Monday, 11 January 2010

The old delusion of protectionism

Jeff Jacoby at the Boston Globe writes on The old delusion of protectionism. He writes,
In my e-mail inbox, meanwhile, the subject line of a new message exhorts me to “BUY AMERICAN!!!’’ When I open it, I am reminded that “every little thing we buy or do affects someone else - even their job,’’ and that I should avoid products manufactured abroad and buy only those made in the United States. Among the items to be shunned: Bounce dryer sheets (allegedly made in Canada), GE lightbulbs (Mexico), and Apache hose fittings (China).

It is certainly true that people’s jobs are affected by consumers’ choices. If customers stay away in droves from Chinese hose attachments, it might well mean more work for an American hose and belting manufacturer. But why stop there? In addition to boycotting goods and services made in other countries, let’s avoid spending money on products from other states. Those of us who live in Massachusetts should refuse to buy dryer sheets from California, Ohio lightbulbs, and hoses made in California. My Boston cabbie should be curling his lip at cars made not just by companies headquartered in Japan or Germany, but by those based in Michigan, too.

Crazy? Of course. Refusing to trade across state lines wouldn’t make us economically stronger. It would make us weaker, condemning us to higher prices, less variety, reduced purchasing power, and inferior quality. Granted, such protectionism might work to the advantage of a few local producers. But it would do so only by depriving everyone else of economic opportunity and improved quality of life. To turn state borders into trade barriers would be irrational and self-defeating.
But Jacoby's best point is,
Free trade isn’t a battle that countries (or states) win or lose. It is a human right - the liberty to engage in voluntary transactions that leave both participants better off. If John wants to sell something that Mary wants to buy, it should make no difference to the lawfulness of their exchange whether they are residents of different neighborhoods, different states, or different nations.

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