A Simple Argument Against Ex-Im
By Pierre Lemieux
Ex-Im’s mandate in financing American exports has been reconducted by Congress with the blessing of President Donald Trump, who first appeared to be against but changed his mind because, apparently, exports are important and cannot be left to the market. The law’s instigators won by “tucking it into a large must-pass spending package,” to use the terms of the Wall Street Journal, making sure that it would not be debated by the glorious representatives of the people. Here is a simple case against Ex-Im.
If Ex-Im increases American exports and if that is good, why not boost the agency’s subsidies enough for exports to increase until the whole American GDP is exported? (Whatever Americans needed for subsistence or more would be imported.) If the answer to this question is that subsidizing exports is only good up to a certain point, the question becomes: How are politicians and government bureaucrats as central planners capable of determining that nirvana threshold, as opposed to just laissez-faire the interplay of the decentralized actions of producers and consumers? Can Nancy Pelosi or Mitch McConnell find the nirvana threshold?
The real-world answer comes from what economists call the logic of collective action. Concentrated special interests, represented by the cronies who get the subsidies, win the political competition against the diffuse interests of taxpayers and consumers. Some call that “the swamp.” The government will subsidize cronies’ exports as much as the market will bear, that is, as long as taxpayers will not revolt and the mechanics of politics and bureaucracy will permit.
The opposite approach lies in the Marquis d’Argenson’s interjection: “Laissez faire, morbleu! Laissez faire!” (“Morbleu” is a French swear word, derived from “death of God.”)