Here’s a letter to The Economist:
“R.A.,” a correspondent at your blog “Free Exchange,” discusses the tariff aimed at protecting 200 ironing-board-making jobs in the US (“Ironing trade out ,” June 23). In doing so, R.A. mentions Matt Yglesias’s (correct) understanding that any of these workers who lose their jobs today making ironing boards would have more difficulty than in non-recessionary times finding other employment.
From this fact, R.A. reasons as follows: “I understand why market purists think that countercyclical policy (and particularly things like government bail-outs) generate all sorts of economic distortions and weaken the market system. But it’s important to recognise that a liberal economic system survives only so long as the public is willing to support it. Long, drawn-out, painful episodes of unemployment weaken that support and strengthen the hands of those who’d like to undo the world’s hard-won gains for liberalisation.”
Strange reasoning. First, government bail-outs and protective tariffs are the very sort of policies that those of us who support a liberal economic system seek to prevent. Acquiescing in illiberal interventions, such as these, in order to protect a genuinely liberal economy is the worst sort of destructive duplicity.
Second, the tariffs that R.A. here justifies on the grounds that, in his view, they likely bribe the public into supporting market liberalization during “long, drawn-out, painful episodes of unemployment” were implemented in 2003, when America’s unemployment rate averaged a very respectable 6.0 percent.
Alas, it is the fanciful ‘realism’ of the sort endorsed by R.A. that poses the gravest threat to a liberal economic system.
Donald J. Boudreaux