Recently on Facebook, I shared my Café Hayek post titled “Lower-Priced Goods are a Blessing, Not a Curse.” I prefaced this share with this remark: “Protectionism is the theory that 10+2=6, and 10-2=16. And protectionists proudly and tirelessly defend this theory, happy to dismiss as ‘elitists,’ ‘experts,’ or ‘globalists’ those of us who point out that 10+2=12, and that 10-2=8.”
Of course, my description of protectionism isn’t literally true. And yet it does truly capture protectionism’s essence, which is the bizarre belief that a greater abundance of goods and services made available from sources outside of a nation’s boundaries reduces the supplies of goods and services available to the people of that nation, while policies that diminish the abundance of goods and services made available from sources outside of a nation’s boundaries increase the supplies of goods and services available to the people of that nation.
Putting aside the national-security exception to the case for free trade, such an arithmetical impossibility is indeed what 90 percent of protectionism is revealed to be, when stripped of the vague and misleading language typically deployed to mask its essence. Tariffs and other protectionist interventions are sold as means of creating more and higher-paying jobs (which would, in turn, reverse the allegedly rising “cost of thriving”), of paving paths for the development of “the industries of the future,” of raising impressive amounts of tax revenue from foreigners, of making the economy more ‘competitive,’ and generally of strengthening the domestic economy, improving the living standards of ordinary citizens.
Because voters overwhelmingly like policies that promise them greater access to goods and services, protectionists understandably trumpet the alleged ability of protectionism to deliver on this economic front.
But what about the remaining 10 percent of the attempted justifications of protectionism (again, putting aside considerations of national security)? These justifications pretend to be non-materialistic and, therefore, presumably are ‘higher’ and more weighty than are ‘merely economic’ concerns. Such is the stance, for example, of Mr. Kang Chen, who offered this comment in response to my Facebook post: “No. Protectionism is the theory that there are things that matter besides the prices of goods and services.”
An easy response to a comment such as Mr. Chen’s – a response that’s accurate and appropriate despite its easiness – is to point out that the great majority of the pleas for protectionism promise improved material well-being. More jobs. Higher wages. Rising standards of living. A larger share of our tax revenues paid by foreigners. Protectionists such as Mr. Chen would be taken more seriously if the likes of Donald Trump and Elizabeth Warren campaigned for higher tariffs by explicitly announcing that “tariffs will significantly raise, now and into the future, the prices of the goods and services that you and all American households regularly purchase. Most of you, therefore, will see your real wages fall and your material standard of living worsen. But don’t worry! Your lower standard of living will be more than offset by non-material benefits.”
Protectionist politicians never say such a thing. On rare occasions, protectionists triumphantly declare that higher tariffs might reduce people’s access to cartoonishly frivolous luxuries such as “plastic baubles and trinkets,” or, as President Trump said last year, “maybe the children will have two dolls instead of thirty.” (Such declarations are meant to convince voters that the economic costs of protectionism are trivial compared to its economic benefits.) But never do protectionist politicians campaign on a platform of arranging for people to be economically poorer as a price to be paid for non-economic benefits.
No more need be said to dismiss Mr. Chen’s suggestion that protectionism, in practice, is about the sacrifice of economic well-being for higher non-economic ends. But more can – and should – be said.
What people such as Mr. Chen and others believe themselves to be doing when they insist that protectionism is about more than “the prices of goods and services” is distinguishing themselves from free traders, who are assumed to be concerned only with narrow material ends. Mr. Chen and Co. fancy themselves as standing in gallant opposition to the horde of mindlessly materialistic free-traders in order to promote ends such as job security, the family, and the character of towns and regions.
But Mr. Chen and Co. deeply misunderstand the case for free trade. It is not a case for the elevation of shallow materialism over profoundly important non-economic ends.
First, very many (most?) free traders — including myself — support free trade ultimately because it’s consistent with individual liberty, while protectionism is an offense against individual liberty. Even if free trade somehow resulted in a reduced material standard of living, I and many other free traders would still champion it because of its non-economic virtue of being consistent with freedom. It’s fair for Mr. Chen and other protectionists not to esteem individual liberty as highly as do we free traders. It’s unfair, however, and mistaken for protectionists to accuse us free traders of valuing nothing higher than material enrichment.
Second, all motives for economic action ultimately are non-monetary (that is, they’re not about accumulating money for the sake of accumulating money). Some of these motives are material in a narrow sense and, hence, might be called “materialistic”: everyone must eat and be housed and clothed. And some of these materialistic motives are indeed crass and shallow and even contemptible: Joe uses some of his monetary earnings to get drunk on Friday nights while Janet regularly feeds some of her monetary earnings into slot machines. But other of these motives are not materialistic in any narrow sense: Jane spends much of her monetary earnings on piano lessons for her grandchildren while Jerry donates a portion of his monetary earnings to a community children’s theater and uses another portion to improve his and his wife’s learning by subscribing to The Rest Is History podcast. Because free trade increases the opportunities to do all of these things, it’s erroneous to suggest that the case for free trade is a case only for narrow material or sensual gratification.
Third, nearly all of the alleged non-materialistic benefits of protectionism are, in fact, materialistic benefits.
Consider, for example, job security. Job security is valued largely because a secure job is a secure stream of income. If job security really were a non-economic goal that trumps ‘mere’ material well-being, workers who have this goal could greatly increase the security of their jobs by offering to take a significant cut in their monetary wages. Yet, tellingly, such wage-cut offers seldom occur. The case for using protectionism to increase the job security of workers in protected industries is the case for having fellow citizens other than the protected workers pay the economic cost of making the protected jobs more secure.
It’s admirable to have non-economic goals. But it’s detestable to force other people to subsidize the achievement of these goals, and hypocritical to accuse those of us who object to such subsidization of being excessively materialistic. If any group in this situation is excessively materialistic, it’s the protected workers and the protectionists who apologize for them. These protectionists never pause to ponder what non-economic goals a policy of protectionism prevents the bulk of their fellow citizens from pursuing. As a result of having to pay prices driven higher by tariffs, how much leisure does a working mom lose? How much does a family’s education budget shrink? How much health care must another family forego? By how many years does dad postpone retirement?
If protectionists are in search of people who are mindlessly and narrowly materialistic – of people who are blind to the non-economic goals that most individuals have – protectionists should look in the mirror.
