FROM IAN FLETCHER’S book, Free Trade Doesn’t Work: What Should Replace it and Why:

The idea that America’s economic tradition has been economic liberty, laissez faire, and wide-open cowboy capitalism – which would naturally include free trade – resonates well with our national mythology. It fits the image of this country held by both the Right (which celebrates this tradition) and the Left (which bemoans it). It is believed both here and abroad. But when it comes to trade at least, it is simply not real history. The reality is that all four presidents on Mount Rushmore were protectionists. (Even Jefferson came around after the War of 1812.) Protectionism is, in fact, the real American Way. (p. 131)

                                                                — Comments —

Kristor writes:

The problem with protectionism, of course, is that only the government can engage in it. And this means inevitably that it will be corrupted. It will not, then, serve the interests of the common welfare, but only the interests of those who are able to control the reins of the state. The most telling argument for free trade is that if the state is not involved in trade, that will reduce its power to muck up trade , the way it mucks up everything it touches. 

If the state were not deeply involved in regulating businesses in all sorts of ways – wages, labor policy, price regulation, product regulation, taxes, fees, on and on – then American businesses would be more competitive, and there would be far less money to be made by outsourcing to other nations. It costs money to put part of your operations in China. You’d avoid it if you could. Slap a bunch of punitive tariffs on top of the current swamp of costly state interventions in private enterprise, and all you have done is prevent your businessmen from avoiding your punitive hand with any part of their businesses. Tariffs are to businesses the financial equivalent of the Berlin Wall. Tariffs prop up the liberal, interventionist, gnostic state. We must tear it down, and replace it with the free decisions of morally upright men and women. Do that, and only a fool would decide to hire anyone but Americans.

Laura writes:

That is the counter-argument in a nutshell.

Truthfully, this is an issue I am trying to understand as someone who is a non-economist. Protectionism can be very harmful. There is no question about that. But I don’t understand how, in a world in which other powerful nations, such as Japan and China, engage in protectionism, the United States can afford not to.

Couldn’t Kristor’s argument justify non-intervention in immigration? Let the market decide how many workers and what type of workers it can handle. Closed borders also have negative short-term consequences for business.

Natassia writes:

Theoretically, open borders might work if we didn’t have a welfare state.

Laura writes:

We would quickly become an Asian nation.

Roger G.writes:

You write, I don’t understand how, in a world in which other powerful nations, such as Japan and China, engage in protectionism, the United States can afford not to.”

The way it works is, if Japan and Red China engage in protectionism against us, it hurts both them and us economically. If we retaliate, we don’t help ourselves; we hurt ourselves and them economically. Every bit of protectionism, practiced by no matter whom, hurts both sides.

No point in trying to reinvent the wheel. Go read the works of the great minds – e.g., Smith, Bastiat, von Mises, Hayek. They have already figured out that protectionism doesn’t work.

Roger G. adds:

Laura wrote, “Couldn’t Kristor’s argument justify non-intervention in immigration? Let the market decide how many workers and what type of workers it can handle. Closed borders also have negative short-term consequences for business.”

Aha! You’re conflating economics and cultural issues, which should be considered separately. If we didn’t have a welfare state for them to leach onto, then, purely as a matter of economics, workers should be allowed to migrate in. The freer that labor and capital are to move back and forth across borders, in response to supply and demand, the better the economic result. But regardless of the economic benefit they provide, unassimilable immigrants create the societal problems that we have so extensively discussed. It was never my point that matters of economics should be our only concern. But with matters of economics, it is only freedom that works.

So even though we hurt ourselves economically by keeping out unassimilable workers, we should do so to protect ourselves culturally. We should indeed be protectionist as to people. But if we are protectionist as to capital, goods, and services, we still hurt ourselves economically without the cultural benefit.

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