Exceeded only by the pathological dread of imports that affects all nations is a pathological yearning for exports. Logically, it is true, nothing could be more inconsistent. In the long run imports and exports must equal each other (considering both in the broadest sense, which includes such “invisible” items as tourist expenditures, ocean freight charges and all other items in the “balance of payments”). It is exports that pay for imports, and vice-versa. The greater exports we have, the greater imports we have, if we ever expect to get paid. The smaller imports we have, the smaller exports we can have. Without imports we can have no exports, for foreigners will have no funds with which to buy our goods. When we decide to cut down out imports, we are in effect deciding also to cut down our exports. When we decide to increase (double) out exports, we are in effect deciding to increase (double) our imports.
Would Doubling Exports Result in a Doubling of Imports?
Jan 30 2011, 11:55
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Steven Landsburg points to the opening paragraph from Chapter 12 ("The Drive for Exports") in Henry Hazlitt's classic book "Economics in One Lesson":
Professor Landsburg points out that "Encouraging exports is exactly the same thing as encouraging imports. And wouldn’t you expect that if you were out to encourage imports, your first step might be to stop discouraging imports, say by declaring an end to all tariffs and quotas on foreign-made goods? In a sane world, that’s indeed what you might expect. But somehow I don’t expect it."
Another thing that might happen in a sane world would be for Obama to push for finalizing the free trade agreements (FTAs) with Colombia and Panama, which Obama claims to support. The Colombia FTA was signed in 2006, and languishes into its sixth year without getting final approval from Congress. According to the Latin America Trade Coalition, more than $3 billion in tariffs have been imposed on U.S. exports to Colombia in the 1,531 days since the FTA was signed, but not finalized. Under the FTA, most tariffs would be eliminated, and the U.S. could boost exports to a country that now has finalized FTAs with both Canada and Europe.