When asked to pick my most frustrating issue, I could list things from my policy field such as class warfare or income redistribution.
But based on all the speeches and media interviews I do, which periodically venture into other areas, I suspect protectionism vs. free trade is the biggest challenge.
So I want to ask the protectionists (though anybody is free to provide feedback) how they would answer these simple questions.
1. Do you think politicians and bureaucrats should be able to tell you what you’re allowed to buy?
As Walter Williams has explained, this is a simple matter of freedom and liberty. If you want to give the political elite the authority to tell you whether you can buy foreign-produced goods, you have opened the door to endless mischief.
2. If trade barriers between nations are good, then shouldn’t we have trade barriers between states? Or cities?
This is a very straightforward challenge. If protectionism is good, then it shouldn’t be limited to national borders.
3. Why is it bad that foreigners use the dollars they obtain to invest in the American economy instead of buying products?
Little green pieces of paper have little value to foreign companies. They only accept those dollars in exchange for products because they intend to use them, either to buy American products or to invest in the U.S. economy. Indeed, a “capital surplus” is the flip side of a “trade deficit.” This generally is a positive sign for the American economy (though I freely admit this argument is weakened if foreigners use dollars to “invest” in federal government debt).
4. Do you think protectionism would be necessary if America did pro-growth reforms such as a lower corporate tax rate, less wasteful spending, and reduced red tape?
There are thousands of hard-working Americans that have lost jobs because of foreign competition. At some level, this is natural in a dynamic economy, much as candle makers lost jobs when the light bulb was invented. But oftentimes American producers can’t meet the challenge of foreign competition because of bad policy from Washington. When I think of ordinary Americans that have lost jobs, I direct my anger at the politicians in DC, not a foreign company or foreign workers.
5. Do you think protectionism would help, in the long run, if we don’t implement pro-growth reforms?
If we travel down the path of protectionism, politicians will use that as an excuse not to implement pro-growth reforms. This condemns America to a toxic combination of two bad policies – big government and trade distortions. This will destroy far more jobs and opportunity that foreign competition.
6. Do you recognize that, by creating the ability to offer special favors to selected industries, protectionism creates enormous opportunities for corruption?
Most protectionism in America is the result of organized interest groups and powerful unions trying to prop up inefficient practices. And they only achieve their goals by getting in bed with the Washington crowd in a process that is good for the corrupt nexus of interest groups-lobbyists-politicians-bureaucrats.
7. If you don’t like taxes, why would you like taxes on imports?
A tariff is nothing but a tax that politicians impose on selected products. This presumably makes protectionism inconsistent with the principles of low taxes and limited government.
8. Can you point to nations that have prospered with protectionism, particularly when compared to similar nations with free trade?
Some people will be tempted to say that the United States was a successful economy in the 1800s when tariffs financed a significant share of the federal government. That’s largely true, but the nation’s rising prosperity surely was due to the fact that we had no income tax, a tiny federal government, and very little regulation. And I can’t resist pointing out that the 1930 Smoot-Hawley tariff didn’t exactly lead to good results.
We also had internal free trade, as explained in this excellent short video on the benefits of free trade, narrated by Don Boudreaux of George Mason University and produced by the Institute for Humane Studies.
My closing argument is that people who generally favor economic freedom should ask themselves whether it’s legitimate or logical to make an exception in the case of foreign trade.
[...] Dan “Bulldog” Mitchell has a few questions for protectionists. [...]
Fantastic post as usual.
[...] Cato’s Daniel Mitchell has eight questions to ask the supports of protectionist trade policies. [...]
My only argument is: When a nation no longer produces the goods that it consumes, it is longer a country; It is a colony. A colony and its citizens are subject to the wishes and desires of the ‘mother’ country on all matters of domestic and economic issues. Most major industries of a colony are owned by subjects in the mother country and are controlled for the benefit of their citizens – not for the benefit of the colony. The ‘mother’ country tells the colony what products they shall buy at what what quality and at what cost. The ‘mother country controls the political process of the colony by economic withdrawal of goods and industries.
“Que Bono?” Easy. . .The ‘mother’ country – NOT the colonists! We are given cheap goods, both in quality and cost at the expense of the ability to pay for them. When you take away our citizens jobs in the name globalism, you also take away the paycheck that feeds our families. Economics is not a natural science and is not subject to the laws of nature. It involves political decisions, both by individuals as well as countries. To assume otherwise requires a fair amount of denial and a love of World and NOT country.
Protectionism exacerbates the inability to bid for external resources.
Larry Shepherd,
“When a nation no longer produces the goods that it consumes, it is longer a country; It is a colony.”
That’s like saying: a person who doesn’t produce the products he consumes isn’t free; he’s a slave. So do you produce most of the products you consume or do you trade for them? I can safely say that I don’t own anything that I produced, from my clothes and food to my house and car. I am a free man.
Regards,
Ken
Ken,
The key word I used was “Nation”, not ‘individual’. A nation is made up of individuals which collectively are referred to as citizens of a ‘country’. My reference that you quoted is gleaned from historical examples. One only has to look at the foundation of this nation to see the result of colonial rule by economic and political authority by an foreign power to see what happens when the ‘individuals’ decide what is best for themselves and their families.
The only way that ‘absolute’ free trade can work is when the world is placed under one monetary exchange unit and one government. I, for one, live in the United States and do not consider myself a ‘citizen’ of the world.
America and Americans first!
Question for protectionists: Why do you want to violate the rights and limit the economic opportunities of the poorest and most vulnerable members of humanity?
