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Quotation of the Day…

… is from page 175 of Bas Van Der Vossen’s and Jason Brennan’s excellent 2018 book, In Defense of Openness:

Countries around the world have erected walls and barriers that stop free people from being productive. Our world actively prevents people from doing the things that actually abolish poverty. It interferes with their productive abilities, it stops them from working where their services are most needed, and it makes it difficult to sell their products to others who want them.

DBx: Here’s a commonplace fallacy: Because workers in jobs that satisfy especially pressing human wants are paid high wages, a key to making a country more prosperous is to artificially create especially pressing human wants.

Stated so starkly, no one accepts this formulation. But in practice this formulation is a central article of faith embraced by all who argue that protectionist measures promote greater prosperity in the home country. The protectionist observes that workers in the past who were employed to manufacture some particular good earned unusually high wages. Seeing that that particular good is now manufactured abroad and imported into the home country, the protectionist concludes that the home country is now poorer because those particular high-wage jobs no longer exist in the home country. How to ‘solve’ this ‘problem’? Simple! Use government coercion to make that particular good more scarce in the home country – that is, use government coercion to obstruct fellow citizens’ abilities to acquire that particular good from abroad.

Observing the protection-enabled high-paying jobs in the domestic economy, the protectionist then applauds his genius and humanity. “Take note,” the protectionist boasts, “the protectionism that I support enables these particular workers to earn higher wages!”

The protectionist – and the economically uninformed people who fall for his fallacy – doesn’t understand that the objective of production is to reduce scarcity. The protectionist misses the fact that when we rightly applaud the high incomes earned by producers who successfully reduce scarcity, we are applauding rewards justly earned for the successful reduction of scarcity. Deeply confused, the protectionist thinks that we are applauding the high wages as such. The protectionist mistakenly thinks that these high wages are a cause of prosperity; he doesn’t realize that these high wages are a result of the successful creation of more prosperity – that is, a result of the successful reduction of scarcity.

And the protectionist then leaps from this mistaken understanding to the whack-a-doodle conclusion that prosperity is created by keeping it artificially limited – that scarcity is reduced by using government coercion to make scarcity artificially increase.

Again, the protectionist is someone who, had he the courage and sense to follow his logic to where it leads, would argue that, because oncologists earn high incomes, the nation would become wealthier if government arranged for more people to have cancer.