Protectionism’s Essence

by Don Boudreaux on October 19, 2014

in Trade

Here’s a letter to a college student in New Jersey:

Dear Mr. Sloan:

Thanks for writing.

You ask if my support of free trade is “too simplistic.”  Aren’t there “conditional situations and details” that I overlook when I oppose protectionist arguments?  Fair questions.  My answer, though, is that while I agree that reality is unavoidably more complex than are any human accounts of it, the unconditional case against protectionism is as sound as is, say, the unconditional case against armed robbery.

Suppose your next-door neighbor grows tomatoes and offers to sell some to you.  You reject his offer and instead buy tomatoes from a seller who lives further down the street.  Your next-door neighbor’s prices might be higher than are those charged by the more-distant seller or the quality of his tomatoes not quite to your liking.  Whatever the reasons, you don’t buy tomatoes from your neighbor.

Now suppose that your neighbor responds by pointing a gun at your head to demand that you hand over to him a dollar for every pound of tomatoes that you buy from the seller down the street.  Would you think that your neighbor’s actions are justified?  Of course not.

But what if your neighbor tells you, as he stares at you down the barrel of his gun, that he really needs the extra income that he’ll get if you buy his tomatoes?  Or what if your neighbor insists that the seller down the street is selling tomatoes at prices that are unfairly low?  (“His uncle subsidizes his tomato growing!”)  Or suppose your neighbor asserts that he’s a more reliable supplier of tomatoes for the neighborhood than is the seller down the street?  Would any of these “situations and details” justify your neighbor threatening violence against you if you don’t pay to him a fee whenever you buy tomatoes from someone else?  Of course not - and this conclusion wouldn’t change if your neighbor outsourced to a criminal gang the task of collecting from you the fees your neighbor demands for your patronizing another seller.

Protectionism of the sort practiced by sovereign governments is similarly unconditionally unjustified, for it differs in no relevant ways from the armed robbery described above.

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

….

I could have added to the letter many other conditions, each equally unsuccessful in justifying the next-door neighbor’s threats of violence.  For example, if a majority of the adults in the immediate vicinity of your house vote to permit your next-door neighbor to threaten violence against you for your not buying his tomatoes, such use of force remains utterly unjustified.

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… is from pages 191-192 of Leonard Read‘s 1956 essay “Unearned Riches,” which is chapter XIV in the 1956 collection, edited by Mary Sennholz, On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises (available for free here) (original emphasis):

Our wage earner may think of his plight as hapless when compared to the one who inherited his millions.  True, the millionaire has gained much from the doings of others.  But the wage earner himself owes his life to the doings of others.  It is not that possessing millions and having life are alternative propositions.  That is not the point.  The point is that both flow from the same exchange process and that whatever each has – be it autos, houses, food, clothing, heat, millions, knowledge, or life itself – comes to him unearned in the sense that he alone did not produce all of it.  We trade because we can all get more satisfaction from our labor by that means.  Vast stores are available to those who have anything to trade that others value.  In the free market, each earns all that he receives in willing exchange.  This is fantastically more than one could produce by himself.

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Tom Palmer On Leonard Liggio

by Don Boudreaux on October 18, 2014

in Civil Society, Video

Tom Palmer discusses Leonard Liggio (1933-2014) – a man whose lifelong efforts have noticeably shaped, and will continue to shape for decades to come, the cause of liberalism and peace.

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Quotation of the Day…

by Don Boudreaux on October 18, 2014

in Inequality

… is from page 164 of Ludwig von Mises‘s 1951 essay “Profit and Loss,” as reprinted in the 2008 Liberty Fund edition of Mises’s 1952 collection, Planning for Freedom:

All the arguments advanced in favor of income equalization within a country can with the same justification or lack of justification also be advanced in favor of world equalization.  An American worker has no better title to claim the savings of the American capitalist than has any foreigner.  That a man has earned profits by serving the consumers and has not entirely consumed his funds but ploughed back the greater part of them into industrial equipment does not give anybody a valid title to expropriate this capital for his own benefit.  But if one maintains the opinion to the contrary, there is certainly no reason to ascribe to anybody a better right to expropriate than to anybody else.  There is no reason to assert that only Americans have the right to expropriate other Americans.

