Peace Through Commerce

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

Andy Kessler notes that the Trump administration, by cutting off China’s Huawei from buying advanced microchips made by the Taiwan Semiconductor Manufacturing Co., increased Beijing’s likelihood of launching a military offensive against Taiwan (“China Is Losing Its Bet on Chips,” Nov. 16). If Chinese manufacturers can’t acquire high-quality chips through commerce, their government might attempt to acquire the chips for them through conquest.

There’s a subtle but vital lesson here. Protectionism undertaken in the name of national security might well achieve its narrow goal of reducing an unfriendly country’s ability to acquire strategic goods through trade. Yet whatever is the resulting decrease in that foreign-government’s military capabilities must be weighed against the resulting increase in that government’s incentive to start a shooting war. When the latter exceeds the former, national-security protectionism makes the home country and its allies less secure.

It would be comforting if proponents of national-security protectionism were more aware of this tradeoff.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030