I recently mentioned Diana Mutz’s book. Winners and Losers: The Psychology of Foreign Trade I am shocked at how people think of international trade as a competitive activity. Of course, I shouldn’t really be surprised by this. 30 years ago, Paul Krugman’s excellent essay ‘Competitiveness: A Dangerous Obsession’ has been published. diplomacy. In the book, Krugman laments that too many people think that “the United States and Japan are rivals in the same sense that Coca-Cola is rivals to Pepsi,” and an example of this misconception is President Bill Clinton’s statement that a country is: I quote. “Like a large company competing in the global market.”
Recently, co-blogger David Henderson posted the following: article When asked if Hoover subsidizes Safeway:
Am I subsidizing Safeway? Why would I ask? Here’s why: My wife and I spend at least $400 a month at Safeway. Safeway doesn’t buy anything from us. Therefore, our monthly trade deficit with Safeway is at least $400. And in Trump’s worldview, trade deficits are like subsidies. By Trump’s logic, I’m subsidizing Safeway.
Let us borrow this framework and apply it to competition and trade. My wife and I spend hundreds of dollars each month on groceries and various household items at Target. Now I have a question. Does this put me in “competition” with Target? By buying from them, have I become their competitor?
Obviously not. That is absurd. I am not a competitor to Target. I am a Target competitor. customer. The subject is not competing. with Me – Target competes with HyVee, Lunds & Byerlys, Trader Joes, Amazon, and various other stores. for me.
When Americans trade with Canada, it means the customer is buying from the producer. “America” is not “competing” with “Canada” when Americans and Canadians do business with each other, any more than I compete with Target or Amazon when I do business with them. there is competition for It is trade, but trade itself is not competition. It is a mutually beneficial collaboration.
Of course, there are elements of international trade that involve competition, namely the trade competition mentioned earlier. If you want to purchase lumber for your construction company, you can either purchase lumber from an American company or purchase lumber imported from Canada. As a result, American lumber companies have to compete with Canadian companies for me. But this isn’t a bad thing! After all, domestic trade involves the same kind of competition.
The benefits of competition continue to be beneficial even when they occur across borders. Certain American companies may lose money and go out of business because they cannot compete. This is true, and it can be devastating for businesses and people who have lost their jobs. But this also applies when American companies compete with one another! American companies have gone out of business as a result of domestic competition. That doesn’t mean that such competition is bad overall or that the U.S. economy would benefit if policymakers decided to prevent it from occurring.
Apple also has to compete with the American company Microsoft and the Korean company Samsung. Simply because competing with Samsung is not a bad thing for Americans, competing with Microsoft is good. It’s good in both cases, and for the same reasons.
But just as “America” doesn’t “compete” with “Korea” when an American buys a Samsung phone or a Korean buys a new iPhone, it’s just like competing with Target when I run my weekly grocery run there. International trade may increase the scope for competition, but trade itself is not competition, nor are national competitors when the citizens of those countries trade with each other.
