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There’s Nothing Unique About Competition from Imports

I’ll stop repeating economic facts when protectionists stop repeating economic fallacies.

Mr. McKinney:

You assert that I “drop the ball totally” when I write, as I did here, that “Free trade alone subjects [domestic] companies to maximum competitive pressures to operate in the public interest, while tariffs allow them to profit by snubbing the public interest.” In your view, because free trade allows domestic producers to import inputs “made by low wage foreign workers,” free trade “frees corporations to act AGAINST the public interest by destroying American jobs.”

Not so. Contrary to your belief, competition that prompts firms to economize on labor employed domestically promotes the public interest every bit as much as does competition that prompts firms to offer goods and services that consumers value. Put differently, the public interest is served by any practice or policy that rewards firms for reducing costs relative to the value of the outputs offered for sale to consumers.

If you truly believe that competitive forces work against the public interest whenever they prompt existing firms to economize on labor employed domestically, then your gripe is with far more than the competition that comes from imports. Your gripe is with competition itself.  After all, competition incessantly drives firms to reduce the amounts of inputs used while increasing the value of outputs produced, and incites entrepreneurs to introduce new goods and services that ‘destroy’ some existing firms and jobs.

With the same energy that you regularly expend railing against imports, you should rail also against delivery firms that replace smaller vans with larger ones – airlines that upgrade their fleets so that less maintenance and repair are required – tire manufacturers that introduce tires that last longer and are less likely to be punctured – new toothpaste that reduces the incidence of cavities and gum disease – video-streaming services that reduce consumers’ demand to watch movies in theaters – people who discourage others from consuming tobacco, alcohol, and fatty foods – yoga instructors and exercise websites that shrink the demand for physical therapists – improved food-packaging that reduces the damage to foods being shipped to market – pharmaceutical products that reduce the risks of unwanted pregnancies and STDs and, thus, reduce the demand for condoms – our increasing wealth that enables more of us to vacation abroad – the growing popularity of beards which lowers the demand for razorblades…. This list is practically endless.

Until and unless you offer a compelling reason why the job churn regularly caused by all competition and economic change is harmful, you have no basis for asserting that competition from imports is not in the public interest.

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