… is from page 111 of Anne Krueger’s 2020 book, International Trade: What Everyone Needs to Know:
[I]t must be remembered that it is not possible to protect everything. If some activities are singled out for preference or protection, that means that the others are subject to discrimination and negative protection.
DBx: Yep. No matter how much the likes of Bernie Sanders and Donald Trump insist otherwise, reality isn’t optional.
Pop Quiz: Why does Krueger’s point hold even if the government were to impose prohibitive tariffs on all imports – that is, even if the government weren’t to single out a select relative few domestic industries for preference or protection, but, instead, imposed high protective tariff all imports? The answer is beneath the fold.
Answer to the pop quiz: Many goods and services – and especially services, and especially in a country as large as the United States – are not in the “traded” sector. Think of your dentist, the person who cuts your hair, and the person who comes to your house to repair your automatic dishwasher. Producers and sellers of goods and services that aren’t in the traded sector will be unprotected by the universal protective tariffs. These tariffs will inflict on these producers and sellers negative protection – that is, positive harm – as spending and resources are drawn away from their industries into the “traded-goods” industries that expand behind the high tariff barriers.
A more advanced answer would explain how even many of the traded-goods industries would nevertheless suffer as a result of such universal protective tariffs.
…..
Because protectionism leaves most citizens of the home country less prosperous than they would otherwise be – and because it also necessarily damages and destroys many home-country industries – perhaps we should start calling it “abusism.” “Abusism” is a much more accurate descriptor.
