Don Boudreaux on Jason Chaffetz

Don Boudreaux on Jason Chaffetz

When I read Jason (ex-congressman current pundit) Chaffetz’s piece in the Washington Examiner “USMA renewal: American manufacturing is a nonnegotiable,” I immediately thought of my friend Professor Don Boudreaux of George Mason University. Don is arguably the leading expert on tariffs and their impact. He along with my old University of Georgia economics tutor, Phil Gramm have contributed many articles (many in the Wall Street Journal) and a recent book “The Triumph of Economic Freedom: Debunking the Seven Great Myths of Capitalism.” In it they debunk many of the protectionist arguments of those such as Chaffetz who favor tariffs. So naturally I sent Don Chaffetz’s article: 

https://www.msn.com/en-us/money/markets/usmca-renewal-american-manufacturing-is-a-nonnegotiable/ar-AA21f4wm

His response was priceless. It can be found on his blog Cage Hayek:

Protectionist Fallacies Pour Forth

I repost it here with his permission.

Here’s a letter to the Washington Examiner. (I thank Prof. Harold Black for alerting me to this piece by Chaffetz.)

Editor:

Former Rep. Jason Chaffetz’s defense of Trump’s tariffs is a mayhem of misunderstanding (“USMCA renewal: American manufacturing is a nonnegotiable,” April 19).

By writing of “bringing manufacturing back home,” Chaffetz sneaks in the baseless conclusion that manufacturing in the U.S. has gone away or otherwise suffered in the few decades leading up to Trump’s presidency. In fact, manufacturing output in the month before Mr. Trump began his second term was, although 10% lower than the all-time high it hit in December 2007, 9% higher than when China joined the World Trade Organization, 51% higher than when NAFTA took effect, and 164% higher than in 1975, the last year the U.S. ran an annual trade surplus.

Even these numbers don’t adequately convey the strength of U.S. manufacturing. On an absolute basis, the U.S. trails only China in the value created by its manufacturing sector, yet on a per-capita basis U.S. manufacturing value-added is 158% higher than China’s.

And high-value-added manufacturing in the U.S. is expanding, while much of the moderation in the 21^stcentury in the growth of U.S. manufacturing is due to the steep decline in American production of textiles and leather goods – a low-value-added segment of manufacturing that’s typically performed in low-wage countries that are just beginning to industrialize. It’s only because American workers in these industries encountered better opportunities in other occupations that American textile and leather-goods production fell so dramatically. We should be pleased, not perturbed, at this development. (If you doubt this conclusion, ask: How many people do you know who long for their children and grandchildren to spend their lives working in textile mills?)

A final point: By subsidizing their countries’ exports to the U.S., foreign governments compel their citizens to bestow gifts on us Americans. We are enriched by such gifts no less than we are enriched by technological advances that reduce the amount of American labor required to produce manufactured goods. Especially if we take a stance now fashionable in some conservative circles and reject “cosmopolitanism” in favor of what is called ‘putting America first,’ we should welcome rather than reject foreign countries’ self-destructive practice of ‘putting America first’ by selling to us goods at prices below cost.

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