Advancing a Free Society

Should the Government try to Stimulate US Exports?

Sunday, February 21, 2010

Posner shows, among other things, the basic impossibility of doubling US exports during the next five years. I consider whether such a policy makes sense, even if it could be achieved. My short answer is that it does not.

In economies that have full employment except during recessions, which describes the American economy, increased exports do not create jobs, any more than building football stadiums creates jobs, although many commentators and businessmen continue to lament the jobs lost to China. What increased exports do under full employment conditions is transfer jobs from producing for domestic consumption and domestic investment to producing for export. The share of American GDP devoted to exports has about doubled during the past 50 years without having any noticeable impact on either the employment or unemployment rates. Part of the reason for this little impact is that imports increased even more rapidly than exports did, but the main answer is that some workers and capital shifted from producing for domestic uses to producing for foreign uses.

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