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Quotation of the Day…

is from page 8 of the Introduction to the 5th edition (2020) of Douglas Irwin’s great book Free Trade Under Fire:

While the views of economists deserve critical scrutiny, they also deserve a fair hearing. Economists have studied trade for a very long time and have noticed that the same worries and fears about trade tend to get repeated generation after generation. “With America’s high standard of living, we cannot successfully compete against foreign producers because of lower foreign wages and a lower cost of production.” This claim is heard today, but this particular statement comes from President Herbert Hoover in 1929 as he urged Congress to pass what became known as the Smoot-Hawley Tariff on the eve of the Great Depression. Among the claims heard yesterday and today is that trade will destroy jobs, leading to higher unemployment and lower wages, and that trade deficits will siphon away a country’s wealth. To economists, these are fallacies that history and experience have refuted time and again.

DBx: Protectionists today write and talk confidently as if they are either offering cutting-edge insights or revealing long-ago-discovered faults with economists’ theory of trade – faults that economists today stubbornly ignore. Both stances are mistaken. My guess is that the last time an original argument against free trade was offered was well over a century ago.

And as for the greater and more-nuanced understanding of trade that people such as Robert Lighthizer, Oren Cass, and Ha-Joon Chang claim to possess, it’s bogus. Protectionists such as these routinely mischaracterize – out of ignorance rather than intention – the case for free trade (such as, for example, when they assert that free trade ‘works’ only when trade is ‘balanced,’ meaning no trade deficits or surpluses).

It is no exaggeration to say that, with rare exceptions, arguments made against free trade, yesterday and today, are ridiculous in their assumptions, reasoning, and conclusions. These arguments, no matter how elaborate and well-footnoted – amount to nothing more than futile attempts to prove that ten minus two sometimes equals thirteen.

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