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Quotation of the Day…

… is from page 514 of the 1982 Liberty Fund issue of the 1978 Oxford University Press edition of Adam Smith‘s Lectures on Jurisprudence (spelling modernized):

From the above considerations it appears that Britain should by all means be made a free port, that there should be no interruptions of any kind made to forreign trade, that if it were possible to defray the expences of government by any other method, all duties, customs, and excise should be abolished, and that free commerce and liberty of exchange should be allowed with all nations and for all things.

DBx: Opposition to free trade comes from three sources: economic ignorance, cronyist rent-seeking, and sophomoric enchantment with bizarre ‘theoretical’ possibilities.  Of these, economic ignorance supplies by far the most fuel for protectionism.  Nearly all sincere protectionists (and they are a multitude) are simply too impatient, as Deirdre McCloskey might say, to stay in the audience beyond Act I.  These protectionists see jobs and domestic factories ‘lost’ to imports.  But leaving their seats before the start of Act II, they miss the domestic jobs and businesses created by imports.  They miss the economic growth encouraged by imports and by larger, global markets for exports.  Indeed, these protectionists aren’t even very attentive to, or appreciative of, all of the action in Act I.  They don’t see – or they discount – the immediate gains to consumers of imports, including domestic producers who purchase imports to use as inputs.

In contrast to sincere protectionists, cronyist rent-seekers support protectionism because it enriches them at the expense of others – the others being mainly their fellow citizens.  Cronyist rent-seekers are happy to have the state rob others in order that these rent-seekers’ wallets and purses artificially swell with the stolen booty (some of which, of course, is shared with government officials as payment to these officials for services rendered – those services being the actual carrying out of the thievery on behalf of the rent-seekers).  And cronyist rent-seekers are, of course, delighted that the world is heavily populated with sincere protectionists: sincere protectionists are both themselves willing victims of the rent-seekers’ predation, and they – the sincere protectionists – when they issue their illogical, factually uninformed, and economically ignorant arguments for protectionism are the rent-seekers’ useful idiots.

Also useful to cronyist rent-seekers are those who countenance protectionism for the third reason given above: sophomoric enchantment with bizarre ‘theoretical’ possibilities.  Reality, being very complex, can be imagined to offer possibilities for god-like creatures to intervene into human affairs just so in order to improve human lives.  It’s child’s play for any half-competent economist – or, indeed, for any clever boy or girl – to describe imaginary scenarios in which Smith’s freedom to trade with Peng leads to some ‘loss’ that every intelligent and humane person agrees is genuinely unfortunate and would applaud were that loss to be prevented by a god-like creature.

But protectionists fail to realize that, when they play this academic game, there’s no reason to limit the game to commerce that crosses international borders.  Any and all of the bizarre theoretical possibilities that can be identified as justifying a god-like creature restricting the American Smith’s freedom to trade with Peng in China can be used to justify a god-like creature restricting the American Smith’s freedom to trade with Jones in Michigan.

In addition, of course, we humans are not god-like creatures and we have no way to summon such creatures into our vale to serve us.  The case for free trade is not a case that such trade in reality works perfectly or in the manner suggested by textbooks’ necessarily simplified expositions of its workings.  The case for free trade is a case for a policy rule of free trade: because government officials are not god-like creatures, and because each of us – as consumer and producer – knows our interests, circumstances, and business better than do either ‘We the People’ as voters or the politicians so elected – when we are left free peacefully to buy, sell, and innovate our welfare as a whole stands a greater chance of rising higher than it will rise if in our commerce we are restricted simply because some of the commerce that we choose to conduct is with individuals and firms located in political jurisdictions different from our political jurisdiction.