Donald Boudreaux, an economist at George Mason University, writes an open letter to Lou Dobbs in today’s Christian Science Monitor:
I’m writing this letter on a new Sony computer that I bought with cash. I owe Sony nothing. If Sony holds the dollars it earned from this sale, or if it uses these dollars to buy stock in General Electric or land in Arizona – that is, as long as Sony invests its dollars in America in ways other than lending it to Americans – the US trade deficit rises without raising Americans’ indebtedness.
Americans go more deeply into debt to foreigners only when Americans borrow money from foreigners. Uncle Sam, of course, borrows a lot of money, from both Americans and from non-Americans. I share your concern about the reckless spending and borrowing practiced by politicians in Washington.
Foreigners, however, are not to blame for this recklessness. Indeed, I’m grateful that foreigners stand ready to help us pay the cost of our overblown government. Fortunately, Washington’s spending binges are not serious enough to cripple America’s entrepreneurial economy. If they were, foreigners would refuse to invest here.
If you’re still skeptical that America’s trade deficit is no cause for concern, perhaps you’ll be persuaded by Adam Smith, who wrote that “Nothing, however, can be more absurd than this whole doctrine of the balance of trade.”
Smith correctly understood that with free trade, the economy becomes larger than any one nation – a fact that brings more human creativity, more savings, more capital, more specialization, more opportunity, more competition, and a higher standard of living to all those who can freely trade.
Yes, but, the one thing Adam Smith didn’t understand was that ranting an raving like an idiot on national television increases ratings and boosts the salary of blowhards like Dobbs.
Over at Cato@Liberty, Daniel Griswold notes that the “accidental President” was among those Republicans who led the GOP away from it’s history of economic isolationism:
It is easy to forget today, but before World War II, the Republican Party was the protectionist, isolationist party. Republicans sponsored the 1930 Smoot-Hawley tariff bill that deepened and prolonged the Great Depression, contributing to a downward spiral in global trade and feeding the resentments that set the stage for World War II.
After the war, Republicans such as Sen. Arthur H. Vandenberg of Michigan broke from the party’s past to work with Democrats to forge a bipartisan trade and foreign policy. In the late 1940s, the United States not only joined NATO but also the General Agreement on Tariffs and Trade. Under this bipartisan consensus, U.S. government barriers to international trade and foreign investment continued to fall from their peaks in the 1930s to their relatively low levels of today.
Gerald Ford’s presidency and career are open for critique, but on the basic question of whether the United States should engage in the global economy or wall itself off in fear, Gerald Ford was on the right side of history.
Unfortunately, political opportunists like Tom Tancredo and populists like Lou Dobbs seem intent on dragging America back in the other direction.
Unfortunately in America, there is a new tide of xenophobia, protectionism, and ultra-nationalism rising. This tide of populism helped to catapult Democrats like Jim Webb and Republicans like Tom Tancredo to national prominence as they denounce everything foreign. Even so-called libertarians like Ron Paul have gotten in on the act. The public face of this new populist nationalism though is Lou Dobbs.
This new wave of populist nationalism is nothing more than Buchanite paleo-conservatism dressed up and lipstick has been placed on this pig to bring it into the twenty-first century. Already, these new populists have nearly sunk CAFTA and a free trade agreement with Vietnam, that fortunately will pass Friday. In addition, xenophobes like Dobbs and Tancredo stand in the way of a solution of the illegal immigration problem. Both free trade and a free as possible movment of people across national borders lowers the price of goods and services and raises the standard of living for most people in a nation. Also, free trade does more to increase diplomatic relations between the United States and other nations than any other action America does. Finally, as countries open their nations to outside goods, services, and more importantly ideas; those nations will be come more freer.
To call Lou Dobbs the enemy of the people is not an overstatement if viewed in the proper context. Lou Dobbs stands in the way of cheaper goods that benefit all Americans. Lou Dobbs stands in the way of more and higher paying jobs as more foreign investment comes to America as a result of trade. Lou Dobbs stands in the way of immigrants and the promise and abilities they bring to America. We must stand up to these populists.
It’s time to start educating about trade, immigration, and opening up our nation. All three things bring benefits to our nation.