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Quotation of the Day…

… is from page 61 of Winston Churchill’s February 19th, 1904, speech at Free Trade Hall in Manchester – delivered at the inaugural meeting of the Free Trade League – as this speech is printed in the 1977 volume For Free Trade, a collection of some of Churchill’s early speeches on trade:

We Free Traders are often told that we should consider the producer more, and not think so much about the consumer.  The great manufacturers are the largest producers in the country, but they are also by far the largest consumers.  The more they produce, the more they have to consume.  The bigger the mill, the more it costs to run.  The manufacturer, therefore, wants one thing dear – the thing he sells – and a hundred things cheap which he uses.

DBx: There’s no doubt that government can artificially enrich a handful of producers (and their employees) with tariffs and other policies that artificially increase the scarcity of the things that are supplied by this handful of producers.  Those who make an economic case for protectionism are much impressed by this artificial enrichment.  Indeed, protectionists are so very impressed by this observed artificial enrichment that it leads them to commit the fallacy of composition (among other errors, both theoretical and empirical).  But as Churchill here suggests, the greater the extent of trade barriers, the more each domestic producer suffers rising costs of production.  The economic case for protectionism is deeply illogical: a country’s people cannot all be enriched by policies that decrease the availability of goods and services, including that of inputs to production.

The protectionist is either a sad or a despicable figure.  He’s a sad figure if he truly believes that people generally are enriched by any government policy that obstructs their access to goods and services.  It’s sad that anyone clings to such illogic.  The protectionist is a despicable figure if, while himself knowing better, he uses this logical fallacy to dupe others into supporting a policy that enriches him at their expense.  It’s my experience that the ranks of protectionists are well-manned with both sorts, the sad and the despicable.


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