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Wednesday, October 17, 2018

The Level Playing Field Fallacy: Bastiat’s Response

Not only do tariffs not "level the field," the analogy itself has no real bearing on trade whatsoever.

In the realm of political discourse, metaphors are powerful. A well-written metaphor paints a mental picture, and in doing so, transforms how we view the situation. Particularly powerful metaphors have the potential to redefine ethical considerations and replace proof with persuasion. The problem occurs when the metaphor is non-analogous to the situation it describes. Then it becomes detrimental to the pursuit of truth.

One of the most misleading metaphors in use today is the “level playing field” analogy. Such a phrase clearly originates from sports, where each team and player has to abide by the rules—clearly, no one would support a team that won by cheating! The term was first used figuratively in 1977 by John Bolger, a lobbyist for the US Bankers Association. Since then, it has been extended to numerous political contexts to demand laws that enforce “fairness.”

Trade policy has not been spared from its frequent usage. The use of the phrase “level playing field” is overused among politicians and pundits. (Indeed, a quick Google search of the terms “level playing field imports” yielded almost nine million results.) Needless to say, it is one of the most compelling and damning pieces of rhetoric employed by proponents of protectionism against free trade.

And it was debunked by Frederic Bastiat more than 150 years ago.

Bastiat’s Response

Frederic Bastiat was a 19th-century French economist. During his lifetime, the philosophy of protectionism reigned supreme among the French National Assembly and among the French people. Bastiat took it upon himself to defend free trade, and in Economic Sophisms, through a series of brilliant essays, he debunked each “sophism” arraigned against free trade. In Chapter 4, “Equalizing the Conditions of Production,” Bastiat quoted a major protectionist, who said:

In a horse race, the weight that each runner has to bear is weighed and the conditions are equalized; without this, they are no longer competitors. In matters of trade, if one of the sellers is able to deliver at lower cost, he ceases to be a competitor and becomes a monopolist. If you abolish this protection that represents the difference in cost, as soon as foreigners invade your market, they have acquired a monopoly in it.

While the metaphor used here is that of a horse race, it is still in practice the same as the rhetoric used today. The “level playing field” analogy used today maintains that a foreign company’s lower-priced product (which exists for whatever reason, be it from natural advantages or government subsidies) is an unfair advantage and a violation of the “level playing field” idea. That is that same idea as the one quoted here.

Well, what is Bastiat’s response?

This argument recurs constantly in articles written by the protectionist school…Here, as elsewhere, we find the theoreticians of protection situated in the producers’ camp, whereas we are taking up the cause of these unfortunate consumers whom they refuse to take into account. They compare the field of industry to the race track. However, the race track is simultaneously the means and the end. The public takes no interest in the competition outside the competition itself. When you start your horses with the sole aim of knowing which is the best runner, I can understand that you make the weights equal. But if your aim is to ensure that a major and urgent item of news reaches the post, could you with impunity create obstacles for the one that might offer you the best conditions of speed? This is, however, what you are doing to economic production. You are forgetting the result sought, which is well-being. You leave this out of the account, and even sacrifice it through completely begging the question.

In other words, rules to give each horse an equal opportunity (through equal weights) are warranted because the end goal of the race is to see which horse is the fastest. However, tariffs to ensure “equal opportunity” in commerce impede the end goal of production by reducing the quantity of goods available to consumers.

Means vs. Ends

As Bastiat points out, the difference between the horse race and economic production is that the horse race is simultaneously both the means and the end: the end is to see which horse is naturally fastest, which is done through the means of the race.

But in economic production, the end and the means are clearly separate. The purpose of economic production is to bring to the consumer a valuable product as cheaply as possible—to enhance consumption. Economic production is the means to make this possible.

You would not want to give a horse a certain advantage, say, by giving every other horse 15 extra pounds of weight, because that would inherently obstruct your ability to determine which horse is naturally the fastest. Therefore, hindering the means would inherently hinder the end. Conversely, making it harder for consumers to access goods through tariffs may actually help the means (economic producers), but it will definitely hinder the ends (consumption).

None of this is to say we shouldn’t have any rules in commerce. Not at all! Laws are justified to punish companies that violate individual rights and arguably, in certain cases, companies that impose costs on society. But the “level the playing field” analogy is a non-analogous and misleading metaphor because tariffs undermine the end of economic production: consumption.

  • Joshua Anumolu is a high-school student, thinker, writer, debater, and free-market enthusiast.