Fuzzy Thinking About Trade
Jan 14 2010, 15:38 EST [updated Jan 14 2010, 15:41 EST]
Humans weren't built to think about exchange at the national scale. Here is a non-sequitur from Victor Davis Hanson:
Of the some $50 billion in remittances that leave the U.S. each year to Latin America, perhaps $20 billion come from California residents, draining the state of capital, and ensuring that the donors will be in need of state health, education, housing and food supplements.I know what he is trying to imply, but what does this mean? The $20 billion in remittances don't get burned upon arrival in Mexico (would that they were! it would make the other existing dollars more valuable). They are denominated in US dollars so they eventually have to find their way back into the US to purchase goods & services here. And it isn't like the people sending the money stole it - other people had to pay them $20 billion and those people received goods & services valued at at least $20 billion. Who gets hurt in that equation? nobody.
Presumably VDH would be even more outraged if those same people who were sending the money to Mexico actually lived in Mexico because then 100% of their paychecks would cross the Rio Grande. But the outcome in that case would be just the same - people on this side of the border would be paying in US dollars for goods and services they value at at least that amount (or the transaction wouldn't happen) and that money would have to come back to the US eventually because it is US dollars.
There are good reasons to have national borders but fear of money, goods, and services crossing them isn't one.