In a post today Scott Sumner says that the world would be better off if we could increase gross exports. He refers to this Tyler Cowen post before going into more detail calling it “wonderful”. I’ll probably never understand the Market Monetarism way of thought. It just strikes me as reformed old school Monetarism (which has gone the way of the dodo) with a NGDP Targeting twist, but the same old laissez-faire foundation and most of the destructive nonsense that Milton Friedman injected into the field of economics. Anyhow….
Now, Sumner doesn’t actually refer to gross exports, but I am going to assume that’s what he means. And he’s right – boosting gross exports would be “wonderful”. Or, said differently, if we all just produced more goods and services that other countries wanted then we could collectively increase our gross exports (as well as our gross imports). But why is this news or some “wonderful” insight? I mean, if I could produce a better car than Tesla then I could increase gross production for the global economy and that would be “wonderful”. But isn’t this just an obvious fact? But this is how neoliberal economists think. If we can just unleash unfettered capitalism then all of the untapped potential within us would just pour out into the economy, right? As if there’s an Elon Musk inside of all of us just being held back by high taxes, regulation and the government….
Saying that we should all just boost gross exports is the mercantilists version of telling the poor guy with no job and no skills that he just needs to pick himself up by his bootstraps. It’s obviously true, but it often makes no sense in reality because picking yourself up by the boot straps is not only extremely difficult, but takes a good deal of time. From the perspective of economics it’s just obvious (yes, if we could all produce more then we’d likely all be better off). But from a policy perspective it’s often just political rhetoric that sounds nice in theory and doesn’t translate into the real world in any realistic sense. And then Sumner (predictably) goes into a bunch of laissez-faire policies that will supposedly unleash all this pent up production thereby allowing us to pick ourselves up by our boot straps. Of course, none of the ideas are particularly new and many of them are things that many countries have been implementing for years already. Nothing new here, certainly nothing “wonderful”….
This is the same thinking that has been poisoning economics, policy making and the global economy since the 1970s. When will it end?