The manufacturers of air conditioners met in annual conclave. The depression had brought their business to a sorry state. Costs were rising and consumers just wouldn’t stand for any more price increases; indeed it was becoming apparent that any pickup in sales would require even lower prices.
Few of the members had any awareness as to the real cause of their difficulties: governmental intervention. They didn’t quite realize that overextended government was financing itself by increasing the volume of money and credit, resulting in lower money value and thus in higher costs. They didn’t read any significance into the fact that the dollar had lost 51 per cent of its purchasing power since 1939.
No, these producers of conditioned air were blaming other influences for their troubles. Most of the talk dwelt on the evils of foreign competition with its "cheap labor." "How on earth," they queried, "can we who pay $3.00 an hour for labor expect to compete with those foreigners who pay only 390 an hour for labor?" This line of reasoning made it more and more apparent to all that the ideal solution was to secure a tariff to equalize the cost differentials. A law to establish "competitive fairness" was the sense of the resolution about to be drafted.
Then came an interruption in the day’s deliberations. "Tarry a moment," cautioned an old member. "Our greatest competition isn’t coming from these foreigners with their low wages. The greatest competitor of all isn’t paying a cent for wages. Gentlemen, it’s Nature herself, the biggest supplier of fresh air ever known to man, that must command our attention. Let me show you how we can turn the law to our own and everyone’s advantage. Simply make it illegal for any home, barn, factory, auto, airplane, truck or locomotive cab, or any other enclosure to use any air not processed by a mechanical air conditioner. Reflect, please, on the merit of this proposal. Our industry will flourish and the increased demand for workers, for steel, for motors, and for thousands of other items will be on an unprecedented scale. Why, it may take a million skilled technicians just to service our machines. I implore you not to waste time on such trivia as a few minor foreign competitors. Let’s go at this thing in a big way. We can make the automotive industry look puny if you will but follow the course I commend."
The bankers gathered in annual conclave. They had lots of money to loan but borrowers were scarce. The bankers were concerned about competitive interest rates being too low for a "fair profit." The solution seemed obvious. Just pass a law setting a "floor" under interest rates. Make it illegal for anyone to charge or pay less. Overlooked entirely was the government’s near-complete control of the money market and of their business. And, not a word was said about the special privilege extended by government to credit unions and the outright loaning by government itself. Too touchy a subject!
Just as they were about to petition the Congress for a price control on loaned money, the dean of the financial fraternity rose to his feet. "Bankers, listen to my counsel. You are overlooking the real offenders. It’s not the folks who are running cut-rate money shops that should concern us. Yes, one-half or one per cent off the going rate here and there, but that’s peanuts. I tell you the culprits are of a different breed. They’re the givers, the ones who not only charge no interest rate at all but, gentlemen, they don’t even want their capital returned. Outlaw giving! Make illegal these gifts totaling hundreds of millions of dollars annually to schools, colleges, churches, charities and then we’ll have an active market for money. Demand for money will exceed the supply. The borrowers will be competing to get our money instead of our competing to loan it. Need I say more?"
The light and power people were assembled in annual conclave. Costs were rising and the government commissions just wouldn’t permit any more increases in rates. The people, pinched by government-induced inflation, had the commissioners on the political hot seat. The commissioners didn’t dare to do other than refuse the light and power petitions. Faced with this dilemma, the delegates saw no alternative but to increase the volume of their sales. But how?
Then came the answer from the cleverest among them. Said he, "The candlemakers we have put out of business.1 And the electric lamp has for all practical purposes replaced the gas lamp. We can’t make any substantial ground in these directions. That competition didn’t amount to anything, anyway. Our real competitor is old Sol, the Sun itself! The way to handle this competition has already been pointed out to us. I know of a modern hotel that hasn’t a single window and already there are many factories without windows. All their light is electric light. Simply pass a law shutting out all sunlight from the interior of all structures, homes as well as hotels, stores as well as factories. Do as I suggest and we’re in business."
That All May See
It should not be necessary to point out that the above accounts are at once fiction and satire. Nor would it be necessary were it not for the fact that millions of Americans from all walks of life are sponsors of this very brand of protectionism. Let not anyone laugh at the absurdity of these illustrations who supports subsidies to farmers or "social security" or TVA or who turns to the law to lessen competition in any of countless forms or who stands for featherbedding and any of the other compulsions practiced by labor unions. The above are but caricatures of things we practice, magnified and presented in the nude for easier viewing.
Take the case of keeping out the sunlight. What is this light? It is but radiant energy supplied by the sun. The earth gets its energy from the sun; therefore, any product in its natural state or as reshaped by man is as much from the sun as is the light by which we see. And candlelight, gaslight, electric light are as much from the sun’s radiant energy as is daylight.
We see by the sun’s radiant energy and we eat and keep warm and clothe and otherwise embellish ourselves by it. It is no more absurd to keep the light of the sun from shining into the lives and environment of human beings than it is to inhibit and obstruct other manifestations of its radiant energy from flowing into their lives. The fact that these other forms may take the shape of bicycles or facial tissues or soap or corn flakes, by whomever processed, does not alter the morality of the matter nor warrant the feathering of one’s own nest at the expense of others.
Protectionism is the obstructing of the sun’s radiant energy and/or creative human energy in their flow to those who wish them. If protectionists were precise in their petitions to government, their resolutions would read something as follows:
WHEREAS, we are heartily in favor of the sun’s radiant energy by which mankind is permitted to exist on this earth, nonetheless, some of this energy is flowing through the hands of competitors into the lives of people more advantageously than when flowing through our own hands;
THEREFORE, BE IT RESOLVED that the sun’s radiant energy be restricted from flowing into people’s lives to whatever extent is necessary to keep us in business.
To weigh the consequences of protectionism, imagine its substitution for the uninhibited travel and the free trade in goods and services that now prevail between the abutting states of Illinois and Wisconsin. Tariffs, quotas, and embargoes would be invoked, and custom and immigration officers would populate the border. Constabularies would be necessary to enforce the edicts. The people would begin growling at each other and, sooner or later, the constabularies would have a go at it to establish "justice" and to make the states "safe for democracy." Probably, at some future date, the government of the more prosperous state would tax its people that gifts might be made to the government of the "backward" state not only for the purpose of keeping it "from going communist" but to aid it in buying more of the prosperous state’s goods and services. And, surely, there would evolve a class of "economists" who with slide rules, charts, and statistics would "prove" the propriety of this "foreign aid" hokus pokus.
Bastiat was right in asserting that "when goods do not cross borders, soldiers will." Or, to state our own case in positive terms: When we forswear protectionism as a principle, we will be able to forego soldiers as a necessity.
Man’s higher role, it would seem, is not to use force to board up either windows or borders. It is, instead, to aim his genius at helping the sun to shine into the lives of all peoples. When we allow the free, uninhibited flow of all creative and radiant energy, we shall aid the true interests of all, for the true interests of all are harmonious.
‘The idea for this essay came from The Candlemakers’ Petition by Frederic Bastiat which appeared in THE FREEMAN, March 1958.
There is no limit to the sky;
And Nature holds no trace,
Nor check-rein on Her Bounty
More than God has ended Space.
‘Tis only man who limits things;
His love, his wealth, his mind;
To choose instead, a penury,
A stringence hard to find.
He digs around until he strikes
The makings of a mess;
For only man has figured out
That plenty comes from less!