Posted by Joseph Y. Calhoun, III

One of President Obama’s stated economic goals is to double exports in the next five years. Setting aside the question of whether that makes any sense as an economic goal, is it something that is attainable? Menzie Chin says it has happened before and so can be done again depending on a number of variables:

So, if you didn’t know it already, achieving the goal of doubling nominal exports depends upon exchange rate pass through, the extent of exchange rate depreciation, the rate of rest-of-world GDP growth, and the evolution of export supply (of both goods and services).

Mr. Chin doesn’t really address whether the goal is laudable, but he does say in the comments that he doesn’t advocate devaluing the dollar to accomplish the goal.

In his State of the Union address President Obama said this:

Third, we need to export more of our goods.  (Applause.)  Because the more products we make and sell to other countries, the more jobs we support right here in America.  (Applause.)  So tonight, we set a new goal:  We will double our exports over the next five years, an increase that will support two million jobs in America.  (Applause.)  To help meet this goal, we’re launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security.  (Applause.)

I am puzzled by this assertion that selling things to foreigners creates jobs. Doesn’t selling things to Americans create jobs too? Why does it matter where the buyer of a product resides? Is there something magical about goods crossing lines on a map that make them worth more to the company selling them?

Yes, we can probably accomplish the goal set forth by President Obama if we are willing to devalue the dollar, but is that something we should really be trying to do? The economic outcome from devaluing the dollar in the late 70s, late 80s and 00s wasn’t exactly ideal. Why would we want to repeat it? There is nothing special about exports and rising exports do not create any more jobs than rising domestic sales. President Obama needs to stop concentrating on the economy as if the US is in competition with other countries. It is our companies that are competing and economic policy needs to support them, not some mythical entity known as the US economy. So far President Obama has spent most of his time demonizing corporations and finding new and innovative ways to extract taxes from them. How does that make them more competitive? If he wants them to create jobs in the US maybe he should make it more profitable to do business here rather than all the countries with lower corporate tax rates.