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Henry Olsen Really Should Learn Some Economics

Here’s a letter to the Washington Post:


In praising Oren Cass’s new think tank, American Compass, pushing an agenda of protectionism, Henry Olsen displays a failure to understand the case for free markets and free trade (“This new think tank wants to reform conservatism. Republicans ignore it at their peril,” May 5). This failure is most vividly revealed when Olsen – thinking himself as scoring points against the case for free markets and free trade – writes that this case “has meant that government cannot ‘pick winners and losers’ and must remain passive and silent even if the market’s movements create losers of millions of Americans.”

Free traders oppose government using tariffs and subsidies to pick winners and losers for at least two reasons, neither of which Olsen grasps. First, economics offers solid theory – and history offers solid evidence – to show not that government cannot pick winners and losers (of course it can), but, instead, that government too often picks as winners losers, and as losers winners.

Second, Olsen seems unaware that when government prevents trade from destroying the jobs of some Americans it thereby destroys the jobs of other Americans. For example, tariffs that protect American steel workers destroy jobs for Americans working in industries that export, that use steel as an input, and that are buoyed by foreign investments. (It’s a wonder that people such as Olsen apparently never pause to ask ‘What do foreigners do with the dollars they earn by selling their exports to Americans?’)

Unlike Olsen who sees only the jobs that protectionism saves, free traders see also the jobs – and the economic growth – that protectionism destroys. Blind to what free traders see, Henry Olsen, Oren Cass, and other protectionists continue to misunderstand and misrepresent the case for free trade.

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