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Still Awaiting a Good Reason for Why International Trade Differs Meaningfully from Domestic Trade

Sunday, February 26, 2017 10:27
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In a Facebook response to this cartoon showing – correctly – that tariffs inflict damage chiefly on the bulk of the population of the country whose government imposes tariffs, a Mr. Tom Moyers writes:

Probably one of the more stupid cartoons I’ve seen used to explain any situation. It is inferring that some sort of crash or derailment would happen as a result of tariffs. Since you like using stupid cartoons to explain things, you could also add another slide of the guy getting up and riding again, because the cartoon is not looking long term. It’s the same argument I keep hearing from academics every time free trade comes up, thankfully our leadership doesn’t buy into it.

Mr. Moyers obviously thinks himself to be clever, but he doesn’t realize that the argument he makes here is centuries old and has been refuted many times in many different ways by economists over many years.  Here’s my Facebook reply to this bit of economic error:

Mr. Moyers: Do you grow your own food? Weave your own cloth? Supply all of your own medical care? If not, you really should rethink your mistaken views about trade, for surely you would not want me to accuse you – you who buy food, clothing, and medical care from others – of failing to look at how well you would do for you and your family “in the long run” should you stop yourself from trading with grocers, department stores, and medical doctors.

Protectionists and other economically uninformed people such as this Mr. Moyers invariably respond to this point by insisting, in one way or another, that matters for a country differ from those of a household (or for some unit or region smaller than a nation-state).  Yet no one – and certainly not Mr. Moyers – has yet satisfactorily explained just how things are different in ways that refute the original point.  If Mr. Moyers improves his economic well-being by specializing in performing whatever work he does for a living and then uses the income from his work to buy food, clothing, and medical care (and countless other kinds of goods and services) from people outside of his household, the same logic dictates that the people in Mr. Moyers’s neighborhood improve their economic well-being by also each specializing and buying most of what they consume from other specialists outside of their neighborhood.

And what is true for Mr. Moyers’s neighborhood is true for Mr. Moyers’s county.  Mr. Moyers and the thousands (or millions) of others who reside in whatever county he resides in each specializes in performing a particular job and then using the incomes earned from these jobs to buy from others – mostly from strangers outside of the county – most of the goods and services that they consume.  Mr. Moyers would surely and correctly understand that he in his fellow ‘countymen’ would be made poorer, not richer, by a thumping county chief executive who restricted their abilities to by good and services from outside of the county.

And also, what is true for Mr. Moyers’s county is true for Mr. Moyers’s state.  I’m quite confident that he understands – correctly so – that restrictions on his and his fellow state residents’ abilities to buy goods and services from outside of his state would make him and his fellow state residents’ poorer and not richer.

Yet, Mr. Moyers (like Trump and many other economically uninformed people) mysteriously suppose that this logic stops at the borders of nation-states – and they continue to insist on this peculiar notion despite being aware that their fellow citizens voluntarily buy whatever imports from foreigners they choose to buy.  Again, though, no satisfactory explanation has ever been given for why saving resources by buying, say, clothing or bicycles made by people living in other countries is any less real or important than is saving resources by buying, say, broccoli or medical care from people living in other households.

I don’t expect Mr. Moyers (or most other committed protectionists) ever to concede this point.  They never do.  They are confident and secure in their economic (and historical) ignorance.  They’ll continue to wave their hands and offer up the uncountable number of ad hoc and mistaken justifications that have been offered up for centuries for why international trade differs fundamentally from intranational trade. (“Foreigners are paid lower wages!”  “Foreign governments subsidize their exports!”  “Foreign government impose tariffs on our exports!”  “Foreigners blah, blah, blah!”  The number of such bad arguments is vast.)   And because most of these people choose to be ignorant of the economics of trade (“Oh, that’s a bunch of academic mumbo-jumbo” they assert in their ignorance), they’ll never grasp just how weak, shallow, and familiar their mistaken assertions and arguments are; they’ll never encounter any of the many effective rebuttals of what they, in their intellectual blindness, wrongly believe to be profound refutations of the case for free trade.



Source: http://cafehayek.com/2017/02/42309.html

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