For reasons mysterious to me, this past week has brought an unusual number – eight all told – of e-mails challenging me to defend free trade (as one of these e-mailers says) “in face of the fact that China and other [foreign] governments grant steep subsidies to their industries.” These correspondents must have slept through the many posts – I can’t count the number – that I’ve done over the years on this matter. (Of course, other economists and scholars more talented, eloquent, and insightful than me also have weighed in on this matter, dating back at least to Adam Smith‘s day.)
Anyway, I repost here just one of my earlier attempts to address the fallacy that if other people’s governments make them poorer with subsidies and tariffs, then ‘our’ government should do the same to us.
Imported from Bastiatland
by DON BOUDREAUX on MAY 10, 2011[EDIT]
Here’s a letter to the Washington Times:
Robert Lighthizer praises Donald Trump’s call to “get tough on China” (“Donald Trump is no liberal on trade,” May 10). Here’s the key paragraph:
“On a purely intellectual level, how does allowing China to constantly rig trade in its favor advance the core conservative goal of making markets more efficient? Markets do not run better when manufacturing shifts to China largely because of the actions of its government. Nor do they become more efficient when Chinese companies are given special privileges in global markets, while American companies must struggle to compete with unfairly traded goods.”
Inspired by the 19th-century French economist Frederic Bastiat, I reword Mr. Lighthizer’s paragraph just a bit:
“On a purely intellectual level, how does allowing God to constantly rig trade in the sun’s favor – sending us lots of valuable energy, light, and warmth while unfairly refusing to purchase a single earth-made good in return! – advance the core conservative goal of making markets more efficient? Markets do not run better when energy production is outsourced to celestial bodies largely because of the actions of God. Nor do they become more efficient when the sun enjoys special, God-created privileges in the solar-system’s markets, while American suppliers of electricity, fuel oil, light bulbs, and overcoats must struggle to compete with unfairly traded energy, light, and heat from the sun.”
Until the likes of Mr. Lighthizer plausibly explains why foreign-government-subsidized exports of valuable goods and services from places such as China harm Americans while God-subsidized exports of valuable energy and light from places such as the sun do not, his and other protectionists’ objections to the supposed scourge of low-priced imports should be taken for what they are: economically uninformed screeds that give intellectual cover to domestic producers seeking nothing more noble than protection from competition.
Donald J. Boudreaux