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Protectionism Does Not Prevent Job Losses

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Here’s a letter to a Cafe Hayek reader:

Mr. Glen W____

Mr. W____:

Thanks for your e-mail.

You are correct that under a regime of free trade some people, through no fault of their own, lose jobs.  You are also correct that such experiences are unpleasant.  But protectionism does not stop job losses from occurring.  Even if Uncle Sam were to completely shut the American economy off from global markets, job losses would still occur.  American consumers would still change their spending patterns such that goods and services that were in high demand yesterday would be in lower demand today.  Entrepreneurs would still experiment with new products and with new, labor-saving methods of production and distribution.  Economic churn would still happen, complete with its unavoidable job losses.

The difference would be that, being denied access to the creative insights and productive efforts of 95 percent of the world’s population as well as to the bulk of the world’s resources, we’d all be much poorer.  Job losses would therefore be more ominous and sources of far more anxiety.  With the likes of food, fuel, clothing, transportation, communications, and building materials all made more costly by protectionism, those who lose jobs would suffer greater risks of actually going hungry, of being evicted from their homes, and of finding themselves unable to afford coats and new shoes for their children as winter approaches.

The bottom line is that making trade less free does not stop job losses from occurring – but it does worsen the consequences.

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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