The Ex-Im Bank’s Unilateral Disarmament Fallacy

One of the weakest arguments against free trade is the “unilateral disarmament” fallacy–that a country should refuse to liberalize its trade policies until other countries liberalize theirs. If your opponent uses it, you almost automatically win the debate. The Export-Import Bank’s defenders must be getting desperate, because they are now having to resort to the unilateral disarmament fallacy. Here’s a letter to the editor I sent to the Cleveland Plains-Dealer setting the record straight:

Editor, Cleveland Plains-Dealer:

George Landrith’s argument that the U.S. should subsidize certain businesses because other countries subsidize some of their businesses is equivalent to saying the U.S. government should stop ripping off its citizens only when foreign governments stop ripping off their own citizens (“Why keep the Ex-Im Bank? Unilateral economic disarmament is as unsound as unilateral defensive disarmament,” August 10).

The Export-Import Bank’s special favors make U.S. businesses less competitive by rewarding political connections over customer service, and have led to 74 corruption allegations during the last five years. If other countries want such problems, fine. But the U.S. can, and should, do better by closing the Ex-Im Bank this fall, regardless of what other countries do.

Ryan Young
Fellow, Competitive Enterprise Institute
Author of the study, “Ten Reasons to Abolish the Export-Import Bank.”

One response to “The Ex-Im Bank’s Unilateral Disarmament Fallacy

  1. I think the unilateral disarmamanet argument used in this context is uniquely inapt because the subsidy that Foreign governments (who have their own Ex-Ims) are giving their producers is in the form of tax-payer giveaways to American firms. I suspect Foreigh taxpayers don’t like that either, but Foreigh producers tell them: The Americans are doing it. This is a case where if one side stops, the consitutuency for Ex-Im subsidies on the other side will no longer have an excuse to ask its taxpayers to continue subsidies. This would result in bilateral disarmamanet.

    Take this example: Delta complains that US Ex Im subsidies help air France buy cheap Boeings which helps a Delta competior. Boeing says you can’t stop because EU Ex Im helps Delta buy Airbuses which helps Boeing’s competitor. Air France (or at least EU taxpayers) could say EU Ex im is helping their competiror. Airbus would say you can’t stop because US Ex Im is helping Boeing an airbus taxpayer. Here subsidies are basically just cycling around lobbyst-pols possibly not even producers and certainly not tax payers. Break the circuit and the current is most likley to stop, not to surge and fry one end.