In the Real World

by Don Boudreaux on December 29, 2017

in Myths and Fallacies, Trade

Here’s a letter to a new Cafe Hayek reader:

Mr. Nick Campos

Mr. Campos:

I disagree that “free trade doesn’t work in the real world [with] other countries giving their businesses unfair advantages over ours.”  On my blog I’ve often explained the reasons for my disagreement, but let me here give it yet another shot by focusing on the real world.

In the real world, tariffs and subsidies used by foreign governments weaken those foreign economies and make most of their citizens poorer than they would otherwise be.

In the real world, if Uncle Sam responds to foreign-governments’ trade restraints by inflicting similar restraints on us Americans, we are thereby made poorer than we would otherwise be.

In the real world, it is, therefore, asinine to support a policy of inflicting artificial scarcity at home simply because foreign governments inflict artificial scarcity abroad.

In the real world, protecting particular industries and jobs in the home economy destroys (or prevents from arising) other industries and jobs in the home economy.

In the real world, economies grow more the more freely their people trade regardless of the policies pursued by other governments.

In the real world, tariffs – including tariffs in the U.S. – are, always have been, and always will be the products of interest-group politics; tariffs are not, never have been, and never will be the products of careful, scientific economic analysis.

In the real world, the case for free trade is very robust; it has never rested on the assumption that other countries practice free trade or that markets are ‘perfect.’

In the real world, all arguments for policies of protectionism consist of economic ignorance and political naiveté, or of greedy cronyism – and, in many cases, of both.

In the real world, the case for free trade is even stronger than it is in a purely theoretical, unreal world.

Donald J. Boudreaux
Professor of Economics
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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