Quotation of the Day…

by Don Boudreaux on August 12, 2020

in Adam Smith, Myths and Fallacies, Trade

… is from page 75 of the 1969 Arlington House edition of Ludwig von Mises’s 1944 Yale University Press book, Omnipotent Government: The Rise of the Total State and Total War (available free-of-charge on-line here):

However, the inference from Ricardo’s free-trade argument was irrefutable. Even if all other countries cling to protection, every nation serves its own interest best by free trade. Not for the sake of foreigners but for the sake of their own nation, the liberals advocated free trade.

DBx: Yep.

Note that the same feature that Mises here identifies about Ricardo’s analysis of international trade is also a feature of Adam Smith’s analysis of international trade. And it is a feature also of the analyses of most other economists – including Bastiat, Cannan, Haberler, Machlup, Bhagwati, Panagariya, and Irwin – who support a policy of free trade.

Among the most commonplace sophistries peddled by protectionists is this one: A policy of free trade followed by a government of a prosperous country is beneficial on net only if the economic welfare of foreigners is taken into account. Free-trade advocates at home are falsely portrayed by protectionists as rootless cosmopolitans, naive about human nature, who are willing to sacrifice the welfare of fellow citizens in order to increase that of foreigners.

Most protectionists, I suspect, hold this false belief about the case for free trade sincerely; their expression of this fallacy reflects a defect in their knowledge. But I’m sure that some protectionists know better; their expression of this fallacy reflects a defect in their ethics.

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