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Quotation of the Day…

by Don Boudreaux on October 17, 2014

in Politics, Self-deception

… is from pages 128-129 of Michael Huemer’s vitally important 2013 book, The Problem of Political Authority (link added; footnote excluded; emphases original):

The general precursors for the development of Stockholm Syndrome, then, are reasonably well satisfied in the case of citizens of modern states.  It is therefore not surprising to find that citizens tend to identify with their governments, adopt their governments’ perspectives, and develop emotional attachments (often considered ‘patriotism’) to their governments.  Just as Stockholm victims tend to deny or minimize their captors’ acts of coercion, many citizens tend to deny or minimize their governments’ coercion….  Due to the Stockholm dynamic, power has a self-legitimizing tendency: once it becomes sufficiently entrenched, power is perceived as authority.

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Higher Costs Are Not a Source of Prosperity

by Don Boudreaux on October 16, 2014

in Trade

Here’s a letter to The Economic Times:

The U.S. Treasury is jawboning Beijing to raise the price of the renminbi relative to that of the U.S. dollar (“Chinese currency significantly undervalued: US report,” Oct. 16) …. which is to say that the U.S. government is pleading with Beijing to force Chinese producers to raise the prices they charge for the goods they sell to Americans.

Gee whiz, if ever I had cause to doubt what I learned from my high-school civics teacher about the glories of American democracy, I might start to suspect that Uncle Sam sometimes pursues policies that make ordinary Americans poorer.

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

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Quotation of the Day…

by Don Boudreaux on October 16, 2014

in Civil Society, Seen and Unseen

… is from page 223 of Robert Wright’s wonderful 1994 book, The Moral Animal:

Even urban gang members have people who can trust them.  And even scrupulously polite Victorian men went to war, convinced of the justness of the death they dished out.  Moral development is often a question not just of how strong the conscience will be, but of how long a reach it will have.

This important insight does not imply that each of us should love and care for strangers as much as we love and care for our family members and close friends.  Such sentiments (and even more obviously, actions consistent with those sentiments) are humanly impossible.  What Wright’s insight does suggest is that each of us should be better at recognizing the humanity of all people, regardless of where those people live and of which sovereign rulers issue their passports.  The same civil sentiments that we have for strangers in our own countries are civil sentiments that we ought to have for strangers in other political jurisdictions.

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Judge Andrew Napolitano explains (in my words) that the Patriot Act makes Uncle Sam more like a terrorist.  A slice:

The Patriot Act is the most unconstitutional legislation since the Alien and Sedition Acts of 1798, which proscribed speech critical of the government, yet the FBI loves it. Its premise is that in dangerous times, if we surrender our freedoms to the government, the government will keep us safe until the danger passes. This is a flawed argument. The Declaration of Independence recognizes the continuous possession of personal freedoms (“endowed by their Creator with certain inalienable rights”), and thus they cannot be stolen by a majority vote in Congress, but only surrendered by a personal, intentional, knowing choice. History teaches that government does not return freedoms once stolen or surrendered. Without freedom, who will protect us from the government?

Sheldon Richman and the Future of Freedom Foundation will host, on October 21st, a free webinar on America’s antimilitarist libertarian tradition.

Here’s an opportunity for students to help the great Institute for Justice identify and call out government abuses.

David Henderson on Jean Tirole.

With the help of Milton Friedman and Deirdre McCloskey, James Pethokoukis explains why Barack Obama doesn’t understand what markets are or why they work.

Stewart Dompe and Adam Smith, two GMU Econ PhDs, now teaching at Johnson & Wales University, explain how government interventions on the consumer-credit front are resurrecting long-dead retailing practices from the past – practices that consumers would not endorse but for the fact that government has now stripped them of better options.

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Bonus Quotation of the Day…

by Don Boudreaux on October 15, 2014

in Civil Society, Sports

… is from George Will’s most-recent column in the Washington Post; in this column Will discusses the absurd hoopla stirred by Very Sensitive People over the nickname of the professional football team located in Washington, DC – that nickname being “Redskins”:

The fact that censorship is progressivism’s default position regarding so many things is evidence of progressives’ pessimism about the ability of their agenda to advance under a regime of robust discussion. It also indicates the delight progressives derive from bossing people around and imposing a particular sensibility, in the name of diversity, of course.

