Quotation of the Day…

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… is from page iv of the late Nobel-laureate Gary Becker’s Foreword to the 1990 second edition of David Friedman’s superb textbook, Price Theory: An Intermediate Text:

[C]onsider tariffs, quotas, and other protection against imports. Almost 200 years ago, Alexander Hamilton argued that “infant” industries in the United States should be protected by tariffs so that the growth of those industries would not be stifled by competition from imports. Yet the evidence is clear that import protection is mainly given not to growing infant industries but to what Friedman calls “senile” industries, like steel and shoes. He shows how competition for political influence among special interest groups provides political support for tariffs and other trade restrictions that mainly benefit old declining industries.

DBx: Yep.

I’ll here add one small addition to Becker‘s point. Hamilton argued that in many cases so-called ‘infant-industries’ are best nurtured, not with tariffs, but instead with “bounties” (that is, with subsidies – which Hamilton recognized as having much, although not everything, in common with protective tariffs).