Wanted: A Cure for Mercantilism
12 January 2008
Editor, The Atlantic
Dear Editor:
I have a question for Warren Robinson and others who worry that trade with low-wage China will make "the U.S. considerably worse off" (Letters, Jan./Feb.). Suppose that a Chinese scientist discovers a recipe for combining everyday kitchen ingredients into a medicine that completely and safely cures cancer, heart disease, tuberculosis, and erectile dysfunction. This generous scientist publishes the recipe on the web for free so that ordinary people throughout the world can, at near-zero cost, protect themselves from these diseases.
Would this invention make Americans poorer? Treating these diseases today is big business. Patients pay lots of money for treatment by highly skilled specialists, as well as lots of money for medicines made by other highly skilled specialists. America's wealth, however, does not lie in the production of these high-priced outputs. Rather, it lies in Americans' ability to CONSUME these and other useful outputs.
It's true that, given the current scarcity of resources and knowledge available for treating these awful diseases, the prices that we willingly pay today for such treatments are high. Hence, the remuneration of the specialists who provide these treatments is unusually high. But these high prices reflect the regrettable fact that we still face unusually high obstacles to overcoming these diseases. A people grow wealthier as they lower the obstacles standing in their way of satisfying their desires. Just as the invention of a low-cost cure for dreaded diseases would make nearly all of us richer, so, too, does our ability to acquire goods and services from abroad at unusually low costs make nearly all of us wealthier.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Editor, The Atlantic
Dear Editor:
I have a question for Warren Robinson and others who worry that trade with low-wage China will make "the U.S. considerably worse off" (Letters, Jan./Feb.). Suppose that a Chinese scientist discovers a recipe for combining everyday kitchen ingredients into a medicine that completely and safely cures cancer, heart disease, tuberculosis, and erectile dysfunction. This generous scientist publishes the recipe on the web for free so that ordinary people throughout the world can, at near-zero cost, protect themselves from these diseases.
Would this invention make Americans poorer? Treating these diseases today is big business. Patients pay lots of money for treatment by highly skilled specialists, as well as lots of money for medicines made by other highly skilled specialists. America's wealth, however, does not lie in the production of these high-priced outputs. Rather, it lies in Americans' ability to CONSUME these and other useful outputs.
It's true that, given the current scarcity of resources and knowledge available for treating these awful diseases, the prices that we willingly pay today for such treatments are high. Hence, the remuneration of the specialists who provide these treatments is unusually high. But these high prices reflect the regrettable fact that we still face unusually high obstacles to overcoming these diseases. A people grow wealthier as they lower the obstacles standing in their way of satisfying their desires. Just as the invention of a low-cost cure for dreaded diseases would make nearly all of us richer, so, too, does our ability to acquire goods and services from abroad at unusually low costs make nearly all of us wealthier.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Tuesday June 10, 2008 at 10:57am