Larry Shepherd,
Let’s use the good old economic modeling assumption of a world with just two countries producing only two goods. And let’s assume that each country has no use for its own good, but it is highly desired in the other country, so they happily trade with each other.
Country X then buys all of its goods from Country Y, and Country Y buys all of its goods from Country X. Which one is the colony, or are they colonies of each other?
That’s pretty much the case of what really is happening. The U.S. imports lots of stuff to other countries (until the recession, our manufacturing production and exports were both at record highs) even as we import lots more stuff from other countries. Also, we export more services to other countries than they export to us. So who has colonized who?
And although you characterize country X (actually, it’s usually it’s firms, not the country itself) owning businesses in country Y as colonization, it’s actually a situation where country Y benefits and country X is taking a big risk. Country Y is getting investment that creates jobs and economic growth, and if it wants it can just confiscate country X’s investment (case study: Hugo Chavez).
Has Michigan colonized Vermont, because it produces the cars Vermont needs? Has California colonized Utah because it produces nearly all the films Utahans watch?
I like Boudreaux’s recognition that the Interstate Commerce Clause of the U.S. Constitution created a free trade zone among the states, whereas previously under the Articles of Confederation they had engaged in mutual trade restrictions of various sorts. This is a point I emphasize in my American Government and Political Economy classes, but not one I hear made very often.
Just my $0.02 > trade deficits are merely a political/media scare tactic aimed @ people to essentially scare them about their job. If an individual ends up unemployed b/c his employer declared bankruptcy he is just as unemployed as someone whose job skills were made obsolete by technology.
Foreign nations cannot use dollars within their own borders (generally; I know there are numerous exceptions). If consumers in other nations dramatically increased their purchases of US-manufactured goods and US-provided services, and it even resulted in a trade surplus, I am certain the credibility-free media would spin that into a scare-tactic…
Additionally there are security concerns regarding the sale of militarily useful products, but I don’t see how that would translate into a major concern for the vast majority of the public (in all countries).
At the end of the day, people will be concerned about their own circumstances; not entirely about the origin of the physical goods in their possession.
[...] Eight Questions for Protectionists including the host of The Daily Show. [...]
[...] Elizabeth Warren’s Non Sequitur Eight Questions for Protectionists Social Security is a Mandatory Ponzi Scheme Regime uncertainty Why Congress should not extend [...]
[...] a nation with protectionist trade policy, entrepreneurs are denied the ability to buy and sell in ways that enable the most productive use [...]
[...] a nation with protectionist trade policy, entrepreneurs are denied the ability to buy and sell in ways that enable the most productive use [...]
[...] a nation with protectionist trade policy, entrepreneurs are denied the ability to buy and sell in ways that enable the most productive use [...]
[...] Learn Liberty series. I’ve already highlighted the one on free trade vs. protectionism, and I include eight challenging questions for those who think it is a good idea to give politicians and bureaucrats power to interfere with [...]
[...] boilerplate support for more free trade is fine, but I think all the big benefits of ending protectionism inside Europe already have been captured (and this is the one area where the European project has [...]
[...] The Learn Liberty videos are superb. Here’s one on protectionism and here’s another about how excessive federal spending is America’s real fiscal [...]
One constant and one variable…
1. DEMAND FOR LABOR – the constant
Ever since organized Agriculture formalised it around eight millennia ago, the demand for labor has been an individual’s sole means of earning a livelihood
in all law-abiding societies. No demand for your labor? You still face the same
ancient choices – a life of destitution or criminality…
2. COSTS OF LIVING – a variable
a/ Western weekly COSTS OF LIVING? $800 per average working family
b/ Asian weekly COSTS OF LIVING? $80 per average working family
c/ African weekly COSTS OF LIVING? $8 per average working family
That, ladies and gentlemen, is all you need to remember when adressing the
pros and cons of free trade – relegate the rest to a “big flush” button.
Now, given that IDEAS are universal – only the cost of delivering them varies in accordance with the LOCAL COSTS OF LIVING, I’m looking for a volunteer -
Who will be the first to declare; “Fellow Americans, at $40 an hour my support of free trade is far too expensive – I’ve just given the demand for my academic labor away to an Asian economics professor who shall deliver the same ideas to you via video-link from Bangalore for $4 per hour… Aren’t I a brilliant free trader?”
Any takers?
Mark Gendala on Kindle
[...] the trade score also dropped significantly over the same period, from 8.78 to 7.65. So the protectionists should be happy, even though the rest of us have less [...]
[...] Very few people are willing to admit that they favor protectionism. After all, who wants to embrace a policy associated with the Great Depression? [...]
[...] Very few people are willing to admit that they favor protectionism. After all, who wants to embrace a policy associated with the Great Depression? [...]
[...] Very few people are willing to admit that they favor protectionism. After all, who wants to embrace a policy associated with the Great Depression? [...]
[...] Very few people are willing to admit that they favor protectionism. After all, who wants to embrace a policy associated with the Great Depression ? [...]
[...] despise protectionism. Mostly because it is bad economic policy, but also because politicians often use protectionism as a way of diverting attention from their [...]
[...] the trade score also dropped significantly over the same period, from 8.78 to 7.65. So the protectionists should be happy, even though the rest of us have less [...]
[...] I highly recommend the Learn Liberty videos. Here’s one on protectionism, one on the legality of Obamacare, and here’s another about how excessive federal spending is [...]
[...] better, free trade or [...]
[...] I highly recommend the Learn Liberty videos. Here’s one on protectionism, one on the legality of Obamacare, and here’s another about how excessive federal spending is [...]
[...] the trade score also dropped significantly over the same period, from 8.78 to 7.65. So the protectionists should be happy, even though the rest of us have less [...]