Here’s another letter to a protectionist who, alas, is of a type that is all-too-common today.
Mr. Seligman:
With respect, your continuing efforts to defend protectionism get weaker and weaker. Now you accuse us economists of being in error when we point out that resources are scarce. Your evidence for the remarkable proposition that resources aren’t scarce is that fracking and other innovations have made petroleum and other resources more abundant than they were in the past.
You’re seemingly unaware that economists (who you admit to holding in disdain) have long recognized that innovation in market economies makes resources more abundant over time. Indeed, one of my great heroes is the late Julian Simon, who featured this reality front and center throughout his work. But greater abundance over time no more enables society to escape the bounds of scarcity than your rising income over time allows you to escape those bounds. A dollar that you spend on a loaf of bread is a dollar that you can no longer spend on anything else – a reality that is no less true today when your income is higher than it was yesterday when your income was lower.
Every barrel of petroleum, every roll of steel, every ton of copper, every square foot of every factory and every farm, every hour of every worker’s time, every exertion of ingenuity by every entrepreneur, and every quantum of every investor’s willingness to bear risks – every unit of every input that you can name other than air – is scarce. No particular unit of any resource can be in two places at one time. Using a unit of any resource to produce output X necessarily prevents that resource-unit from being used to produce countless other outputs – other outputs that, were that resource-input superabundant, would have been produced.
But suppose I’m wrong, and you’re correct that resources aren’t scarce. Your case for protectionism remains invalid.
If, as you say, resources aren’t scarce, then there’s no obstacle to increasing the domestic production of whatever outputs you fancy, by as much as you fancy. In your world of no resource scarcity, the outputs of the U.S. steel industry, of the U.S. automobile industry, of the U.S. chemical industry, of any U.S. industry you can imagine (and even of those that you can’t imagine) can be expanded as far as you please without the government having to impede Americans’ purchases of imports. It is precisely because you realize, if only in your gut, that resources are indeed scarce that you perceive a need for protectionism to draw resources into the industries that you believe should grow.
You, of course, will dismiss the above argument because it comes from – gasp! – a professor of economics. But as a fellow human being, not as a professor, I challenge you to identify the flaw in my argument above. Dismissing my argument solely because I’ve spent most of my career in a classroom puts your case for protectionism in a very poor light.
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
