Here’s a note to a new correspondent:
Mr. K__:
Thanks for your e-mail.
You write that Phil Gramm and I, in our January 18th Wall Street Journal op-ed, “miss workers becoming unproductive when they lose their jobs to imports. This is a main reason why tariffs are necessary.”
With respect, you’re mistaken. Workers are indeed unproductive when they’re unemployed, but you overlook an important reality: just as some particular jobs are destroyed by imports, other particular jobs are destroyed by protectionism. When the U.S. government raises tariffs, some workers in America who produce goods for export lose their jobs. The same unfortunate fate befalls some workers in firms financed by foreign investment or that use imports as inputs. These workers – workers who lose their jobs because tariffs are raised – are just as unproductive while unemployed as are workers who lose their jobs to imports.
But there the similarity ends. With free trade, workers lose jobs in industries for which Americans have a comparative disadvantage and find new jobs in industries for which Americans have a comparative advantage. The jobs created by free trade are more productive than are the jobs destroyed. The opposite is true of protectionism. When tariffs are raised, workers keep jobs in industries for which Americans have a comparative disadvantage, thus destroying jobs in industries for which Americans have a comparative advantage. The jobs saved by protectionism are less productive than are the jobs it destroys.
Gramm’s and my point stands: Even if it were true that trade policy is to be judged successful only if and insofar as it increases the ability of workers or the nation to produce, protectionism is literally counterproductive.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
