Don Boudreaux speaks reason to those seemingly incapable of reasoning themselves on the subject of American-Chinese trade.

The extent to which Chinese subsidies are bad is that these subsidies (and the taxes imposed on Chinese citizens to support them; and/or the “devaluing” of the yuan to support them (which is equivalent to a tax on the Chinese citizenry)) distort prices. Distorted prices are always bad in that they lead to market inefficiency (usually always on the production side) because market information is contained in but obscured by those price distortions. However, that China seems intent on subsidizing exports (whatever the mechanism) is undeniably good for American consumers. If you believe this not to be true, then logically, you have to agree with the action proposed in the final paragraph of DB’s letter. If you find that last paragraph to be absurd, then you must reevaluate your prior belief (as, again, it logically follows).

-JD Cross

 

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