Quotation of the Day…

by Don Boudreaux on April 4, 2018

in Competition, Creative destruction, Crony Capitalism, Growth, Innovation, Reality Is Not Optional, Seen and Unseen, The Future, Trade

… is from page 240 of Martin Wolf’s great 2004 book, Why Globalization Works:

As old opportunities migrate, new ones emerge.

DBx: Sincere protectionists – those who oppose free trade, not because they gain materially from offering such support, but because they truly believe free trade to be detrimental for society – either cannot bring themselves to accept the truth of Wolf’s observation, or they fear that the emergence of new opportunities is too slow.  In both cases they are misguided.  One look around at the modern world gives more than sufficient reason to dispense with the fear that Wolf’s observation is mistaken.  As for the sincere-protectionist’s worry that new opportunities do not emerge fast enough, this protectionist does not understand that it is the emergence of new opportunities that destroys, creatively so, the old opportunities.  For example, consumers switch from buggies to automobiles only when actually given the opportunity to purchase automobiles.

Of course, the new opportunities are often ‘distributed’ differently than are the older opportunities that the new ones creatively destroy.  Joe the buggy-whip maker might not be among those who find employment in the new automobile factory.  But this reality about the ‘distribution’ of old and new opportunities holds whether the economic change is caused by international trade or by purely domestic innovation or changes in consumers’ preferences.  To single out any change that can be identified as being caused by trade for special attention and policies makes no more sense, economically or ethically, than to single out any change that can be identified as being caused by, say, people with blue eyes for special attention and policies.

As for insincere protectionists – those who clamor for protective tariffs simply because doing so protects them or their political constituents from having to play by one of the central rules of a market economy (specifically, the rule that producers serve the interests of consumers, rather than the other way ’round) – they are happy to encounter sincere protectionists.  Sincere protectionists provide political cover for insincere protectionists.

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