Some Questions for Protectionists

Protectionism is, by definition, state-action.  The argumentation is that trade with foreign nations make us worse off (with few exceptions) and we need to protect our industries in order to grow.  Protecting our industries, from unfair competition, from competition in general, whatever the reason, will make people better off than in free trade.  This claim, however, leads us to some questions:

  1. Why is foreign trade a collective-action problem?  In other words, if people were actually made better off via protectionism, what is preventing them from acting in a manner to better themselves naturally?  Why is government needed?
    1. If there is a Prisoner’s Dilemma type situation or some other coordination problem, that doesn’t necessarily prevent a non-government solution from arising.  As Elinor Ostrom discusses in “Governing the Commons,” the Prisoner’s Dilemma is not an inescapable trap.  People can get out of it through various interactions with each other.  To justify government action, there’d need to be some barrier preventing people from getting to the socially optimal outcome point.  What are the barriers that prevent this from occurring?
  2. Why is there a coordination issue at the international trade level but not the intranational trade level?  Protectionists never demand restrictions on intranational trade, preferring to let people act.  What is unique about intranational trade that allows for coordination that international trade does not?  In other words, why are people’s actions at the intranational level sufficient to generate overall prosperity but those exact same actions are insufficient, indeed detrimental, to overall prosperity at the international level?

22 thoughts on “Some Questions for Protectionists

  1. “What is unique about intranational trade that allows for coordination that international trade does not?”

    Great question! Here’s my take on it. Because we have an “us against them” mentality built into our upbringing bolstered by practices such as saying the pledge of allegiance every day in school (I’m old, do they still do that?). That conditioning is essential to have people take up arms and be willing to die in war under the flag of their country. That’s not anything you can turn off and on in different situations of perceived stress concerning work and/or trade (work and trade are mentally tied together and count more than cheap stuff to many people).

    The winning argument on trade for many folks will primarily include patriotism and better or more jobs over a lower consumer price approach, and ironically that approach applies even if those people knowingly or unknowingly currently enjoy and shop for those lower prices.

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    • Ok. That doesn’t really answer the question, though. If patriotism/nationalism was the answer, I’d think that’d mean there’d be less of a coordination issue with international trade, not more of one.

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      • I guess I don’t understand what you mean, Jon. Coordination issue = problem? I was answering why some people want to restrict foreign trade and not trade between U.S. jurisdictions (even if they don’t practice restricting their current purchases). I am not sure you will get “the” answer as much as many of the answers.

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        • So, the protectionist argument is that international trade harms an economy and intranational trade does not. In other words, buying something is good for everyone so long as it’s bought within the nation. For some reason, people have a coordination problem, ie they act in a way that is less-than-socially-optimal when dealing with international trade. I’m asking for justification of that last point.

          If the reason that people oppose buying foreign is due to some misguided form of patriotism drilled into them at a young age, then that’d suggest to me there wouldn’t be a coordination problem at all, or an extremely minimal one.

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          • Jon, you’re way over my head with your coordination explanation. You’re using the term in a way I’ve never heard it used. I wouldn’t be able to tell someone they were acting less-than-socially-optimal with a straight face. Maybe I’m just too blue collar for some discussions.

            People just don’t like foreigners stealing their jobs, and trade and people who do not look like them are going to get the blame.

            Most of the people I know would not accept that patriotism can ever be misguided.

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          • With respect (and I do mean with respect because I respect you a lot) I know the conversation is a bit over the head of blue collar. I wouldn’t expect a blue collar worker to understand it. Rather, I direct it toward those who claim there are economic reasons for protectionism. I direct it toward Mr. Trump and Mr. Ross and Dr. Navarro.

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          • Actually, Ron, the only literature I could find using a quick search on the terms “coordination and economics” was a paper “Coordination in the History of Economics” written by Daniel Klein and Aaron Orsborn at George Mason University. I think I know now where Jon got it from.

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        • In other words, in order to make the claim as protectionists do that certain actions may be privately beneficial but socially suboptimal, you need some theory, some reason why, that is. Protectionism lacks that entirely; it’s merely an assertion they make. Futhermore, in order to explain why the individuals do not coordinate for the betterment of all, you need some reason why coordination cannot occur. For example, in the Prisoner’s Dilemma, it is because communication is expressly forbidden between the participants. If you weaken that assumption, then the PD no longer becomes a PD.

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  2. In other words, why are people’s actions at the intranational level sufficient to generate overall prosperity but those exact same actions are insufficient, indeed detrimental, to overall prosperity at the international level?

    If you EVER find a good answer to this question please let me know.

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    • Often, claims offered in support of protectionism are not based on reason. For example, one of the claims made is that buying lower priced imports harms your neighbors by costing them their jobs. The US is a huge country, and without completely torturing the definition of “neighbor” into something totally unrecognizable, just the tiniest, most minuscule percentage of the country’s population are your neighbors. What is the rational explanation for why I should care more about a US resident who lives 3,000 miles from me than a non-US resident who lives 300 miles away?

      Using logical arguments in an attempt to counter a position arrived at through emotion is generally not all that effective.

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      • “Using logical arguments in an attempt to counter a position arrived at through emotion is generally not all that effective.”

        But many problems one must deal with people on a daily basis are emotional. If logic is not effective, what do you plan to use instead (let’s assume for argument’s sake not dealing with problems is not a viable option for most people).

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        • If a person won’t consider a logical argument, I don’t plan on using anything. “I feel that 1+1 equals three because the patriarchy”. You can deal with that guy if you like.

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          • You’re right, but the people who listen and deal with them are getting elected and making policy that affects you, so it does not really matter what I personally like. Being right does not equal being effective.

            Economists and other people who want to persuade and convince people instead of merely inform them are going to have to deal with where other people are coming from on at least some of their terms.

            So, I suppose, the question is what are your actually trying to do? Ya gotta connect if you want to convince otherwise you’re just telling people how smart you are.

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          • What am I trying to do? Respond to a blog post.

            If you’d like a response to your comment about people getting elected and making policy, it would be helpful if you defined what sort of policy you had in mind. There’s quite a gap between policy that protects peoples’ rights and property and policy that takes property from its owner to give to someone else, as I’d hope you’d agree.

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          • Jon, If you deal with people and their problems and answer to them, you’ll have to deal with their passion, too. If life really were as simple as a blog posting.

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      • “If you’d like a response to your comment about people getting elected and making policy, it would be helpful if you defined what sort of policy you had in mind.”

        That’s simple: The policy people who elected you have in mind. It’s not true people who are elected get to spend much time on things they want to personally work on.

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