Applied to Protectionism
On his CafeHayek blog today, Don Boudreaux gave a great quote from a book by William Graham Sumner. The book is titled Protectionism: The ‘Ism Which Teaches that Waste Makes Wealth. You can access that book for free on Liberty Fund’s site here.
Here’s the quote:
If, now, it was possible to devise a scheme of legislation which should, according to protectionist ideas, be just the right jacket of taxation to fit this country to-day, how long would it fit? Not a week. Here are 55 millions of people on 3½ million square miles of land. Every day new lines of communication are opened, new discoveries made, new inventions produced, new processes applied, and the consequence is that the industrial system is in constant flux and change. How, if a correct system of protective taxes was a practicable thing at any given moment, could Congress keep up with the changes and readaptations which would be required. The notion is preposterous, and it is a monstrous thing.
That insight reminded me of a section of Robert Nozick’s Anarchy, State, and Utopia titled “How Liberty Upsets Patterns.” Nozick points out that if the distributionists get their way so that everyone has the ideal amount he or she should have (ideal based on their standards), this won’t last long. Some people will start spending money on seeing, say, Wilt Chamberlain, playing basketball. Actually, many people will do this. As a result, Wilt Chamberlain will get rich and he won’t have the initial distribution he was allowed: he will have more. And some of the people paying to see him play basketball will have less than the initial ideal distribution.
In short, liberty upsets patterns.
Similarly, let’s say Trump gets his way, whatever that is, and we get the ideal trade balance with each country. (That’s a huge assumption, because Trump seems to want a zero trade balance with each country, which would necessarily lead to a reduction in foreign investment in the United States or an increase in U.S. investment in other countries. But let’s assume it.)
Now someone in the United States decides he wants to buy more clothing from Vietnam. He wears it and other people notice it and want to buy more. Within a few months, the trade balance with Vietnam goes negative. We are buying more from them than they are buying from us.
That’s not a problem. But to life arrangers like Donald Trump, it is a problem.
Liberty upsets patterns, including trade balances.
