Yet More On the Alleged “Losers” From Free Trade

by Don Boudreaux on February 7, 2016

in Competition, Other People's Money, Seen and Unseen, Trade

On this post, Bob Guzzardi offers this comment:

Free Trade has winners and losers at points in time. The fears and needs of the losers have to be addressed and vague theories are inadequate. My point is that Free Trade seems to be most beneficial to more people than Protectionism, however, one cannot ignore those who are not benefited in the short run. It is very upsetting to think oneself unproductive and useless to one’s community.

Here’s my reply in the comments section (which I here expand):

For reasons that I spell out in the post, I disagree.  International trade produces no more losers, even in the short run, than does any other change in economic activity.  To fall into the trap – seemignly correct, but wholly inconsistent with the way that we typically treat domestic economic phenomena – of agreeing that trade has “losers” is not only to be incorrect, but to pave with this incorrectness the path to policies that do indeed create genuine losers.

Again, trade – all trade, foreign or domestic – that causes the demand for some people’s market offerings to fall is a result of nothing other than voluntary exchange that occurs within the institutions of freedom of contract and economic competition.  And all trade, at every moment as a practical matter, causes the demand for some people’s market offerings to fall (as it simultaneously causes the demand for other people’s market offerings to rise).  Unless you’re willing to say that whenever people exercise their freedom of contract (which freedom, of course, includes the freedom not to contract) the resulting short-term losers’ losses must be accommodated politically, you are inconsistent if you say such a thing about the short-term losses that result by trade that occurs internationally.

I understand that people, as a practical matter, complain more about unemployment allegedly caused by international trade than they complain about unemployment allegedly caused by domestic trade.  My firm convicition is that the best way to deal with this inconsistency in people’s understandng is not to concede the complainers’ erroneous premise but, instead, to fight to expose that premise as being not only mistaken but also thorougly inconsistent with the way most of the complainers themselves assess economic activities that are (or that appear to be) exclusively domestic.

A final note: I do not doubt that it is “very upsetting to think oneself unproductive and useless to one’s community.”  Yet even ignoring the fundamental point that people who are rendered unemployed by a change in domestic patterns of trade have every right to be as “upset” as do people who are rendered unemployed by a change in patterns of trade that span international borders, none of the proposals of protectionists adequately address this problem you raise at the end of your comment.

If, to salve the feelings of people who lose their jobs because others now spend money differently, government erects artificial barriers to international trade, do you really restore these workers’ pride in their productiveness and usefulness to their communities?  If, on one hand, these workers understand the true nature of protectionism, they should feel even more upset, for not only are they then not useful to their communities, they are downright damaging to their communities: their fellow citizens are prevented by force of arms from buying products at attractive prices from their competitors.  The resulting benefits reaped by these protected workers are forced extractions from their fellow citizens.

On the other hand, if these workers don’t understand the true nature of protectionism – that is, if they fancy themselves productive and useful to their fellow citizens because they (these workers) are artificially protected by tariffs from having to find employment that better serves their communities – have you, by endorsing protectionist policies, really done the community a favor?  What responsibility has the community to tax and impoverish itself in order to prevent some of its members from feeling bad when consumer demands shift away from what some workers are currently selling?

Very much the same is true for government policies aimed at compensating or otherwise “helping” people who are rendered unemployed by imports.  Do you make an unemployed man or woman feel more useful to his or her community by seizing taxpayer funds and putting that man or woman on the government dole?  Anyone who feels pride for holding a job that exists only because of protectionist policies, or anyone who feels pride because fellow citizens are forced to support him or her when they lose a job, is someone whose feelings I do not respect and who, I believe, should be shamed rather than coddled – for such a person, again, is worse than useless to his or her fellow citizens: he or she is a costly nuisance.


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