Thursday, May 12, 2005

For the most part I try to stay away from the libertarian econoblogs. Summaries of their posts on the Economics Roundtable is usually more than enough for me. However, but this comment today by Don Boudreaux at Cafe Hayek was just too rich to pass up.

Any measure of country A�s trade relationship with country B is completely meaningless; it�s useful only for demagoguery. Even if the U.S. were to have a zero current-account balance with the rest of the world � no current-account deficit or surplus � it would be freakishly coincidental if the U.S. had no current-account deficit with each of several individual countries.

The old-but-wise economists� example applies here: I routinely shop at supermarkets, but I don�t work at supermarkets. Therefore, my current-account deficit with supermarkets is long-lasting. It will never disappear; indeed, it will grow until the day I die. Ditto for my trade relationship with clothing retailers, dry cleaners, auto producers, restaurants, airlines, computer makers, pharmaceutical companies, pet stores, wineries � the list is endless.
I can't help but throw Friedrich List back at these worshippers of "cosmopolitical" economic theory.
Is the wisdom of private economy, also wisdom in national economy? Is it in the nature of individuals to take into consideration the wants of future centuries, as those concern the nature of the nation and the State? . . .

No; that may be wisdom in national economy which would be folly in private economy, and vice vers�; and owing to the very simple reason, that a tailor is no nation and a nation no tailor, that one family is something very different from a community of millions of families, that one house is something very different from a large
national territory.


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