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Results Trump Intentions

Friday, January 13, 2017 6:57
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(Don Boudreaux)


Here’s a letter to the Wall Street Journal:

Edward Basile applauds the bullying by President-elect Trump to force automakers to abandon lower-cost production opportunities in Mexico in order to use higher-cost methods of production in the United States (Letters, Jan. 13).  According to Mr. Basile, this “policy is at least intended to place the interests of working, middle-class families above corporate profits.”

Well, a central lesson of economics is that intentions are not results.  Here, however, are some of what will be the actual results of Mr. Trump’s bullying:

– automakers’ higher production costs will result in working, middle-class families paying higher prices for automobiles;

– with new cars made more expensive, working, middle-class families will keep their older cars longer – and because older cars generally aren’t as safe as new cars, driving will, as a result, be more hazardous than otherwise for working, middle-class families;

– with foreigners exporting less to Americans, foreigners’ dollar earnings will fall, causing foreigners to reduce their spending and investing in America and, thus, destroying jobs for working, middle-class families in those U.S.-based industries in which foreigners’ spending or investing falls;

– such government threats aimed at private businesses seeking to operate as efficiently as possible corrode the investment climate in America, making it less entrepreneurial and dynamic, and resulting in less opportunity and prosperity over time for working, middle-class families.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030


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