Here’s a letter to Law & Liberty:
David Conway writes about those of us who are appalled by Pres. Trump’s protectionist agenda that we “would do well to remember that even that supreme apostle of free trade, Adam Smith, advocated tariffs in protection of the domestic manufacture of strategic goods, as were in his day gunpowder and sail-cloth” (“Trump’s Classicist,” July 15).
First, Smith was an “apostle” of nothing; he was a scholar.
And about advocates of free trade, none of us has forgotten that Smith carved out of his case for unilateral free trade a handful of exceptions, one of which is protectionism for purposes of national defense. But Smith was explicit that such protectionism is a cost, if one worth incurring when done prudently. He said about a famous trade restraint of his day aimed at ensuring British naval might that “The act of navigation is not favourable to foreign commerce, or to the growth of that opulence which can arise from it.”*
Smith’s understanding of trade is exactly the opposite of that of Trump, who repeatedly talks of trade as if it is a zero-sum competition among countries to see which ones can earn the most money through exporting. Trump also, of course, is forever bemoaning trade deficits, about which Smith said that “Nothing, however, can be more absurd than this whole doctrine of the balance of trade.”** And so for Conway to attempt to recruit Adam Smith to Trump’s protectionist cause is beyond ridiculous.
Also, Conway is mistaken to assert that “today by ’free trade’ is understood managed, not unrestricted, trade.” Conway might define free trade in this way, but neither economists nor free-trade advocates generally so define it. I refer him and your readers to the works of, for example, Daniel Griswold, Daniel Ikenson, Douglas Irwin, Paul Krugman, Pierre Lemieux, Scott Lincicome, Deirdre McCloskey, Martin Wolf, Bruce Yandle and Ryan Young & Iain Murray.
There’s a perfectly good name for managed trade: “managed trade,” which refers to policies of protectionist interventions. In contrast, “free trade” means a policy under which the home government treats the sale of all goods within its borders the same regardless of where on the planet the sellers of those goods happen to live.
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
*An Inquiry Into the Nature and Causes of the Wealth of Nations (1776), p. 464.
**An Inquiry Into the Nature and Causes of the Wealth of Nations (1776), p. 488.