The Case for Protectionism Simply Cannot be Saved From Its Own Illogic

by Don Boudreaux on May 13, 2017

in Myths and Fallacies, Seen and Unseen, Trade

Here’s a letter to a now-former Cafe Hayek reader who is “sick and tired” of my “failure to support our President”:

Mr. Dave Foote

Mr. Foote:

Thanks for your e-mail.

Staunchly supporting Pres. Trump’s “Buy American, Hire American” program, you “reject [my] contention that production’s only purpose is to satisfy consumers.”  You believe that “production is … an end in itself.”

I disagree.  And evidence that I am correct and that you are mistaken is available from a simple mental experiment.  In a restaurant, you order a plate of scrambled eggs.  You are served instead, and charged a higher price for, beef wellington.  When you object, the waiter informs you that beef wellington requires more labor to produce, and that the chef gets greater satisfaction from producing beef wellington than from scrambling eggs.  The waiter concludes by declaring that ‘You are morally obliged to pay to support the chef’s production preferences.’

Do you agree with the waiter?  Are you obliged to pay for beef wellington while forgoing scrambled eggs?  If you answer ‘no,’ then you get my point.

But even if I’m mistaken – that is, even if production is indeed “an end in itself” – the case for protectionism remains rickety.  The reason is that protectionist policies protect only a subset of existing producers in the domestic economy.  These policies harm other existing producers (such as those who produce for export markets).  These policies harm also future producers – that is, those producers who would arise tomorrow but for the protectionism that keeps resources today artificially locked in protected firms.

So even if I grant, for sake of argument, your claim that production is an end itself, that claim does not justify protectionism, for protectionism artificially buoys the business of some producers only by artificially destroying that of other producers.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

And in the above letter I don’t mention the foreign producers who are harmed by protectionist policies imposed on domestic consumers.

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