Have you ever heard some "pundit" in the media lament the supposed loss of American manufacturing jobs, rail against Chinese imports, trade deficits, and blame free trade and evil corporations?
These claims, of course, are easy to debunk with a simple understanding of economics and the law of comparative advantage. But now we have some hard data that disproves those fallacies.
Although globalization is widely recognized these days, the U.S. economy actually remains relatively closed. The vast majority of goods and services sold in the United States is produced here. In 2010, imports were about 16% of U.S. GDP. Imports from China amounted to 2.5% of GDP.
Chinese goods account for 2.7% of U.S. PCE, about one-quarter of the 11.5% foreign share. Chinese imported goods consist mainly of furniture and household equipment; other durables; and clothing and shoes. In the clothing and shoes category, 35.6% of U.S. consumer purchases in 2010 was of items with the “Made in China” label.
It is simply not true that Chinese imports put American companies out of business. China is too busy trying to feed, clothe, and house itself, notes Gary North in a great article at LRC.
Ignore the rackets for protectionism that come from both liberals and conservatives. Free trade and free markets breed peace, prosperity, jobs, wealth, and cheaper goods. Government-enforced barriers to trade (whether internationally or between peaceful individuals here at home) breed the opposite.
I was wondering what to eat for dinner when I stumbled upon this. This blog is proving itself useful after all.
Posted by: James Edmondson | August 29, 2011 at 09:21 AM