Should the US Enact Bad Policy Because “Other Countries Are Doing It?”


In his latest piece for the Washington Examiner, columnist Tim Carney debunked the fallacies of the “we should do it because everyone else is doing it” argument, when it comes to the Export-Import bank.

He writes:

The argument that convinces most people to support the Export-Import Bank is the everybody else is doing it argument. This argument is based on faulty reasoning, misrepresentation of the facts, bad economics, and an odd (though slightly veiled) appeal to fairness.

… China subsidizes its exports far more than the U.S. does. This probably helps the subsidized Chinese exporters, but it hurts China’s economy as a whole. Research by Fabrice Defever and Alejandro Riaño, presented at the Royal Economic Society’s 2013 annual conference claims that if China removed its export subsidies China’s national income would rise by 3 percent.

Economist Frédéric Bastiat once wrote: “it makes no more sense to be protectionist because other countries have tariffs than it would to block up our harbors because other countries have rocky coasts.” Similarly, it does not make sense to subsidize exports just because other countries do.

The Export-Import bank is an outdated system of corporate welfare that hurts small businesses. The program’s entire existence is a hat tip to the big businesses that pay big money to get politicians elected in the first place.

Here are the main points Carney makes in his piece, which is definitely worth the read (condensed into bullet points):

– Other countries hurt themselves with export subsidies
– Ex-Im actually partners with (and subsidizes) foreign export subsidizers
– U.S. Ex-Im primarily subsidizes China’s government
– Our Ex-Im inspires other countries to subsidize their exports
– Ex-Im’s recipients also lobby foreign governments to expand their export subsidies
– Foreign Ex-Ims (and their customers) are hoping Congress reauthorizes Ex-Im

Learn more about these points and read the full version of the article at the Washington Examiner here.