Here’s a letter to the Wall Street Journal:
Editor:
Profiled by Greg Ip, Robert Lighthizer is quoted as saying, about China, that “if you’re running chronic surpluses for decades, then you are by definition a protectionist. You’re engaging in industrial policy to help yourself, you’re transferring resources from your consumers to your producers, you’re trying to … acquire other countries’ assets” (“He Helped Trump Remake Global Trade. His Work Isn’t Done.” May 13).
Chronic trade surpluses neither make a surplus country protectionist “by definition” nor signal that that country uses industrial policy. Such surpluses simply mean that global investors, including those in the country in question, consistently find better investment opportunities outside of that country than within that country. Why countries, such as the U.S., that are net recipients of these investments should complain is a mystery.
An even worse error is to describe surplus countries as “trying to … acquire other countries’ assets.” The amount of capital in the world or in any country isn’t fixed; it can and does grow. When the Dutch company Ikea builds a store in Newark, it doesn’t so much acquire assets that once belonged to Americans as it creates assets in America that would not otherwise exist – assets that improve employment opportunities for Americans as well as expand Americans’ access to goods and services. Ditto when the German company BASF builds facilities in Louisiana, when the Mexican company Cemex constructs a plant in Texas, and when the Japanese company Toyota erects a factory in Kentucky. It’s beyond mysterious why Mr. Lighthizer, who’s frantic to have more manufacturing in the U.S., peddles policies that would reduce such foreign investment on America’s shores.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
