… is from page 122 of the 1992 collection of some of William Graham Sumner’s finest essays, On Liberty, Society, and Politics (Roger C. Bannister, ed.); specifically, this quotation is from Sumner’s brilliant January 1881 Princeton Review essay, “The Argument against Protective Taxes”:
The people of the United States can compete with anybody in getting wealth. The high wages are a proof of it; but they cannot compete with everybody else in every form of industry. They have only a limited number of laborers and a limited amount of capital. The same man cannot be doing two things at once. The same capital cannot be employed in two uses. Hence it will be wise and necessary to choose the most profitable of all the profitable employments which are possible. It will follow that we cannot afford to compete in any industry which will not pay here as well as those which have special advantages here. If we cannot compete, it is because we cannot afford to compete. We are too well off. We cannot compete with “foreign paupers,” just because we are not paupers.
DBx: Humankind will enjoy the riches promised by protectionists on the same day that some alchemist turns lead into gold and some wizard mathemetician offers irrefutable proof that circles feature 90-degree angles.
Of course it’s possible that trade restrictions can revive this particular industry, expand employment at that particular firm, raise the wages of those particular workers, and increase particular kinds of employment opportunities. It’s even (barely) within the realm of possibility that protectionism can elevate the level of human happiness within the nation. What protectionism cannot do is increase the abundance of material goods and services available to the people of the nation. Protectionism can only decrease this abundance.
The chief reason protectionism is destined to fail to deliver on its promises of raising the general material standard of living within the country is grounded in two facts. The first and most fundamental is that, as Sumner notes in the quotation above, resources are and will always be scarce; using a particular plot of land and a particular group of workers to produce steel today means that whatever else that might be of value to human beings that that land and those workers could have produced will not be produced. Too many protectionists write, talk, and tweet as if any and all expansions of domestic output made possible by protective measures are free – as if increased production of these additional outputs does not result in decreased production of other valuable outputs.
The second fact that dooms protectionism to failure is that no human being (or group of human beings) can have sufficient knowledge and information about how to allocate resources in ways that consistently produce better outcomes than – or, even, outcomes that are as good as – the outcomes generated on free markets. The knowledge and information that is created by the decentralized competition of private-property owners, and then which is transmitted continually throughout the economy in prices and other market signals, cannot, as a practical matter, ever be bested by government officials.
To trust government officials using protectionist measures to outperform the market at allocating resources is akin to allowing a thief to seize your car under the pretense that he knows better than you where and how to drive – and then, as the brute takes control of the steering wheel after shoving you into the passenger seat, blindfolds himself, gulps down a bottle of moonshine, and hits the accelerator hard.
Happy travels.
