Argument: The alternative to free trade is a faulty protectionism model

Issue Report: Free trade


  • Laurence M. Vance. “The Moral Case for Free Trade”. February 4, 2004 – “The alternative to free trade is protectionism, whether in the form of tariffs or import quotas. Besides making imported goods more expensive, tariffs merely give the government additional revenue. But why should the state be entitled to more money? Doesn’t the state already spend over $2 trillion a year? To question the legitimacy of free trade while at the same time saying that protectionist measures are not the answer is to attempt a middle-of-the-road position, which, as Mises showed, leads to socialism.
A rejection of free trade is an endorsement of interventionism. If trade is “harming” a sector of the U.S. economy, then who is to determine the remedy? Who decides how much of a tariff to impose? Who decides that only x amount of a good can be imported? The industry seeking protection? Why, it is the state, of course. This immediately raises three questions. Is the state responsible? Is the state capable? Is the state reliable?
Is the state responsible for protecting American industries from foreign competition? Then why not protect industries from domestic competition as well? And why not protect industries from each other? Why not protect companies that make regular cameras from companies that make digital cameras? Why not just take control of all production and distribution in the entire economy and protect everyone from everyone? Trade restrictions are the first step toward statism, for if the state knows what is best in the matter of trade, then why not the entire U.S. economy?”
Is the state capable of determining the ‘proper’ amount of protection required? How much of a tariff or quota should be imposed? And what should be their duration? What goods should be subject to a tariff or quota? What goods should be exempt? The possibility of such an economic calculation was refuted by Mises back in 1920.
Is the state reliable? That is, can we trust the state to make trade decisions that are in the best interests of American businesses and consumers? I think the answer is quite obvious. Granted, the state is good at one thing – mass bombing of countries that don’t submit to its hegemony.
Should all decisions on trade matters be left up to the likes of Robert Zoellick, the U.S. Trade Representative, Don Evans, the U.S. Secretary of Commerce, N. Gregory Mankiw, the Chairman of the Council of Economic Advisers, Stephen Friedman, the Director of the National Economic Council, or some other modern-day Jean Baptiste Colbert. Or perhaps this cabal should be expanded to include the thousands of career bureaucrats on the government payroll.”