans buy imports. I respond by pointing to American jobs lost when Americans change their eating habits. The Atkins diet, for example, destroyed jobs in bakeries and breweries and created jobs on ranches and in slaughterhouses.

Any change in the ways people spend their money destroys some particular jobs and creates others. Buying more tomatoes from Mexico is no different on this front than is buying more beef from New Mexico.

Donald J. Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.

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