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Friday, January 27, 2017

The Immorality of “America First” Economics

Protectionism makes everybody worse off, bar a select few who enjoy the fruits of less competition and higher prices.

The most alarming part of the next four years is clear to any advocate of liberty. The growing trend of protectionism and economic nationalism, most clearly signified in the figure of President Donald Trump, represents a staggering regression of the slowly rising tide of free exchange that the world has enjoyed for decades.

Proponents of protectionism, perhaps knowing they don’t have an economic leg to stand on, often make appeals to ethics and justice to justify a whole slew of tariffs and quotas. Advocates of free trade are accused of not caring about jobs or prosperity or are eyed with suspicion, as though they’re secretly working at the behest of a globalist elite.

The more and freer the trade, the better for human flourishing.

In truth, the benefits of free trade are vast for all nations, including the United States. The alternative — trade restricted by protective tariffs and quotas — concentrates benefits to a protected few who profit from reduced foreign competition.

To be sure, protectionism preserves some jobs, the most inefficient, outdated, and comparatively disadvantaged jobs, that is. Despite what protectionists wail, a nation and all its citizens are undoubtedly worse off when trade is limited.

Virtuous Trade

There is an inherent justice to free trade. Individuals can choose what they buy from where. Trade links individuals across the world together through vast networks of exchange. Integration through trade and exchange is a major factor for lifting people out of poverty. The more and freer the trade, the better for human flourishing.

Those who cling to false justifications of protectionism might take comfort from Abraham Kuyper, Dutch theologian-turned-politician. In Kuyper’s book Antirevolutionaire Staatkunde (or Anti-Revolutionary Politics), he discusses his political support of tariff increases in the Netherlands. Kuyper makes a moral argument in defense of tariffs which stems from his concerns about unemployment. He writes:

Excessive enthusiasm for Free Trade and for free movement of population can deprive men of work who would otherwise have it in abundance. Free Trade can have as a consequence that many items are fabricated abroad so that there is no work to be done here. This can be observed in its simplest form in the case of lumber. If unsawed logs are imported, then the wages of sawing can be earned here. If, however, lumber arrives sawed, then the wages for sawing are lost here.”

In this one brief excerpt, Kuyper echoes familiar protests against free trade. What will happen to the jobs for those who can’t stand up to foreign competition? What about their wages, and their families? To Kuyper, only the immoral man could ever advocate for “excessive” free trade.

Moral defenses of free trade are few and far between. However, there are exceptions. In a 1956 article titledAbraham Kuyper’s Unscriptural And Unsound Ideas On Tariff Protection,”Frederick Nymeyer takes Kuyper to task for what he sees as grievous moral and economic errors in his defense of tariffs.

Protectionism makes everybody worse off, bar a select few who enjoy the fruits of less competition and higher prices.

Kuyper’s defense of protectionism is rooted in concern for workers, like Dutch sawmill workers, who might be unemployed due to imports of already sawed lumber. These workers and the sawmill owners capture the concentrated benefits of restricted trade on lumber. However, the costs of restriction are spread across all the consumers of lumber throughout the Netherlands. They pay in higher prices.

As Nymeyer writes:

“From this viewpoint there was no gain to be obtained by Dutch sawmill employees except at the expense of other Dutchmen, namely the consumers. What virtuous morality is there in helping one man at the expense of another?”

The Immorality of Protectionism

In a protectionist system, the only gains come, as Nymeyer says, “at the expense of another.” For every sawmill worker who keeps his job, or enjoys higher wages, as the result of protectionism, thousands of other citizens suffer from a lesser ability to purchase what they want, and through higher prices for wood and anything for which wood is used.

In all cases, protectionist policies unfairly benefit a small, targeted group at the expense of entire countries.

Of course, domestic citizens are not the only ones harmed by this protectionist policy designed to benefit domestic sawmill workers. Foreign sawmill workers are harmed in the same way Kuyper fears for the Dutch. With fewer markets for their products, they may also end up unemployed.

Nymeyer argues that Kuyper, and other protectionists, approach the world with mixed morality. They only think of one specific category, such as workers in a protected industry. If they gain, it is just, even if thousands of others suffer at their expense. As Nymeyer says, “In plain language, Kuyper has scales for morality with two sets of weights; one set of weights for Dutchmen; another set of weights for Swedes [foreigners].”

Nymeyer did not go far enough. Protectionists have different “scales of morality” for domestic versus foreign producers but also for domestic producers versus domestic consumers. Protectionism makes everybody worse off, bar a select few who enjoy the fruits of less competition and higher prices.

The problem with protectionism is that it is rarely if ever confined to a single industry. Instead, it manifests itself into a whole restrictive system. Every industry becomes crucial and demands protection. Any concentrated gains that are realized in those industries become completely eroded, as goods in every sector become more expensive, and as the freedom for individuals to buy as they please collapses.

Protectionism is inherently immoral. In all cases, it unfairly benefits a small, targeted group at the expense of entire countries. It invites conflict between nations, reinforces nationalist ideas, and impoverishes everyone in the process. Not only is restricted international trade economic lunacy, but protectionism is wholly incompatible with justice, morality, and reason.

  • Tyler Groenendal is a graduate of Hillsdale College, and works for the Acton Institute for the Study of Religion and Liberty. He enjoys cats, liberty, and the music of Ritchie Blackmore.