Logical Flaws in Protectionism - Commentaries on Bastiat's Economic Sophisms - First Series - Chapter 4
I'm back to posting on here regularly (hopefully), and plan to finish up my commentaries on Bastiat's Economic Sophisms with posts on Mondays, Wednesdays, and Fridays.
Bastiat opens this chapter by allowing the protectionists to sink themselves with their own words. They make the foolish claim that the goal of their protectionism is to equalize competition. One of the remarks even compares it to the idea of putting weights on horses during races.
Bastiat makes quick work of that perspective by pointing out that the horse race is an end in itself and competition is not. This concept is such an important and wide-ranging one that I'll be writing a post on it tomorrow. But since Bastiat realizes that he doesn't have much hope of pulling his opponents around to his view, much of the chapter focuses on five main points.
1.Bastiat points out a significant logical flaw in the protectionist argument. Trying to equalize the conditions of exchange undermines the very principles on which exchange is based. Exchanges occur because of differences in the labor used to produce them. Differences in climate, geography, availability of materials, and kinds of laborers are just some of the factors that allow change to occur. These elements favor certain production and hurt others, while other nations may have the opposite conditions and effects.
Were you to have the ability to eliminate these differences; you would eliminate the need for exchange altogether. Though Bastiat doesn't mention it, some still might be willing to say that theoretically, that would be preferable, but this too is a fallacy. Those differences allow us to maximize production and satisfy more people. The elimination of the differences would impoverish many and slow human progress.
2.For his second point, Bastiat returns to the horse racing analogy. He makes the case that just because one nation does a certain kind of production particularly well, doesn't mean it is eliminated in other countries. After all, a burden is made easier by multiple horses pulling the same load the same direction. And if the market demand is there, that's what we see. It's not as though the horses are always pulling against each other.
3.Bastiat's third point is perhaps the most self-evident and most strongly shows the lack of intellectual rigor on the part of his opposition. They claim that their goal is to equalize the conditions of production. But given the impossibility of that task, all they do is equalize the conditions of the sale. The result, due to the limits of the government's jurisdiction, is that the cost of any duty is passed on to the citizens of the country that imposes it.
4.With his fourth point, Bastiat decides to throw the protectionists a bone. With the understanding that natural differences can't be changed, he examines what would equalize conditions of production as much as possible. The answer, of course, is liberty. Freedom of movement for people, goods, materials, and factors of production would allow these things to shift in ways that prevent any one country from abusing their natural advantage beyond what the market would allow. Bastiat doesn't directly call them out, but it's obvious that this point challenges the notion that the protectionists are actually interested in what they claim.
5.Bastiat's final point is that the countries that have the most to gain from trade are those that are most naturally disadvantaged. This is because it is very difficult for them to produce that particular product, and therefore it is more expensive and rarer. But because other nations can produce it more cheaply and quickly, it becomes more widely available and affordable in the nation that is naturally disadvantaged.
With these arguments, Bastiat shows that even if the protectionists fail to understand that the end of economic activity isn't the horse race, they still fail to pursue their goal. The rest of the chapter is spent describing a point about trades being not of equal value but equal labor. But this is an argument made useless by the marginalist revolution and the demonstration of the falsehood of the labor theory of value, so I'm not going to bother with it here.