January 03, 2011
In reporting on a WikiLeaks cables showing U.S. State Department officials acting as sales agents for Boeing, the New York Times decided to tell readers that the real motivation was high-paying jobs for American workers. This leak might be seen as rather embarrassing since most small businesses cannot count on top State Department officials spending their time pushing their product. These businesses have to pay for their own marketing.
However, the NYT threw in the comment:
“It is not surprising that the United States helps American companies doing business abroad, given that each sale is worth thousands of jobs.”
Of course most immediately each sale means tens of millions of additional profit for Boeing. The NYT presents no basis whatsoever for its assertion that the concern for American jobs was a larger motivational factor for the State Department sales pitches than the concern for Boeing’s profits.
It is also worth noting that in the standard trade models that economists use to argue the merits of lower trade barriers, each sale is not worth “thousands of jobs.” The standard trade models assume a fully employed economy. In these models, at best an additional sale could mean that a small number of workers are employed at modestly more productive jobs, leading to small gains in wages and efficiency. If administration officials actually believed that each sale of a Boeing jet abroad means thousands of jobs then they do not accept the standard economic arguments that are used to push for trade agreements.
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