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:
- 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?
- 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?
- 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?