Here’s a letter to a Cafe Hayek commenter:
Mr. Donald Jansen
Commenting on this blog post you write that “[t]here ought to be a distinction between trade that involves substantive comparative advantage and trade that is merely the result of artificial arbitrage opportunities created by inept governance.”
Economists for generations have recognized that governments routinely intervene in ways that change patterns of comparative advantage and, hence, change patterns of trade. Yet most economists have also long recognized what too many non-economists miss, namely, the people who pay the price for such interventions are overwhelmingly the people whose governments so intervene, whether as ‘first movers’ or in response to similar interventions by other governments. In short, economists recognize that, say, we Americans are harmed rather than helped whenever our government obstructs or subsidizes our trade. This conclusion is not changed if such intervention is done in response to other governments obstructing or subsidizing the trade of their citizens.
Here’s another truth to recognize: because no producer has a right to the patronage of any consumers, it is no more ethically justified for ‘my’ Uncle Sam to obstruct my trade with, say, the Chinese on the grounds that some Chinese producers get subsidies from Beijing than it would for my neighbor Sam to obstruct my trade with a merchant in an adjoining town on the grounds that that merchant gets subsidies from her rich boyfriend. In both cases I benefit from these subsidies while no producer in the U.S. or in my town loses anything to which that producer has a right or an ethical claim.
The bottom line is straight and clear: trade policy should be judged only by how much it enables domestic citizens to improve their standard of living over time though increased access to goods and services for consumption. Trade policy should never be judged by how well it enables domestic producers to thrive. To judge trade policy from the perspective of consumers is to treat increasing abundance as a blessing; to judge it from the perspective of producers is to treat increasing abundance as a curse.
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