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Quotation of the Day…

is from page 89 of the 5th edition (2020) of Douglas Irwin’s excellent book Free Trade Under Fire:

Second, protectionist policies distort domestic prices in a way that leads to inefficiency (wasted resources), or in economic jargon, a deadweight loss. As import restrictions push the domestic price of a good above the world price, domestic firms produce more (at a higher cost than the goods would be available on the world market), while consumers buy less than they otherwise would, forgoing some of the benefits of consumption. The inefficiency associated with these distortions of incentives imposes a deadweight loss on the overall economy. Trade barriers are like an income transfer in which ten dollars is taken from consumer while giving only eight dollars to producers, resulting in a two-dollar loss to the economy as a whole.

DBx: Yes.

The lot of the protectionist is a sad and difficult one, for the task that he or she chooses to perform is to demonstrate that the state of reality is such that a wise government can arrange to subtract two from ten and wind up with a sum of 15.

One reason the case for free trade must be repeated over and over again and again is that powerful producer groups are forever attempting to gull the public to believe that 10-2=15. But there’s an additional reason why the case for free trade must repeatedly be repeated: Protectionism is embraced not just by rent-seekers but also by many well-meaning people who mysteriously seem to be intoxicated by the illogic of 10-2=15. It would, after all, be oh so wonderful if we humans could get 15 units of output simply by having the government forcibly take from us two units for every of ten in our possession.

Individuals who embrace and peddle such illogic will not be convinced by logic (or evidence). If an adult passionately insists that 10-2=15, what arguments are at your disposal to convince that person that he or she is mistaken?