by George Leef
GMU economics professor Don Boudreaux is one of the most indefatigable opponents of all economic interventionism and has lately added his voice to the opponents of the Export-Import Bank. In the letter below to the Washington Post, he devises a clever way of showing the folly of government support for certain products:
Editor, Washington Post
1150 15th St., NW
Washington, DC 20071
You rightly highlight the dubious assumptions used by the Export-Import Bank to estimate the number of jobs its subsidies “support” (“Seeking clarity on the number of jobs the Export-Import Bank is responsible for,” August 14). Yet a deeper truth deserves prominence – namely, subsidizing exports is no more likely to increase overall employment than is subsidizing any other class of goods or services.
Suppose that, instead of the Ex-Im Bank, we had a Yellow Goods Bank. This bank would subsidize all purchases, foreign and domestic, of maize, summer squash, school buses, and other goods colored yellow. Such subsidies would indeed result in larger numbers of people working to produce yellow goods. But such subsidies would also pull resources – financing, raw materials, machinery, and workers – from the production of beets, blue jeans, cardiovascular surgery, and other non-yellow outputs.
Because sensible people are unlikely to be duped into thinking that a government policy of artificially increasing the production of goods described as “yellow” means a stronger overall economy, why do so many otherwise sensible people continue to fall for the mercantilist myth that a government policy of artificially increasing the production of goods described as “exports” means a stronger overall economy?
Donald J. Boudreaux
Professor of Economics