An argument I recently heard in favor of protectionism is that consumer’s don’t have perfect information, therefore it is the job of the government to pass tariffs against companies and trade partners who do things objectionable.
There are two main issues with this argument. First, “objectionable” is a moral judgement. What a rich, white person in the United States considers objectionable a poor, Asian in China might not. Additionally, what Jon Murphy finds objectionable, John Smith might not. To base national policy on one person’s morals is a gateway to tyranny.
The second issue with the argument is the note about perfect information. “Perfect” doesn’t exist in this world. Nothing is perfect. No market is perfectly competitive. Economic actors are not perfectly rational. There are no good people or bad people. We are merely people who do good and bad things. And there is no such thing as perfect information. What is necessary is not perfect information, but accurate information. Prices, we know, convey such information. When prices are distorted (whether through price controls, tariffs, what-have-you), the information provided is no longer accurate. Decisions made off such information is now more likely to be harmful. More harmful, indeed, then having imperfect information. Chances are, any given economic actor will never have perfect information. But what he will have is the knowledge and information of his particular time and space.
Besides, if any given economic actor doesn’t have perfect information, why assume some government entity would be in any better position?