Despite my having lived in the DC area for most of my adult life, I emphatically am no fan of any DC-area sports team.  (I have an instinctive dislike of anything that most Washingtonians like.) But if there is one development that could possibly cause me to cheer for the Redskins it’s the grandstanding, self-righteous, ridiculous objections to the name “Redskins.”  People pull for teams that they identify with – teams that make people feel proud to be allied with.  The name “Redskins” is certainly not slanderous and demeaning in the minds of the (I’m guessing) three or four million people who are self-proclaimed fans of the Washington Redskins: these people, at least, regard the name as a source of pride.  So these fans – and the team’s owners – surely do not intend to insult native Americans.

Although I struggle (without success) to lose all interest in spectator sports, I remain a huge fan of a professional football team named the “New Orleans Saints.”  Yet in being such a fan I do not regard myself as pulling for a team that slanders or demeans people who are unusually good and tender-hearted, or one that promotes prejudice against (or even simply encourages ‘insensitivity’ towards) souls who have been canonized by the church of Rome.  And if I should awaken one fine morning to discover all of my sins forgiven and whatever less-than-wholesome human appetites I have forever sated – with myself to be led nevermore into temptation – I would still take no offense at the name of the professional football franchise headquartered in the city of my birth.  Indeed, I suspect that I would be deeply honored by that nickname.

I could write pages on why I believe it absurd to give credence to the complaints by some over the name “Redskins.”  But I’m too busy to participate further in this pow-wow.

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Two Passings

by Don Boudreaux on October 15, 2014

in Civil Society, Education

On Monday, my first economics teacher – Michelle Bailliet (or as she was known in 1977, Michelle Francois) – died.  And yesterday, Leonard Liggio passed away.

My life would today be very different, and in a bad way, were it not for the influence and generosity of these two people.

I took Michelle’s ECON 252 class (Principles of Microeconomics) at Nicholls State University during the second (Spring 1977) semester of my freshman year.  I took it only because it met on Mondays and Wednesdays.  I was working at Avondale Shipyards near New Orleans on Tuesdays and Thursdays, and so this class fit my schedule.  When I signed up for it I had no earthly idea what economics is, and I didn’t care.  My plan was to quit college at the end of that semester and start working at the shipyard full time.

I stayed in school because of Michelle’s class.  She was a great teacher.  On January 17, 1977, Michelle explained, clearly and cogently, that government-imposed price ceilings cause shortages.  Eureka!  I finally had a sensible explanation for why I’d waited so many times in long lines to buy gasoline – a product that was frequently in short supply during the disco decade.  Encountering Michelle’s expert explanation was the closest thing I’ve ever had, or ever will have, to a born-again moment.  I fell in love with economics immediately and completely; it’s a love affair that still burns bright.

Had Michelle taught that class with lots of equations, I’d likely today be an unemployed welder or pipe fitter.  I’ve often joked that Michelle saved my life.  That’s something of an overstatement, of course, but it’s only because of her great skills as a classroom instructor, and her generosity with her time outside of class, that I am an economist – a profession that I cherish.

Michelle – or Dr. Francois, as I called her back then – graciously tolerated my constant presence in her office to discuss this amazing subject called “economics.”  (She eventually introduced me to another Nicholls State faculty member, Bill Field, who remains to this day my greatest mentor.)  Michelle is also the person who introduced me to the works of Frederic Bastiat.

….

Leonard Liggio touched the lives of so many modern classical liberals.  I first met him when I was a summer fellow for the Institute for Humane Studies in 1984.  IHS was then still in Menlo Park, CA.  (I first met the other great IHS leader, Walter Grinder, earlier that summer at an Austrian Economics seminar in Milwaukee.)  Remembrances of Leonard are starting to come on line.  They will be many; they will be heartfelt.  I will link to some of them here at the Cafe.  I content myself now to say that his positive influence on the modern liberty movement, not just in the U.S. but around the world, is so huge that it is impossible to imagine what that movement would be like had Leonard never existed – save to say that it would be smaller, less significant, and much more weakly grounded intellectually.

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