Rejecting the Nonsense of Protectionism

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Since the
2008 election battles are already well under way, pressures toward
protectionism to steal from others to line constituents’ pockets
are intensifying. Through their patrons in Washington, industries
and unions are pushing even harder for what amounts to delegated
government taxing power over their consumers, using the offer
of election year resources as a lure.

Of course,
the conspiracies between special interests and their pet politicians
must make at least minimally plausible sounding arguments for
why the blatant favoritism at others’ expense is really even-handed.
As a result, each such cabal tries mightily to formulate "new
and improved" rhetoric for why free trade may be a good idea
in general, but just not in their particular case. However, those
efforts simply recycle confusion or bad ideas that were debunked
long ago. That is why classic analyses of such arguments are often
helpful in refuting the most recent claims.

One
of the most powerful such analyses comes from William Graham Sumner,
who died April 12, almost a century ago. His "The Argument
Against Protective Taxes," originally published in 1881 (reprinted
in his On
Liberty, Society, and Politics
), is as appropriate today
as when he wrote it.

"The
most absurd assertion which can be put into language is that
a thing (e.g., free trade) is true in theory but is false in
practice. For, if free trade is not true in practice, something
else, viz., restricted trade, is alleged to be true and beneficial
in practice … Any one, therefore, who makes this assertion
is either guilty of very loose thinking, or else he seeks an
escape, at all hazards, from rational conclusions against which
he can no longer contend."

"[The
controversy over protectionism] … its fruitlessness has
been due, in large measure, to the ambiguities, false definitions,
and confusion which has prevailed in it … [and] the glib
commonplaces by which people get rid of the trouble of thinking…"

"
… my point of attack is protection under any form or in
any degree … "

"I
maintain against any system of restriction whatsoever that it
renders that ratio [of material good to sacrifice] less favorable
to men than it would be under freedom … Instead of increasing
wealth, it is mathematically demonstrable that it lessens wealth
… by taking away one man’s earnings to give them to another.
I mean to say that a man must work harder and longer to get
a given amount of product under protection than under free trade…this
state of things is due to the statute law, which steps in and
takes away part of his product and gives it to another man."

"The
economic question about [protectionism] is: Does it enable the
population of the country to command greater material good for
a given effort? The political question about protection is:
Does the statute enacted by the legislature alter the distribution
of property so that one man enjoys another man’s earnings? Has
the state a law in operation which enables one citizen to collect
taxes of another?"

"The
philosophical protectionists at once reply that this is not
the question … They are not willing to consider the question
of wealth aside from other things. They want to embrace in the
view what they call moral, political, social, esthetic, and
sentimental considerations. Their instinct is perfectly correct
when they oppose those operations of analysis and classification
which would introduce clearness and precision into the discussion
… [they] keep clear mixed with unclear … [and] dogmas
which are conveniently vague, loose and broad … "

"
… regard the introduction of extraneous elements, no matter
under what high-sounding names … as sure signs of impending
confusion and fallacy … "

"Any
favor or encouragement which the protective tariff system exerts
on one group of its population must be won by an equivalent
oppression exerted on some other group … If the legislation
did not simply transfer capital it would have to make capital
out of nothing. Now the transfer is not simply an equal redistribution;
there is loss and waste in the case of any tax whatsoever …
We cannot collect taxes and redistribute them without loss;
much less can we produce forced monopolies and distorted industrial
relations without loss."

"It
is very singular that the people who believe in these notions
are so slow to understand the fact that whatever lessens the
wealth of a community, in the widest generalization or deduction
only lessens its wealth!"

"…[protectionism]
can appeal to no motive save that of desire for profit. It does
so by providing that a certain industry shall, under protection,
pay higher profits than it could under freedom … The rest
is all phrases intended to occupy attention while the thimblerig
is going on."

"A
restricted trade lowers the physical well-being of the population,
and, with that, all chance at intellectual and moral well-being,
below what it would be under free trade…"

"
… [protectionism] can win nothing for some without an equivalent
or greater deduction from others … whatever strength and
help it brings to them as a group it must take from other groups
… this operation cannot increase the national welfare…"

"
… this humbug … was all rhetoric … we were right
to debate it as a question of dollars and cents only. There
is nothing else in it. A wants protection; that is, he wants
B’s money. B does not want to let him have it. A talks sentiment
and metaphysics finely, and, after all, all there is in it is
that he wants B’s money. A does not otherwise show much interest
in sentiment and patriotism and metaphysical goods generally.
He never goes to Washington to lobby … unless there is
a chance in it for him to get B’s money. He is then moved to
scorn at B’s love of money… because B will not give up
his money. The matter is all stated from A’s standpoint. We
see him all the time. For him to want B’s money is patriotic.
It is "developing our resources." It is noble. For
B to want to keep the same money is mean. I insist upon the
matter being stated in the most crass and vulgar way, just because
that is all there is of it when the humbug is all eliminated."

"Competition
is the force which under freedom indicates to us what we can
do for ourselves and them, and what we can let them do for us
to our final maximum advantage. To shut off competition and
go into the industries which…Congress or the caprice of
individuals may select, is like unhinging the compass and steering
the ship by chance."

"If
the industry does not pay … it is wasting and destroying…The
protected manufacturer is forced to allege, when it asks for
protection, that his business would not pay without it. He proposes
to waste capital. If he should waste his own wealth he would
not go on long. He therefore asks the legislature to give him
power to lay taxes on his fellow-citizens, to collect from them
the capital which he intends to waste, and good wages for himself
while he is carrying on that business besides … Either
an industry can pay under freedom, in which case it does not
need protection, or else it would not pay under freedom, in
which case it is wasting the wealth of the nation as long as
it goes on."

William Graham
Sumner noted that when it came to protectionism, "Common-sense
makes its way very slowly into the minds of men when it has to
rely on its own merits." After all, the self-interest of
those who wish to employ the government to take from others often
blinds them to rational argument, and those who want to land the
job of facilitating such transactions for what he called "parasite
industries" are more than eager to do so. But it still does
not change the truth that "any scheme which aims to gain,
not by the legitimate fruits of industry and enterprise, but by
extorting from somebody a part of his product" deserves moral
condemnation.

April
11, 2007

Gary M.
Galles [send him mail]
is a professor of economics at Pepperdine University.

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