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Quotation of the Day…

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… is from page 295 of Deirdre McCloskey’s wonderful 2019 book, Why Liberalism Works: How True Liberal Values Produce a Freer, More Equal, Prosperous World for All [2]:

As argued by the economists John Harsanyi, James Buchanan, and Gordon Tullock, and by the philosopher John Rawls, the politically relevant question is which society you would rather enter at birth, without knowing where in it you would end up. Choose: One in which all jobs are protected, bureaucrats decide who gets the limited amount of special subsidies, journalists direct attention to the losers instead of to the winners, and the economy slides into stagnation and youth unemployment? Or one in which labor laws are flexible, workers decide their own futures, journalists know some economics, and the economy lifts up the poorest among us? It’s a choice between a poor but stable economy and a rich but risky one. At some tradeoff – one that seems to exist in the actual world – most people would choose riches.

DBx: Deirdre here identifies precisely the tradeoff implied by protectionist philosophies. Yet because of the sheer size and continuing dynamism of the American economy – actually, the global economy – this tradeoff is masked. Sincere protectionists conclude that protectionism is on net a productive policy because excusing a relatively small number of producers from having to abide by the rules of market competition not only often enriches those protected producers but also doesn’t cause the economy to crash.

It’s a textbook commission of the fallacy of composition: what’s true for a part of the group must be true for the whole group. But of course in the case of protectionism what’s true for a part of the group is not true for the whole group. Just as the successful pickpocketer is mistaken to conclude from his own enrichment at others’ expense that all humans would be enriched if all humans turned to pickpocketing, the protectionist is mistaken to conclude from the enrichment of protected industries X and Y that all people would be enriched if all industries were protected.

Every protectionist in practice is a special pleader: he or she pleads for a relatively small number of people to be excused from having to play by the rules of competition, and, thereby, to be enriched at the greater expense of many others who must continue to play by these rules. I say “must continue to play by these rules” because, were everyone, or a sizable number of people, protected from competition, no one would be enriched; everyone would be impoverished.

Protectionists across the political spectrum – from Donald Trump, Oren Cass, and Daniel McCarthy on the right to Sherrod Brown, Bernie Sanders, and Elizabeth Warren on the left – are forever going on about fairness, dignity, increased prosperity, and playing by the rules. All of them, however, are blind as bricks to the fact that it is their preferred policies that are unfair, undignified, impoverishing, and a violation of the rules.