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Quotation of the Day…

… is from page 39 of Melvin Reder’s 1947 book, Studies in the Theory of Welfare Economics:

But, to many critics, “free” competition – or any other kind – has no particular virtues, and the economist has had – and still has – to wage a vigorous battle in its defense.

DBx: By “‘free’ competition” Reder here means open competition, the sort that naturally exists without artificial barriers to entry into, and to exit from, industries and occupations, as well as with widespread freedom of consumers to spend their incomes as they see fit.

Two ugly monuments to the dislike of competition mentioned by Reder are occupational-licensing restrictions and trade restraints.  Many who support such restrictions and restraints do not realize that they oppose competition.  They say – often, although by no means always, sincerely – that they aim merely to ensure that consumers are protected from unsafe products and services (as is claimed for occupational-licensing restrictions) or that workers are protected from losing their jobs (as is claimed for trade restraints).  But even though these proponents of restrictions and restraints do not realize it, what they really oppose is competition.

Especially in the case of trade restraints, nearly every economic argument that protectionists offer as a good reason for such restraints would, if valid, be a good reason for restraints on competition generally.  There is nothing at all unique about competition that comes from across a political border; such competition has all of the upsides and downsides of competition that is exclusively home-grown.  Yet protectionists continue to miss this important reality.  Protectionists do not realize that, if their arguments against imports are valid, then not only must increased trade with foreigners be stopped; in addition, increased trade with any set of particular producers, regardless of these producers’ physical locations, must be stopped.


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