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Quotation of the Day…

… is from David Hume’s essay “Of Commerce” (here from page 254 of the 1985 Liberty Fund collection of some of Hume’s essays, edited by the late Eugene Miller, Essays: Moral, Political, and Literary) (original emphasis):

But when we reason upon general subjects, one may justly affirm, that our speculations can scarcely ever be too fine, provided they be just; and that the difference between a common man and a man of genius is chiefly seen in the shallowness or depth of the principles upon which they proceed.  General reasonings seem intricate, merely because they are general; nor is it easy for the bulk of mankind to distinguish, in a great number of particulars, that common circumstance in which they all agree, or to extract it, pure and unmixed, from the other superfluous circumstances.  Every judgment or conclusion, with them, is particular.  They cannot enlarge their view to those universal propositions, which comprehend under them an infinite number of individuals, and include a whole science in a single theorem.  Their eye is confounded with such an extensive prospect; and the conclusions, derived from it, even though clearly expressed, seem intricate and obscure.  But however intricate they may seem, it is certain, that general principles, if just and sound, must always prevail in the general course of things, though they may fail in particular cases; and it is the chief business of philosophers to regard the general course of things.

DBx: A common, pedestrian example of the flawed reasoning that Hume here warns against is the protectionist’s commission of the fallacy of composition when evaluating trade and trade restrictions.  The protectionist sees what even a toddler can see – namely, that if the potential customers of some favored firms are penalized if and when they patronize the rivals of those favored firms, the business of the favored firms improves.  The favored firms encounter a higher demand for their outputs.  The favored firms produce more.  The favored firm’ revenues rise.  The favored firms employ more worker and purchase greater quantities of other inputs.  The favored firms pay more in taxes.

As David Hume would not have actually said – but as he would certainly have agreed – “Well, duh.”

The protectionist then leaps victoriously to the conclusion that, therefore, protectionism paves the path to widespread prosperity.  It’s a leap of ignorance.

What the protectionist doesn’t see is the reduced spending elsewhere in the domestic economy by consumers, both domestic and foreign.  What the protectionist doesn’t see is the reduced investment elsewhere in the domestic economy by investors, both domestic and foreign.  What the protectionist doesn’t see are the outputs not produced by domestic producers, and the jobs not performed by domestic workers, as a result of the artificial expansion of the protected firms.  What the protectionist doesn’t see are the wage rates that didn’t rise because the trade restrictions tamp down the growth of worker productivity.  What the protectionist doesn’t see is the greater difficulty of especially poorer households to stretch their budgets in ways that enable them to improve their standard of living.  What the protectionist doesn’t see is the fact that, once government starts doling out such special privileges, entrepreneurs who would otherwise devote all of their time, effort, and resources to building better mousetraps spend more and more of their time, effort, and resources building better lobbying arrangements and schemes.  What the protectionist doesn’t see is the danger to the rule of law and to freedom that lurks in government powers to dispense such special privileges.

The protectionist sees none of this because to see it requires a bit of abstract reasoning and knowledge of general principles.  The protectionist rejects such reasoning and principles as girly, as academic, as not fit for a practical man of affairs – a man who knows only what he actually sees, and who sees only what is dancing immediately in front of his nose.