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… is from page 454 of Armen Alchian’s May 1960 American Economic Review article, co-authored with William H. Meckling, “Incentives in the United States [2],” as this article is reprinted in volume 2 of The Collected Works of Armen A. Alchian [3] (2006):
But in trying to improve their lot individuals do more than merely adapt to given cost-reward relationships. They try to alter the schedule of prizes and costs to their own advantage. How? By changing the rules, especially through government. By pressing for advantageous legislative, administrative, or judicial action, individauls can and do use the power of government for personal gain. Thus economists describe the effects of reduced demand for an industry’s product in terms of a new equilibrium with lower prices and lower output. But in a society where government can be summoned to the aid of distressed suppliers, that description is incomplete. For the industry may induce govern- ment to artificially maintain demand or subsidize losses.
DBx: The number of absurd excuses given for protectionist policies is practically countless. Yet among the most absurd is the one that proclaims that tariffs and other trade restrictions are often necessary to maintain the dignity of domestic workers who might otherwise lose their jobs because their fellow citizens choose to buy more imports.
What is never explained by people who attempt to justify trade restraints with this excuse is exactly how someone maintains his or her dignity by having fellow citizens coerced to purchase his or her outputs.
No one thinks that Joe’s dignity is enhanced if Joe himself uses a gun to rob Sue. How, then, can it be that Joe’s dignity is enhanced if, to acquire more of Sue’s money, Joe hires Sam to carry out on his behalf the actual act of robbery?