Here’s a note to a long-ago undergraduate student of mine:
Eric:
Thanks for your feedback on Phil Gramm’s and my piece in today’s Wall Street Journal. Your main criticism is that we “don’t address the China danger.”
We don’t address this danger because it’s not the principal reason that motivates Trump’s protectionism. Trump is a protectionist chiefly because he believes protectionism will enrich Americans economically. But in this matter he’s dead wrong. I’ll not here rehearse the countless fallacies that infect his, and nearly every other protectionist’s, argument that the people of a country are made richer when their government forcibly restricts their access to goods, services, and capital and other inputs. The economic argument for protectionism has been debunked again and again and again, both theoretically and empirically. This bundle of balony continues to be sold and swallowed only because venal rent-seekers who gain by plundering their fellow citizens prey upon the public’s economic ignorance.
I accept – as does Sen. Gramm – that there’s a national-security exception to what should be a general policy of unilateral free trade. But this exception is just that: an exception. If it is to work, it must be prudently used and carefully targeted to achieve well-specified and real national-security goals. Across-the-board tariffs, or tariffs imposed for the ludicrous purpose of reducing a country’s so-called “trade deficit,” don’t fit this bill. Indeed, by raising business people’s rewards of pandering to politicians relative to those of satisfying consumers – as well as by diverting resources from efficient to inefficient domestic uses – such tariffs would make us poorer over time and, thus, worsen our military capabilities. And the prospects of actually getting into hot wars would rise because we and other countries would have less to lose by physically destroying each other’s plant, equipment, and people.
Yelling “China!” is not an incantation that nullifies economic reality or justifies any and all protectionist measures.
Sincerely,
Don
