A Thief Is a Wrongdoer. A Competitor Is a Benefactor.

by Don Boudreaux on June 21, 2018

in Competition, Myths and Fallacies, Trade

Here’s a letter to a friend of a friend:

Mr. Kevin Wells

Mr. Wells:

Thanks for your e-mail.

I stand by my claim that trade has no losers. International trade is merely one of countless venues in which economic competition plays out. And the adjustments that must be made by producers when they face increased competition from foreign producers differ in no way from the adjustments that must be made by producers when they face increased competition from domestic producers or from technological or organizational innovations. Therefore, saying that trade has losers conveys the mistaken impression that trade is unique in obliging producers to adjust to competition-induced changes in consumer spending patterns.

More fundamentally, the claim that trade has losers reflects a confusion of losses with costs. Trade – like all competition – certainly has costs. Among the costs of participating in the market economy is the requirement that each person, as a producer, adjust his or her productive activities to the demands of consumers. In return, each person, as a consumer, is free to spend his or her income in whatever ways he or she chooses. The resulting benefit is a high and improving standard of living for nearly everyone.

Because no one as a producer has a right or an entitlement to some minimum level of demand for his or her services, jobs or income “lost” to trade (or to any other form of competition) are not losses akin to property lost to theft or to vandalism. A person whose car is stolen or vandalized loses property to which he or she owns an entitlement. In contrast, a person whose job is made redundant by competition loses nothing to which he or she owns an entitlement; there is here no loss that must be compensated. A person who loses a job or income because of competition is, instead, incurring one of the costs of participating in a competitive market economy. Undeniably, this cost is sometimes high. But relieving a relatively small handful of producers from the responsibility of paying this cost is unfair to the great majority of producers who are not relieved from paying it. And any attempt to relieve all producers from the responsibility of paying this cost would soon cast all of us into unimaginably grinding poverty.

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

P.S. Here’s another reason why trade has no losers.


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