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Someone who believes that tariffs and other trade restrictions make people as a whole more prosperous is someone who mistakes symptoms of more-intense scarcity for evidence of greater wealth. Such a person mistakes the higher incomes earned by those who successfully deal with more-intense scarcity – and mistakes also the greater number of jobs for such people – as being greater wealth for society. Such a person mistakes, for example, the rise in wages paid to steel workers following the imposition of a tariff on domestic buyers of foreign steel as greater wealth to society writ large; this person doesn’t recognize that this rise in steel-worker wages is a symptom of an artificially induced greater scarcity of steel in the domestic market.
Suppose that terrorists one day, in a coordinated attack, cause all municipal water systems throughout Canada and the United States to become even worse than the Flint, Michigan, water system. These terrorists, using a combination of toxic chemicals and atomic devices, cause all tap water from Goose Bay to Honolulu and from Point Barrow to Key West to become utterly unfit for human consumption and use. Making tap water fit for human consumption and use would become a high priority: the incomes of (and jobs for) people who supply bottled spring water would rise, as would the incomes of (and jobs for) people who can successfully work to eventually correct the problems afflicting municipal water systems throughout Canada and the U.S.
These water-poisoning terrorists can be said to create jobs and higher incomes for legions of workers who are set to the task of reversing, and otherwise to helping their fellow human beings deal with, the artificial, unnecessary, lamentable terrorist-created scarcity of potable water. Yet surely no one older than the age of three would mistake the greater number of these ‘water’ jobs, and the higher wages paid to these water workers, as being evidence that making potable water artificially scarcer makes Americans and Canadians as a whole richer.
Yet plenty of people well past the age of three – many of whom seek and win political office, and many others of whom pose as informed pundits for news and commentary outlets – insist that higher tariffs on steel or sugar or cars or shoes or furniture or textiles or you-name-the-good-or-service make people as a group richer. Donald Trump, Bernie Sanders, Lindsey Graham, Sherrod Brown, Peter Morici, Harold Meyerson, Pat Buchanan, Ian Fletcher, and other politicians and pundits too numerous to count understand correctly that tariffs increase the incomes of, and jobs for, domestic citizens who deal with the consequences of the more-intense scarcity artificially created by ‘protectionist’ government policies. Yet these people and their fans do not understand that the resulting higher incomes in protected industries, and the resulting greater number of jobs in those industries, are symptoms, not of greater national wealth, but rather of greater want – of reduced prosperity – of scarcity made worse and more biting by government policies.
If we would – as we should – condemn and punish terrorists who create jobs and higher incomes by poisoning municipal water supplies, why do we not do the same to politicians who terrorize us with tariffs and other import restrictions? And why do we not scorn and ridicule – or at least ignore for the ignoramuses the they are – the pundits, preachers, and professors who encourage the economic terrorism that is protectionism?
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The above hypothetical, of course, is simply another version of Bastiat [2]‘s broken-window account in “What Is Seen and What Is Not Seen [3].”