Quotation of the Day…

by Don Boudreaux on January 30, 2019

in Crony Capitalism, Myths and Fallacies, Trade

… is from page 113 of Paul Krugman’s excellent article “What Should Trade Negotiators Negotiate About?” which first appeared in the March 1997 issue of the Journal of Economic Literature:

If we nonetheless have a fairly liberal world trading system, it is only because countries have been persuaded to open their markets in return for comparable market-opening on the part of their trading partners. Never mind that the “concessions” trade negotiators are so proud of wresting from other nations are almost always actions these nations should have taken in their own interest anyway; in practice, countries seem willing to do themselves good only if others promise to do the same.

DBx: Yup.

Economists can run themselves weary documenting the countless theoretical exceptions to a policy of free trade. (These ‘exceptions,’ in principle, number close to infinity.) And pundits can, for their convenience, pick and choose among these exceptions in their attempts to persuade the public that riches grow from artificially engineered privations. But let’s be real: nearly all political support for protectionism is rooted in rent-seeking producers’ schemes to evade competition, and backed by the utterly mistaken (but widely believed) notion that the more ‘we’ import the fewer are the number of jobs ‘we’ have, while the more ‘we’ export the greater are the number of jobs ‘we’ have.

Actual protectionist measures are never experiments in the applicability to reality of esoteric economic theory. Actual protectionist measures are rent-seeking schemes that play on the public’s misunderstanding of international trade. Mistaking imports as costs and exports as benefits is a key reason why the public cheers as they are robbed by rent-seeking domestic producers.

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