Friday, January 27, 2017

Why free trade is good and hence the irrationality of protectionism

This new post by Mark Perry – a post titled “2009 tire tariffs cost US consumers $926K per job saved and led to the loss of 3 retail jobs per factory job saved” – is excellent.  Here’s Mark’s closing paragraph:

To paraphrase Thomas Sowell: The first lesson of international economics is that free trade makes us better off and protectionism makes us worse off. The first lesson of politics when it comes to trade issues is to ignore the first lesson of international economics. And that pretty much sums up what we’re getting from the “first authentic protectionist to win the White House since the 1920s” — 0% economics and 100% politics.

Fans of Trump’s protectionism (and, let me not be partisan, also fans of Bernie Sanders’s protectionism, for it is practically identical to Trump’s) should read Mark’s post carefully and ponder it again and again until they see that restricting the flow of goods and services into a country can only make the bulk of the people of that country poorer and not richer.

That such a truth is disputed has always baffled me.  No man thinks that his family would be made richer if thugs surrounded his home and drove away some of the goods and services that he ordered for delivery to his family’s residence.  No woman thinks that her household would be made richer if weapons-wielding goons forced her, her husband, and her children to pay a fine each time they bought a good or service from someone outside of the household rather than she and her family produce that good or service themselves.

But call the economic unit “country” or “nation,” and this commonsensical and correct understanding disappears.  People are, it seems, made illogical – their minds turned into mush, their rational faculties thrown into reverse gear – simply by the words “country” or “nation” or “USA.”  Use these words or their variants, and “less” comes, for too many people, to mean “more” while “more” comes to mean “less.”  “Abundance” suggests inevitable poverty, while “dearth” suggests inevitable wealth.  And those who forcibly prevent peaceful individuals each from taking advantage of the best deals that he or she can find are no longer understood to be the criminals that they are, but, instead to be saviors whose depriving actions will, somehow, make us all less deprived.

(Thanks to Cafe Hayek for the pointer to this post)

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