From an economic perspective, protectionism is one of the most foolish policies a country can adopt. It not only hurts the nation’s economy, but makes individual households poorer.
Why then do so many people who are aware of this reality still support protectionist policies? One reason is because they (wrongly) believe that protectionism actually protects American jobs. They also believe (rightly) that the loss of employment has social and moral implications that are caused by a loss of dignity.
Economist Donald J. Boudreaux explains why even that argument is not a persuasive reason to support protectionism:
“People take pride in their work,” these protectionists observe. “If trade causes them to lose their jobs, they’ll lose their dignity. And preventing honest, hardworking people from losing their dignity is reason enough to restrict trade.”
No one doubts that excelling at a job is a source of self-respect and dignity for workers. But what’s the root source of this self-respect and dignity? It’s not just the worker’s knowledge that she is providing well for herself and her family. If providing well for oneself and one’s family were sufficient to create self-respect and dignity, then the successful armed robber and arsonist-for-hire would have self-respect and dignity.
Essential to a producer’s self-respect and dignity is the belief that he earns his living honestly. The producer takes justified pride in his work not merely because that work pays him well but because that work is socially useful.
Protectionism, however, destroys this source of pride — or, it would destroy this source of pride if protected producers understood the nature of protectionism. Protectionism allows a handful of producers to earn incomes not by serving consumers but, instead, by being served by consumers. Protectionism is a policy, enforced with threats of violence, that prevents consumers from spending their incomes in ways that promote their own best interests; protectionism is a policy of forcing consumers to spend their incomes in ways that promote the interests of current producers.