Posts tagged with: protectionism

Photo courtesy of Wikimedia.

Photo courtesy of Wikimedia.

What is the biggest economic problem that the U.S. is currently facing? Depends who you ask.  Some social justice warriors would tell you that capitalism is ruining our economy, yet many who have studied and understand economics would argue the opposite. Capitalism is not to blame, but rather cronyism and protectionist policies are the ones wreaking havoc on the economy.

In a previous post, I discussed how occupational licensing as a form of cronyism is trapping people in poverty. However, cronyism is a much bigger problem than just occupational licensing. The U.S. struggles with other forms of cronyism too, such as protectionism through quotas, tariffs, and corporate welfare.

Quotas and tariffs make it extremely difficult for international firms to sell their product in the U.S., thus protecting U.S. firms from international competitors.  Corporate welfare is government support of a private business usually through direct money transfers (subsidies) or tax breaks, often protecting big firms from the competition of smaller firms.

This form of cronyism typically occurs for two reasons:  First, in an attempt to create new domestic jobs or prevent jobs from being sent overseas and second, because politicians promise “goodies” to corporations and individuals that help them get elected. (more…)

John Calhoun (1782 - 1850)

John Calhoun (1782 – 1850)

Proponents of protectionism often ground their support in a quasi-nationalism; trade should be restricted for the benefit of the nation. Economically, the argument holds little weight. The benefits of more trade, like more and cheaper goods, outweigh the costs, like some temporary unemployment that results from the closing of a factory that couldn’t compete with foreign companies.

Some protectionists may accept this, and still urge tariffs, quotas, and other restrictions. They argue that a nation can still benefit, even with economic disadvantages. Sure, consumers might pay in higher prices if there’s a tariff on steel, but think of all the jobs! The consequences of protectionism, however, are not simply economic. Rather than developing national and political unity, tariffs often lead to national discord.

Take the United States in the early nineteenth century. Its still developing economy was primarily agricultural, with a growing commercial and manufacturing sector. Many early American politicians advocated a tariff in order to protect, foster, and develop American manufacturing.

Ignoring the economic flaws of such a plan, the policy sowed the seeds for national disunion, culminating in the United States Civil War. How?


Blog author: TGroenendal
Thursday, June 30, 2016


Abraham Kuyper (1837 – 1920) | Wikimedia Commons

The benefits of free trade are vast, and enjoyed throughout the world.  The alternative — trade restricted by protective tariffs and quotas — concentrates benefits to a protected few who profit due to less competition from foreign competitors.

The morality of free trade is clear. Individuals can choose what they buy from where, linking the world through a network of exchange. Integration through trade and exchange is a major factor lifting people out of poverty. The more and freer the trade, the better for human flourishing. Despite this, there is a growing protectionist movement in the United States political landscape.

In Abraham Kuyper’s book Antirevolutionaire Staatkunde (or Anti-Revolutionary Politics), he discusses his political support of tariff increases in the Netherlands. One of Kuyper’s arguments in defense of tariffs is a moral argument, which stems from concerns over 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. (more…)

In the hubbub surrounding Brexit, many conservatives have cheered the United Kingdom’s vote to leave the European Union, hailing it as a win for freedom, democracy, and local sovereignty.

Yet for those who disagree, support for Brexit is painted as necessarily driven by fear, xenophobia, and protectionism. Although fear of immigrants and narrow nationalism have surely played their part, such sentiments and attitudes aren’t the only drivers at play, and they mustn’t be heeded if Brexit is actually going to succeed.

Indeed, for conservatives in the vein of Edmund Burke, the reasons for supporting Brexit are necessarily different. Political withdrawal from the EU needn’t, nay, mustn’t mean isolation from outside markets or a freeze on the movement of labor.

As Hannan outlines in a marvelous speech given prior to the vote, this isn’t about protectionism, but about preserving a tradition of freedom and democracy. It isn’t about a fear of outsiders, but about a basic belief in the principle of subsidiarity.


cracked-flag-fragment-america-dividedThe fabric of American society is tearing at the seams. Whether witnessed through the disruptive insurgencies of Donald Trump and Bernie Sanders or the more mundane fissures of pop culture and daily consumerism, Americans are increasingly divided and diverse.

Yet even in our rash attempts to dismantle Establishment X and Power Center Y, we do so with a peculiar nostalgia of the golden days of yore. You know, those days when institutions mattered?

This is particularly evident in the appeal of Mr. Trump, whose calls to burn down the houses of power come pre-packaged with a simultaneous disdain for the power of bottom-up diversity and the liberty it requires. Once the tattered castle on the hill is torched to the ground, we’re told, we will receive a greater castle on a higher hill with a far more deserving king. The scepter will be yuge, and with power restored to the hands of a man shrewd enough to exploit it, surely we will “win” again. (more…)

edmund-burkeThe Republican Party is fracturing on the topic of trade. Alas, in the same corners where free and open exchange was once embraced as a propeller for economic growth and dynamism, protectionism is starting to stick.

In response, free traders are pushing the typical arguments about growth, innovation, and prosperity. Others, such as myself, are noting that the trend has less to do with economic illiteracy than it does with a protectionism of the heart — a self-seeking ethos that wants “economic freedom” only insofar as it poses no threat to the preferred wage, vocation, or plot of dirt.

We have forgotten that work is not about us. It’s about serving others, and adapting that service when the signals say, “yes.”

On this, the “communitarian” wing of conservatism tends to push back, accusing free traders of being overly comfortable with social disruption and displacement, prioritizing efficiency and cheap widgetry over “stability” and “social well-being.”

Such critics would do well to heed Edmund Burke, one of the movement’s heroes. Burke was a staunch supporter of free trade not because he was indifferent to disruption, but because the alternative would cause much, much more.  (more…)

trade-globalization-exchange-collaborationIt’s become rather predictable to hear progressives promote protectionist rhetoric on trade and globalization. What’s surprising is when it spills from the lips of the leading Republican candidate.

Donald Trump has made opposition to free trade a hallmark of his campaign, a hole that his competitors have been slow to exploit. In the most recent CNN debate, Ted Cruz, Marco Rubio, and John Kasich each echoed their own agreement in varying degrees, voicing slight critiques on tariffs but mostly affirming Trump’s ambiguous platitudes about trade that is “free but fair.”

Why so much silence?

Unfortunately, as Tim Carney details at length, voters are biting and swallowing what Trump is peddling, and conservatives are struggling to find solutions that sell. “Conservatives may scoff at this Made in America mindset as economically illiterate,” he writes. “But politically, it seems to be a winner.” (more…)