Art Carden  

Trading With Foreigners: What's In It For Us?

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Arguments against international trade and immigration are classic examples of people ignoring Bastiat's lesson and focusing only on what is seen while ignoring what is unseen. What, people ask, is in it for *us* if we trade with foreigners?

The obvious answer is "more, better, cheaper stuff" as the point of economic activity is not employment per se but acquisition of the goods and services that help us achieve our goals. Still, though, if we buy sugar from Brazil or toys and electronics from China, how will potentially-displaced Americans make ends meet? How will they earn the incomes that will allow them to acquire the goods and services that help them achieve their goals?

Foreigners don't want to sell us real goods and services just so they can hoard dollars (assume for now that they aren't just buying government debt, which is a different problem). They want dollars because they can either sell the dollars to us in exchange for goods and services, or they want dollars so they can sell them to someone else who in turn wishes to sell us the dollars in exchange for goods and services.

What kinds of goods and services? Here are just two: higher education and vacations to Disney World.

While appearances can be deceiving, both my present employer (Samford University) and my previous employer (Rhodes College) enroll a lot of Chinese students. Being a college professor takes a lot of time, training, and specialized skills, so it isn't practical for a lot of displaced workers to go into academia. However, colleges and universities are offering broader arrays of services. Higher demand than we would otherwise have for higher ed also means higher demand for people to maintain facilities, cook meals, and so on.

In February, I visited Petropolis, Brazil at the request of Ordem Livre (here are some of the lectures). One of my sisters, who used to live in Brazil, mentioned that if I sat near the front of the plane I wouldn't be surrounded by teenagers on their way back from trips to Disney World.

This immediately made me think of an exchange in the Daily Caller. A Florida Congressman offered "A Conservative Case for Sugar Tariffs," citing Brazil's position in the sugar market as a reason why the government should intervene. In response, and relying on some of my students' essays on the topic of international trade, I explained the case for free trade in sugar.

And yet, one might ask, what will happen to the sugar workers in Florida displaced by a move to free trade in sugar? First, Americans would save money on sugar and spend it doing other things. We're going to Disney World in August, for example; richer American consumers would mean more trips to Disney World and, therefore, more opportunities in the Orlando entertainment and service sector.

Second, Brazilians earn higher incomes exporting sugar to the United States. As my sister pointed out, Disney World is apparently a popular destination. Some of them would use their higher earnings to take more trips to Disney World, again creating new opportunities in the Orlando entertainment and service sector.

It's been said that God doesn't close a door without opening a window. Free trade closes one door, but its wealth-creating effects open two others.



COMMENTS (3 to date)
Mike Rulle writes:

"(assume for now that they aren't just buying government debt, which is a different problem)."

While I agree with your real point, unfortunately a good chunk of their dollars come back into unproductive activity.

RA writes:

Even the hypothetical jobs you cite don't sound very appealing compared to manufacturing. So you can dress up as Goofy or work as a janitor at a university? Wow, the global economy sounds grand!

Some Americans have limited IQ. When we had manufacturing jobs, it seems that there was at least something they could do to earn a dignified living.

When we had manufacturing jobs, it seems that there was at least something they could do to earn a dignified living.

RA, which of the following scenarios is more dignified: working-class women (i) toiling in a garment factory or (ii) staffing a Children of America daycare so that upper middle class women can practice law?

Three generations of my direct male ancestors (above my father) worked for Bethlehem Steel. None made it to 60 years old. A Dignified life? Perhaps, but a very short one without the majority of material goods and services now enjoyed by nearly all Americans, including service workers.

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