Yesterday, during his visit to India, President Obama delivered a speech that does a very nice job of limning what he gets wrong about trade. The gist of his speech: Our two countries are great trade partners because we get to export to India and India gets to invest in America. In other words, what’s great about trade is that it allows us to export more.

Here’s an example he gave:

And our growing trade is a win for India, because increased U.S. exports and investment here mean more American-made planes flying passengers on India’s airlines all over the world, more American-made turbines generating the energy India needs to continue with its growth, more American-made machinery upgrading India’s infrastructure. And because we’ve made it easier for foreign companies to sell and invest in America, India’s exports to the United States are also increasing — and that means more jobs and opportunities here in India. In the end, that’s the purpose of trade and investment — to deliver a better life for our people. And both Indian and American workers are and can benefit even more in the future from close ties between our two countries.

This is no different than the pitch for a trade that he made during the State of the Union address and his request for authority to negotiate more trade agreements.

Obviously there’s nothing wrong with exports. But exports aren’t the only thing that makes trade awesome, nor do they have most of the powers that politicians attribute to them. Imports are just as important, if not more important, if you care you care about lifting the middle class’s standard of living. I explained this point over at the Daily Beast. A tidbit:

The more imports, the better, as it leads to greater consumer choices and varieties at lower prices.
As George Mason University economist Donald Boudreaux points out (PDF), “Prices are held down by more than two percent for every one-percent share in the market by imports from low-income countries like China.” Fearing cheaper imports from China, as the president does, is not a part of any middle class platform grounded in good economics. We should welcome lower prices!
Consumers aren’t the only beneficiaries of expanded trade. U.S. manufactures within our borders benefit from lower input good prices. At least half of U.S. imports are not consumer goods; they are inputs for US-based producers, according to Boudreaux.
Freeing trade reduces imported-input costs, thus reducing businesses’ production costs and promoting employment possibilities and economic growth. We should welcome U.S. business and employment growth!

But there’s more: Opening trade barriers improves efficiency and innovation, drives the kind of competitiveness that fuels long-term growth, and brings us higher quality goods and services at lower prices.

The wrong-headed worship of exports and fear of imports leads to a number of misguided trade policies, like the commitment to promote well-connected exporters, such as the American plane and turbine manufacturers the president mentions in the quote above.

More from the president’s speech in India:

Today, I’m proud to announce additional steps — a series of U.S. initiatives that will generate more than $4 billion in trade and investment with India and support thousands of jobs in both of our countries. Specifically, over the next two years, our Export-Import Bank will commit up to $1 billion in financing to support “Made-in-America” exports to India. (Applause.) And OPIC will support lending to small and medium businesses across India that we anticipate will ultimately result in more than $1 billion in loans in underserved rural and urban markets. And our U.S. Trade and Development Agency will aim to leverage nearly $2 billion in investments in renewable energy in India. (Applause.)

These institutions — the Ex-Im Bank, OPIC, and the U.S. Trade Development agency — are fundamentally rooted in a profoundly misguided understanding of trade, and they carry real costs. For a quick reminder of why export schemes aren’t win-win, check out my Mercatus colleague Matthew Mitchell’s short and wonderfully clear video.

I concluded at the Daily Beast:

The president should take a page out of Bill Clinton’s book and embrace free trade for all that it is. When you free markets, you free people to buy whatever goods and services he or she wishes irrespective of geographical location. And that is a freedom that ultimately benefits everyone.

The whole thing is here.