Quotation of the Day…

by Don Boudreaux on November 24, 2017

in Myths and Fallacies, Seen and Unseen, Trade

… is from page 16 of Doug Irwin’s new (2017) volume, Clashing Over Commerce:

For most of US history, however, there has not been a single, unified “capital” or “labor” interest regarding trade policy, because there are many different types of capital and labor that are affected by trade in different ways.  Capital owners and workers employed in industries that compete against imports (iron and steel, textiles and apparel) typically have a much different view of trade policy than the capital owners and workers employed in industries that export (agriculture, machinery, or aerospace).

DBx: This reality, which should be obvious, is often missed.  Despite the deeply held dogma of many people, “capital” (or “business” or “corporations”) is not one large and unified, or homogeneous, interest group.  Nor does the interest of “capital” necessarily conflict with the interests of “labor.”

More directly to Doug’s point, to recognize the reality highlighted in this quotation is to immunize oneself against the error, committed by the typical protectionist, of defending trade restrictions on the grounds that such restrictions “save jobs” and “protect domestic producers.”  Trade restrictions save only some particular domestic jobs and businesses while they destroy others.  The typical protectionist, therefore, has no business patting himself on his back for his alleged ‘enlightened’ concern for domestic workers and business owners.  At best, the typical protectionist has more concern for certain workers in the domestic economy (namely, those whose jobs are more visibly affected by international trade) and less concern for other workers in the domestic economy (namely, those whose jobs are either less affected by international trade or less visibly affected by such trade).

It is beyond my comprehension why anyone deserves applause for championing worker Jones over worker Smith for no reason other than that worker Jones happens today to be employed by a firm that is more subject to international competition than is the firm at which worker Smith today is employed.  My incomprehension springs both from the fact that I see no reason to regard the interests of worker Jones to be superior to those of worker Smith, and from the reality that using the state to artificially protect worker Jones from competition is thereby to use the state to artificially impose undue hardships on Smith, both as a worker and as a consumer.  The protectionist gets away with defending such an ethically dubious distinction only by ignoring worker Smith.


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