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If Protectionists are So Smart, Why Ain’t They Rich?

Here’s another letter to Warren Platts. (Understand: I have no expectation of changing Mr. Platts’s mind. I occasionally respond publicly to him only because the arguments that he offers, although invariably tired and weak, are typical of those made by protectionists who are clever enough to recall scattered bits of economic jargon and, hence, who pose some risk of influencing the general public.)

Mr. Platts:

Responding to my request that you (or any other protectionist) identify at least one economically relevant distinction that separates domestic commerce from international commerce, you offer this comment at EconLog:

That’s easy! In domestic trade, American workers only have to compete against each other. In international trade, American workers must compete against workers making $2/hour, if not $2/day!

When told that wage rates in markets reflect worker productivity – meaning, wages of workers in poor countries are very low because those workers are much less productive than are the high-wage workers in America and other wealthy countries – you push back by answering that “Low wages are a reflection of a country’s average productivity.”

Interesting. An implication of your point is that in low-wage countries many workers are underpaid (that is, paid wages below the value of what they produce) while other workers are overpaid (that is, paid wages above the value of what they produce). 

If you’re correct, you’ve identified a golden opportunity for personal profit! You should start businesses in Mexico and other poor countries and hire away to your enterprises all those underpaid workers. You’ll be able to employ them at wages that improve their well-being while still reaping for yourself a handsome profit. You can further increase your fortune by selling short – or by going into competition with – those firms that currently employ overpaid workers, as these firms are destined soon to bankrupt themselves.

You either truly do understand the implications of what you say and you believe these to be true or you don’t. If you do, prove it by putting your money where your mouth is. If, however, you refuse to put your money where your mouth is, you thereby supply sufficient evidence that you do not truly understand what you say or that you do not truly believe what you say. Either way, you then have no business calling on the U.S. government to coercively put our money where your mouth is by preventing the rest of us Americans from spending our incomes in whatever peaceful ways we choose.

In short, sir, put up or shut up.

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