Protectionism hurts everyone — especially its intended beneficiaries

Two questions for my protectionist readers, if I may. First, what qualifies some professional groups to be privileged over others? Second, if we allow such gr oups to exist, are tariffs really the way to help them?

The takeover of American institutions by opponents of free trade has been swift and near-total. Ten years ago, I could get a round of applause out of almost any conservative audience by intoning two magic words: Ronald Reagan . Not anymore. Even the greatest of modern presidents has become, for some, a symbol of needless wars and trade-induced deindustrialization, his trademark optimism out of tune with our age.

It is not ordinary people who have changed their tune so much as political activists. Most people have always been ambivalent about free trade. It is, after all, a counterintuitive idea that just happens to work. But pundits and politicians, who often have a smattering of economics, used to know better.

Free trade is almost the only proposition that unites economists of every school. They understand that the purpose of exports is to pay for the real prize, namely imports. They grasp that security, whether in food or anything else, depends on having a wide variety of global suppliers, not on trying to make everything yourself. They know that trading with low-wage economies benefits both sides.

Because these facts run up against our instincts, and because most people tend to start with their gut feelings and reason backward, voters have traditionally been slightly suspicious of free trade if willing to be led.

There is little sign of a major shift in public opinion . Two-thirds say trade is good for the U.S. economy, though there is also support for retaliatory tariffs. Enthusiasm for trade barriers varies hugely according to whether respondents are told that they are proposed by former President Donald Trump or Vice President Kamala Harris, which suggests that they don’t feel very strongly about the matter itself.

What is new is that, for the first time in a century, both presidential candidates are declared protectionists. Harris was one of a handful of Democratic senators to have voted against even the United States-Mexico-Canada Agreement, the reheated North American Free Trade Agreement. Trump wants a 20% tariff across the board, a measure that would go beyond the Smoot-Hawley insanity of the 1930s.

So let’s return to those two opening questions. Protectionism means that some groups are favored at the expense of others. If you slap tariffs on, say, imported steel, you allow domestic steel producers to charge more. But this comes at a cost to everyone who uses steel: auto companies, construction workers, electrical appliance firms, railways, and, not least, consumers in general. What is it about working in steel that makes you more important than anyone else?

Protectionists might argue that steel is a strategic resource, but most of the sectors I just listed could make the same claim. Can you be certain that the most deserving industry, or the most vital, will be the one that manages to get its rivals blocked? Rather than, say, the one which makes the biggest political donations, or the one whose labor union is the strongest?

Let’s suppose you can. Let’s imagine that governments are somehow wise and disinterested enough to identify the crucial industries, the ones that would allow the country to survive a siege or a global pandemic or whatever the current worry is. If you want to help steelworkers or farmers or any other group, the most effective way of doing so is to hand them cash. The least effective is to distort your trading system, risk retaliation against unrelated industries, and load the cost disproportionately onto your poorest citizens, only for the revenue raised to go not to the supposedly deserving industry but to the government.

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Is it any wonder that protectionism never works? That it turns its supposed beneficiaries into inefficient rent-seekers? Is it any surprise, come to that, that it is targeted overwhelmingly at the old sectors, the ones voters feel nostalgic about? Agriculture is the oldest sector of all. Farmers feature benignly in the books we read to preschoolers. If early reader books were instead filled with stories about computer programmers or fitness instructors, maybe those would be the groups with political clout.

But those groups are doing fine, precisely because they don’t divert their energies into pressuring politicians to handicap their competitors. That’s what the Gipper was getting at when he said that “instead of protectionism, we should call it destructionism” because it weakens the industries it is supposed to help. Sadly, whoever wins in November, people are going to have to learn these things all over again.