Economic theory ignores reality
Richard Rahn made the common mistake of confusing academic theory with reality when he wrote “citizens of the United States are better off buying Chinese-made shirts and the Chinese are better off buying U.S.-made Boeing 747s” (“Trading in recklessness,” Commentary, Wednesday). He is updating David Ricardo’s two-centuries-old example of England trading cloth for Portuguese wine.
In Ricardo’s day, textile manufacturing was the spearhead of the Industrial Revolution. A static world of comparative advantage where England would dominate manufacturing was called “free trade imperialism” by those who were not content to accept their assigned place in a lower economic tier. Other powers, including the United States, eventually surpassed British industry by adopting economic nationalism. The same applies to Mr. Rahn’s modern example. The Chinese are not content with just selling shirts. They are building their own aerospace industry, mandating the transfer of technology and a share of production from Boeing (and Airbus) to speed their effort. They wish to be producers, not merely consumers, of advanced products.
International economics is about competition, with everyone striving to increase wealth and power. In a dynamic world, comparative advantage is created, not just discovered in nature as the classical economists Mr. Rahn quotes seemed to believe. Government policies promoting investment, research and exports are part of this competition. So are policies that protect national champions who can lead the way to future progress and expansion. Mr. Rahn would have Americans assume a passive role in this intense international rivalry, but that is a prescription for defeat ” and the reason the United States is running trade deficits of more than $700 billion a year. The harmonious world of academic theory is nowhere in sight.
On our own soil
I would be more impressed by Alan Nathan’s condemnation of Rev. Jeremiah Wright’s comments about World War II if the brave black soldiers Mr. Nathan mentioned hadn’t come home to a country that wasn’t totally free for another 20 years (“Politics of race,” Op-Ed, Tuesday). When conservatives talk about oppression in other lands, do they realize that there is a generation of grandparents in this country that experienced it right here on this soil? How people deal with it can be debated, but to gloss over it as if it’s easy to forgive and forget is insulting.
Terrorists target aid programs
Harlan Ullman writes that in order to stem Muslim radicalization in Pakistan, the United States should make “the fight against the militants Pakistan’s war, not America’s” (“What about Pakistan?” Web site, Op-Ed, March 29). Certainly, this prescription is apt. However, substantially increasing U.S. direct economic assistance is far from certain to achieve success.
Last year, Taliban leaders in the Federally Administered Tribal Areas (FATA) convinced the local population that an Islamabad-sponsored polio vaccination program was actually a U.S. attempt to sterilize Muslim children. As a result, 24,000 children did not receive a vaccination and the head of Pakistan’s vaccine program was assassinated. Unfortunately, this type of reaction to U.S. assistance programs is commonplace in the Pakistani-Afghan border region.View Entire Story
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