A sure sign that someone is in the midst of making an intellectually and ethically flawed argument against trade is that someone’s use of the term “level playing field.” With exceptions too rare to mention, this hackneyed phrase is always used to justify higher taxes on domestic consumers who buy imports. Unwilling to honestly reveal the purpose behind a tariff or other trade restriction, the protectionist attempts to convey the impression that it would be unfair not to raise taxes on domestic purchasers of imports. After all, if “they” aren’t playing “fairly,” then “we” must protect “our” producers from “their unfairness.”
I’ll here rehearse neither the argument against the fallacy that trade is akin to a sporting event, nor the argument against the fallacy of judging the consequences of trade according to how well or poorly existing, highly visible domestic producers fare. (Interested readers can see, for example, here and here and here and here.)
Instead, in this present post I point out that, from the perspective of each individual worker or firm, the economy – even just the domestic economy – is forever full of all sorts of features that, when the topic is international trade, cause protectionists to scream that the “playing field” is tilted.
My soon-to-be 20-year-old son, Thomas, grew up in a very intellectual household filled with books, philosophical discussions, and regular visits from many highly accomplished scholars. (Nobel laureate Vernon Smith, and his wife Candace, baby-sat Thomas a couple of times! Thomas also once joined me for a small lunch that included my late Nobelist colleague Jim Buchanan.) Thomas’s intellect and character have thus been shaped by his upbringing. He’s better equipped, intellectually and culturally, to pursue a successful academic career as an astrophysicist – which is his goal – than are most young people who come from different backgrounds. Have Karol and I unjustly ’tilted the playing field’ in Thomas’s favor? Should a grad school that seeks to attract Thomas as a student – or, later, a university that seeks to hire him to its physics faculty – be punitively taxed so that a young man or woman from a less-academic background is made artificially more attractive, relative to Thomas, to that school? (Or was the “playing field” tilted against Thomas because his parents are social scientists rather than physicists?)
Thomas did not, however, grow up playing sports. His mother and I both are bookish. We don’t ski, golf, play basketball or softball, or shoot pool. We read. We go to artsy movies. And we drink wine. Thomas is about 6’2″ and healthy, and he has a naturally strong physique. He might easily have been a standout high-school quarterback or top-notch golfer or baseball star had his parents exposed him to those activities. But he’s none of those things. So should Thomas call for government to “level the playing field” among, say, golfers by forcing young men who grew up playing golf, and who are now quite good at it, to wear heavy weights around their wrists or to wear eyeglasses that slightly distort their vision? If the state did so, Thomas would be better able to compete “on a level playing field” with these young men at golf.
Or consider business firms. Does entrepreneur Smith with a rich uncle have an unfair advantage over entrepreneur Jones, who has no rich relatives, if entrepreneur Smith’s uncle gives him an interest-free loan to launch a new business in the computer-software industry? It might well be the case that, had Jones also had an interest-free loan, he, too, would be, like Smith, a successful entrepreneur in the computer-software industry? Should Jones petition the state to impose punitive tariffs on consumers who buy Smith’s software offerings? Such tariffs can be said to “level the playing field” on which Jones must compete with Smith in the computer-software industry.
Or perhaps Smith’s rich uncle instead paid for Smith to attend engineering school, while Jones had no rich relative to pay his engineering-school tuition. As a result, Smith graduates debt-free with a degree in engineering while Jones graduates, having earned the same degree, with much student debt. Jones’s need to repay his student loan results in Jones being unable to husband enough money to launch a company in competition with Smith’s new company. Should Jones petition the state to impose punitive tariffs on purchasers of the goods and services that Smith’s company sells? Such punitive tariffs might be said to “level the playing field.”
Here’s a third scenario involving Smith and Jones. Suppose that Smith had a very good engineering professor who became friends with Smith while Jones, through no fault of his own, unluckily had as engineering professors only very unfriendly introverts. After graduation, Smith and Jones both have ideas for a new software-engineering firm. In putting together his business plan, Smith calls on and receives eager assistance from his friendly former professor. Jones, alas, has no such help from former professors. As a result, Smith’s business plan is slightly better than Jones’s business plan. The bank or venture capitalists fund Smith’s plan but not Jones’s plan.
The “field” here on which Smith and Jones compete might be said to be “uneven” – “tilted” in Smith’s favor. And we might all suspect that god itself would agree that, had Jones too had a friendly former professor, Jones’s business plan would have been more impressive than Smith’s plan. Yet, again, in reality, Smith gets the funding and Jones doesn’t. Should government punitively tax Smith’s sales in order to clear the way for Jones to launch and operate a business in competition with Smith’s business?
The fact is that economic reality is full of “uneven playing fields.” It’s reality. And attempts by the state to “level” these playing fields is neither necessary for economic growth nor called for by any widely accepted moral criterion.
While we all agree that subsidies doled out by governments are unjustified, we should also understand that (1) the bulk of the costs of these subsidies fall on the citizens of the the doling governments – the subsidies make the such countries poorer than they would otherwise be; (2) the bulk of the benefits of these subsidies are enjoyed by consumers in the countries to which the subsidized outputs are exported – the subsidies make economies that buy the subsidized exports richer than they would otherwise be ; and (3) using the existence of such subsidies as an excuse for domestic-government intervention will almost certainly be abused in ways that promote the interests of the politically powerful domestic few at the expense of the politically weak domestic many.
Each individual consumer ought to be free to choose if, and for whatever reason, he or she rejects the opportunity to trade with someone else (be that someone else a fellow citizen or a foreigner). If Adams chooses not to buy Smith’s apples because Adams judges Smith to have had an unfair advantage in business over Jones, that’s Adams’s right and Adams should be left free to exercise it as he or she deems best. But if Williams, even after being informed of Smith’s alleged unfair advantage over Jones, chooses to buy Smith’s apples, that’s Williams’s right and Williams should be left free to exercise it as he or she deems best.
