≡ Menu

Repeating a Central Element in the Economic Case for a Policy of Free Trade

Here’s another letter to my regular correspondent Nolan McKinney:

Mr. McKinney:

You allege that, here, I “misinterpret” John M____’s “identifying the need for government supervision of trade.” In your view, such “supervision” is necessary not so much to protect each individual from being taken advantage of by wily foreign trading partners, but, instead, to “prevent disruptions that come with [international] trade. Only the government is in position to do this.”

Whether or not your interpretation of Mr. M____’s e-mail to me is correct, I profoundly disagree with your substantive point, for at least three reasons.

First, there’s no reason to suppose that even saintly government officials possess, or could possibly obtain, the knowledge necessary to obstruct in welfare-enhancing ways their fellow-citizens’ trade with foreigners.

Second, there’s no reason to suppose that even stupendously well-informed government officials would, when obstructing their fellow-citizens’ trade, act to promote the general welfare rather than to promote the welfare of special-interest groups.

Third, there’s no reason, if government officials are to be trusted with such extensive powers as you desire, to limit the exercise of those powers only to economic change sparked by trade that crosses political borders.

All economic change disrupts. Streaming video is disrupting the movie-theater industry. The microchip disrupted the clerical industry. The post-WWII anti-smoking campaign disrupted the tobacco industry. The polio vaccine disrupted the crutches-and-wheelchair industry. The small but powerful internal-combustion engine – and, later, the jet engine – disrupted the railroad industry. The railroad disrupted not only 19th-century modes of transportation but also, by forging countless localized markets into a national market, other industries as well, such as food distribution. Chemical fertilizers and the mechanical reaper disrupted the agricultural industry. Agriculture disrupted the hunting-and-gathering industry.

Singling out the trade of fellow citizens with foreigners as a source of economic change that is uniquely disruptive and that, therefore, uniquely requires government supervision and obstruction makes no more sense than would singling out for such supervision and obstruction, say, the trade of blue-eyed people with non-blue-eyed people, or the trade of atheists with theists.

Until and unless you can identify for me why economic change that is sparked by trade with foreigners differs in any relevant way from economic change that is sparked by the literally billions of other sparks of economic change, you have no case for singling out for special consideration – and government prevention – the disruptions caused by trade with foreigners.

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