Monday, September 28, 2009

Quote - Henry Hazlitt

Yet among the arguments put forward in favor of huge foreign lending one fallacy is always sure to occupy a prominent place. It runs like this. Even if half (or all) the loans we make to foreign countries turn sour and are not repaid, this nation will still be better off for having made them, because they will give an enormous impetus to our exports.
It should be immediately obvious that if the loans we make to foreign countries to enable them to buy our goods are not repaid, then we are giving the goods away. A nation cannot grow rich by giving goods away. It can only make itself poorer.
90 pages into Hazlitt's Economics In One Lesson and I'm finding gems all over the place I wish our politicians would read. This would be a good one for China to consider as it ponders whether or not to lend the United States any more cash.

6 comments:

Christopher said...

Unfortuantely for Hazdumb, the interplay of trade is social. If one part of the system can't spend, the other part suffers. It is not as simple as "make profit".

Josh said...

I think the part the ends up giving away goods for nothing (money borrowed and never repaid) suffers too.

Unfortunately, you completely missed the point.

Christopher said...

Didn't miss the point. Pointed out that it is not so simple.

Josh said...

well, you stated it is not simple, but unfortunately you didn't explain why it is not simple in any coherent or logical matter.

The ability to spend comes from the ability to produce. If one country can't produce, then they're not going to be able to spend. Giving them money to buy our products only means that we're giving our products away, which serves no gain to our economy. It actually serves as a net negative to our economy, as we're giving away goods.

Christopher said...

"well, you stated it is not simple, but unfortunately you didn't explain why it is not simple in any coherent or logical matter."

I don't need to. You already know it is so.

"The ability to spend comes from the ability to produce. If one country can't produce, then they're not going to be able to spend. Giving them money to buy our products only means that we're giving our products away, which serves no gain to our economy. It actually serves as a net negative to"

Yadda yadda yadda.. free trade..

Josh said...

"I don't need to. You already know it is so. "

Yadda, yadda, yadda, I'm Chris and I like to make points I feel are obvious without providing any logical deduction as to why those points are valid, yadda, yadda, yadda