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I Don’t Understand Why this Simple Point Isn’t Immediately Obvious

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Here’s a letter to a soon-to-be economics graduate student:

Mr. Mendoza:

Thanks for your e-mail.

You’re correct that “economists discovered several explanations showing situations where free trade damages the economy.” But you’re incorrect to conclude that these explanations should therefore guide real-world policy. These explanations are all white-board wonders, irrelevant to reality.

If you allow me to assume that government officials have superhuman knowledge and angelic motivations, I can – as you put it – “discover several explanations” of almost anything you care to show, not just that there should be no “presumption against protectionism.”

If we assume the existence of godlike government officials able to determine when protectionism – that is, the use of force to obstruct peaceful commerce – will redound to the public good, why not also assume that these same officials are able to determine when arson will redound to the public good? After all, a clever ninth-grader can spin a tale of how, under just the right circumstances, torching the homes and businesses of peaceful people will redound to the public good.

Indeed, given our happy situation of being ruled by superhumans, we should have no rules whatsoever. Strict prohibitions of theft, forgery, rape, even murder would be harmful, as these prohibitions would prevent our godlike leaders from allowing these activities to occur in those circumstances when, theory will show and our leaders will know, these activities are beneficial.

The bottom line is that every economic argument in support of protectionism is rooted in the twin assumptions of government officials being (1) much better informed about economic reality than are non-officials, and (2) motivated to serve the public even when doing so damages their own personal well-being.

Until and unless someone persuades me that both of these dubious (to say the least) assumptions are valid, I’ll continue to maintain that there is no rational argument against the proposition that each country’s economic interests are best served by a policy of unilateral and complete 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