You actually had a short, but interesting chapter in your book explaining why you think our trade balance with China is mostly irrelevant. Could you give people a short, but sweet synopsis of that argument?
Adam Smith was the first to point this out in the Wealth of Nations. The common wisdom at the time, mercantilism was the name it went by, was that the way a nation got rich was by exporting things. In return for the exports they’d get gold. And Smith’s going, I’m paraphrasing broadly here, “You can’t eat gold, you can’t kiss gold, and gold won’t keep you warm at night. Gold is just gold.”
He said the exports, that’s real stuff, and you’re giving it away in favor of gold. He said imports are the good thing. Imports are when you’re getting something you like. You’re getting French wine. You’re getting American tobacco. You’re getting furs from Russia, getting whatever they were getting back in those days. He said exports are the way you pay for those imports. So imports are Christmas morning. Exports are January’s Visa bill.
People getting so upset because everything seems to be made in China — I understand it on the level of the jobs have moved overseas. I think it’s probably an important thing to remember that if the jobs hadn’t moved overseas, they probably would have just gone away. So, it’s not like the Japanese have all of our car making jobs.
John Hawkins, “The P.J. O’Rourke Interview”, Grendel Report, 2010-10-11
March 7, 2011
QotD: Mercantilism
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