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Quotation of the Day…

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… is from page 340 of the 1936 English-language edition (translated from German by Alfred Stonier and Frederic Benham) of Gottfried Haberler [2]’s great 1933 work, The Theory of International Trade With Its Application to Commercial Policy [3]:

The complications of the modern tariff schedule afford interested parties rich opportunities to work in the dark and to obtain special advantages at the cost of the community without the general public realising it.

DBx: Any survey – and certainly any careful study – of the history and reality of tariff policy confirms that tariffs (and other trade restrictions) are almost always dispensed, not for any plausible public-interest reasons, but to satisfy the private interests of rent-seekers. Even if, contrary to fact, economic journals and textbooks were filled with several plausible scenarios under which trade restrictions can improve the economic well-being of home-country residents, the actual history of trade policy is that this policy is one in service to domestic plunderers.

Many who agree with me here will nevertheless scold me for using, à la Bastiat, the provocative word “plunderers.” But I stick to my choice of words.

“Plunderers” is descriptive, for plunder is in fact what trade restrictions are all about. For two and a half centuries now we proponents of free trade have played mostly on the rhetorical turf of protectionists. On this turf there are language biases galore, such as “trade deficit,” a lowering of home-country tariffs described as “concessions” to foreign countries, the arrival in the home country of especially low-priced imports condemned as “dumping,” and, indeed, the word “protection” itself. Also, don’t forget the constant, clanking parade of inapposite military and sports metaphors.

For two and a half centuries now we proponents of free trade have typically treated the efforts of rent-seekers and rent-dispensers to portray their use of the state to enrich themselves at the expense of others with intellectual and moral respect. Why?

No one attempts to intellectually rationalize the theft and violence committed by street gangs. No one attempts to rationalize shoplifting, vandalism, armed robbery, arson, or rape. (It would, do note, be child’s play for a competent economics graduate student to develop a coherent theory of “optimal gang violence” that shows that, under just the right set of circumstances, there is an “optimal” amount of gang violence that improves the national welfare.) We call these destructive exercises of theft, coercion, and violence “theft,” “coercion,” and “violence.” We call these predatory activities what they really are.

By calling protectionism what it really is – the plunder of the many by the politically powerful few – we more vividly and widely expose protectionism’s ugly and cruel reality.