• 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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