Bonus Quotation of the Day…

by Don Boudreaux on July 14, 2022

in Crony Capitalism, Economics, Seen and Unseen, Trade

… is from page 364 of the late, great Paul Heyne‘s insightful 1981 paper “Measures of Wealth and Assumptions of Right: An Inquiry” as it is reprinted in the 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.):

[I]n the political arena, the unanswered claim that a particular policy is unjust will almost always defeat a similarly unanswered argument that the alternative is inefficient.

DBx: For better or worse, Heyne’s observation is true, and likely always to be true. And so we economists had better improve our ability to reveal how many of the consequences of economic inefficiency are normatively relevant to the general public. Noting that this or that government intervention causes resources to be allocated less efficiently than otherwise is indeed uninteresting to the general public. But intensely interesting is noting that inefficiently allocated resources means slower wage growth for low-wage workers, less-effective health care for the middle class, and reduced ability to afford protection of the environment.

Also, pointing out, for example, that the aggregate dollar value of the gains seized by parties who benefit from protective tariffs are smaller than are the resulting aggregate dollar losses suffered by the general public has far less normative oomph than does pointing out that tariffs are a means by which the politically powerful coerce peaceful men and women into spending their own money in ways that these men and women would prefer not to spend their own money. When making the case against protectionism, it is no breach of the economist‘s professional duty for him or her to explain how economics casts much doubt on the widespread presumption that market exchange that occurs across political boundaries differs ethically from market exchange that occurs within political boundaries.

It is, in short, well within the professional role of the economist to describe protective tariffs as a weapon used by politically powerful producer groups to rob the general public. That this weapon isn‘t a gun, knife, or bludgeon – that this weapon isn‘t visible to the victims against whom it is used – that this weapon is more sophisticated than are the weapons commonly wielded by street thugs does not distinguish robbery by protectionism from robbery at literal gunpoint. Both are inefficient, it is true, as any competent economist can demonstrate. But both are also unjust – and also as any competent economist should be able and willing to demonstrate.

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