Several people in recent days have commented here at Cafe Hayek, and have e-mailed me, to assert in one way or another that Uncle Sam must obstruct Americans’ freedom to trade if foreign governments (are alleged to) make American imports artificially inexpensive or otherwise reduce consumer demands for American producers. This argument is ethically and economically unsupportable. Here’s an open letter to these commenters and correspondents, whom I dub “retaliationists”:
All of your arguments rest on the curious premise that Americans’ rights to their incomes are conditional upon the actions of foreign governments. “If foreign governments practice free trade,” you say “then Americans have the right to buy imports unobstructed. But if foreign governments use tariffs or subsidies to obstruct their citizens’ freedom to trade, then not only do we Americans thereby lose our right to spend our incomes as we choose, American producers become entitled to that portion of our incomes that we spend on goods of the sort that are imported from those countries.”
Your premise is faulty, for it reflects the mistaken notion that production is the ultimate end of economic activity and that consumption is a mere means to this end. But in fact producers exist only to satisfy consumers as judged by consumers. Producers are not entitled to consumers’ incomes and, therefore, not entitled to the “protection” that you demand.
“Ah!” you reply. “Our argument isn’t that American producers have a right to Americans’ incomes. Instead it’s that our government must intervene to correct market distortions created by foreign governments.”
I reject your reply. Not only is the economic case for such intervention weak, you and other apologists for privilege-seeking American producers consistently reveal that your argument is rejected even by you! You make this revelation by clamoring for the U.S. government only to punitively tax American purchases of imports that foreign governments make artificially inexpensive. Yet you never clamor for the U.S. government to subsidize American purchases of imports that those same foreign governments make artificially expensive. But here’s a fact: any government-engineered diversion of resources toward the production of certain goods in order to artificially push those goods’ prices down is simultaneously a government-engineered diversion of those same resources away from the production of other goods – a diversion that artificially pushes those other goods’ prices up.
If your case for U.S. government intervention were truly grounded on a commitment to keeping markets undistorted, then we Americans would be treated not only to calls for the U.S. government to decrease some imports with market-correcting tariffs, but also to calls for the U.S. government to increase some other imports with market-correcting subsidies. Yet never, ever do we hear calls for the latter. The only sensible conclusion to draw from this screaming silence is that you – you American producers and you who apologize for their protectionist maneuvers – aren’t the least bit interested in keeping markets undistorted; you are interested only in using the U.S. government as your agent for stealing from American consumers.
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