All Commentary
Tuesday, September 1, 1981


The interests of every firm can be favored by all kinds of privileges granted to it by government. But if privileges are granted to the same extent also to other firms, every businessman loses—not only in his capacity as a consumer, but also in his capacity as a buyer of raw materials, half-finished products, machines and other equipment—on the one hand as much as he profits on the other. Selfish group interests may impel a man to ask for protection for his own firm. They can never motivate him to ask for universal protection for all firms if he is not sure to be protected to a greater extent than the other industries or enterprises.

If everybody is protected to the same extent, everybody not only loses as consumer as much as he gains as producer. Everybody, moreover, is harmed by the general drop in the productivity of labor which the shifting of industries from more favorable to less favorable locations brings about.

The only effect of protection is to divert production from those places in which it could produce more per unit of capital and labor expended to places in which it produces less. It makes people poorer, not more prosperous.

  • Ludwig von Mises (1881-1973) taught in Vienna and New York and served as a close adviser to the Foundation for Economic Education. He is considered the leading theorist of the Austrian School of the 20th century.