… is from page 453 of Book IV, Chapter ii of the 1981 Liberty Fund edition of Adam Smith’s magisterial 1776 book, An Inquiry Into the Nature and Causes of the Wealth of Nations:
That this monopoly [which is artificially created by import restrictions] of the home-market frequently gives great encouragement to that particular species of industry which enjoys it, and frequently turns towards that employment a greater share of both the labour and stock of the society than would otherwise have gone to it, cannot be doubted. But whether it tends either to increase the general industry of the society, or to give it the most advantageous direction, is not, perhaps, altogether so evident.
Smith then proceeds – as have legions of economists since Smith – to reveal ‘that which is not seen’ – namely, the economic activity (including jobs) and outputs that are created only because denizens in the domestic economy are acquiring less costly imports from abroad.
It’s easy to see the economic activity and jobs that are lost to imports. Even economically uninformed people such as Donald Trump, Bernie Sanders, and many in their hordes of admirers see these effects. It’s a bit more difficult – although not terribly so – to see also the economic activity and jobs that are created because of imports. And for those willing to think rationally rather than bloviate ignorantly, it’s only yet slightly more difficult to see that the net result is faster economic growth and higher standards of living for nearly everyone over time.
