ECONOMIC THEORIES & ISSUES

Free Trade

 

If, then, one barter does not injure the national labor, since it implies as much national labor given as foreign labor received, a hundred million of them cannot hurt the country. But, you will say, where is the advantage? The advantage consists in making a better use of the resources of each country, so that the same amount of labor gives more satisfaction and well-being everywhere.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), To Artisans and Laborers

 

[I]f any two countries are placed in unequal circumstances as to advantages of production, that one of the two which is the least favored by nature, will gain most by freedom of commerce.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

When goods don't cross borders, soldiers will.

BASTIAT, FREDERIC

 

Commercial freedom distributes in the most uniform and equitable manner, the fruits which Providence grants to the labor of man.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Post Hoc, Ergo Propter Hoc

 

To tell the truth, my good people, they are robbing you.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Robbery by Bounties

 

What is the definite effect of protection? To require from men harder labor for the same result.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Something Else

 

If they say to you: with what shall we pay? Reply: Do not be troubled about that. If we are to be inundated, it will be because we are able to pay. If we cannot pay we will not be inundated.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Little Arsenal of the Free Trader

 

When employment changes its place only to increase, the man who has two arms and a heart is not long on the street.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), To Artisans and Laborers

 

[P]rotection is not an isolated favor. It is a system...it occasions a scarcity of...everything...This alone is certain, that inasmuch as there is a smaller amount of everything in the country, each individual will be more poorly provided with everything.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Dearness - Cheapness

 

[R]estriction must in its results diminish the quantity produced by any fixed quantum of labor. And what can it benefit us that the smaller quantity produced under the protective systems bears the same NOMINAL VALUE as the greater quantity produced under the free trade system? Man does not live on NOMINAL VALUES, but on real articles of produce; and the more abundant these articles are, no matter what price they may bear, the richer he is.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

[W]ould it not be JUST that after a long day's labor, when you have received your little wages, you should be permitted to exchange them for the largest possible sum of comforts that you can obtain voluntarily from any man whatsoever upon the face of the earth. Let us examine if INJUSTICE is not done to you, by the legislative limitation of the persons from whom you are allowed to buy those things which you need.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

Is it true that protection, which avowedly raises prices, and thus injures you [the laborer], raises Proportionately the rate of wages?...The rate of wages depends upon the proportion which the supply of labor bears to the demand. On what depends the DEMAND for labor? On the quantity of disposable national capital. and the law which says, "such or such an article shall be limited to home production and no longer imported from foreign countries," can it in any degree increase this capital? Not in the least...Then it cannot increase the demand for labor.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

[W]hen a nation isolates itself by the prohibitive system...[it becomes] less productive, for the same capital and the same skill are obliged to meet a greater number of difficulties.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

Capital and labor being given, the result is, a sum of production, always the less great, in proportion as obstacles are numerous. There can be no doubt that protective tariffs, by forcing capital and labor to struggle against greater difficulties of soil and climate, must cause the generation production to be less, or, in other words, diminish the portion of comforts which would thence result to mankind.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

The disposing by law of consumers, forcing them to the support of home industry, is an encroachment upon their liberty, the forbidding of an action (mutual exchange) which is in no way opposed to morality! In a word, it is an act of INJUSTICE.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

Prohibit these exchanges, and the divers advantages with which nature has endowed these different countries, will be for us as though they did not exist.  We will have no share in the benefits resulting from English skill, or Belgian mines, from the fertility of the Polish soil, or the Swiss pastures; neither will we profit by the cheapness of Spanish labor, or the heat of the Italian climate. We will be obliged to seek by a forced and laborious production, what, by means of exchanges, would be much more easily obtained.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

[It] is in consumption, in mankind, that at length all political phenomena find their solution. As long as we fail to follow their effects to this point, and look only at immediate effects, which act but upon individual men or classes of men as producers we know nothing more of political economy than the quack does of medicine.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

[C]heapness belongs to the world.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

If they say to you: It is, however, very hard for me, a tax payer, to compete in my own market with foreigners who pay none - Reply: First This is not your market, but our market. I who live on grain, and pay for it, must be counted for something.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Little Arsenal of the Free Trader

 

If they say to you: The lands in the Crimea are worth nothing, and pay no taxes - Reply: The gain is on our side, since we buy grain free from those charges.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Little Arsenal of the Free Trader

 

If they say to you: The Swiss have rich pastures which cost little - Reply: The advantage is on our side, for they will ask for a lesser quantity of our labor to furnish our farmers oxen and our stomachs food.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Little Arsenal of the Free Trader

 

If they say to you: It is essential that a great country should manufacture iron - Reply: The most essential thing is that this great country should have iron.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Little Arsenal of the Free Trader

 

Please consider well that there are many things which foreigners, owing to the natural advantages which surround them, hinder us from producing directly...We produce at home neither tea, coffee, gold nor silver. Does it follow that our labor, as a whole, is thereby diminished? No: only to create the equivalent of these things, to acquire them by way of exchange, we detach from our general labor a smaller portion than we would require to produce them ourselves. More remains to us to use for other things. We are so much the richer and stronger.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Supremacy by Labor

 

It is exactly this sort of [superfluous] labor which machines, commercial freedom, and progress of all sorts, gradually annihilate; not useful labor, but labor which has become superfluous, supernumerary, objectless, and without result. On the other hand, protection restores it to activity...it forces us to ask for gold from the inaccessible national mine, rather than from our national manufactories. All its effect is summed up in this phrase - loss of power.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Supremacy by Labor

 

A momentary disarrangement necessarily accompanies all progress. This may be a reason for making the transition a gentle one, but not for systematically interdicting all progress.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Supremacy by Labor

 

In war, the strongest overwhelms the weakest. In labor, the strongest gives strength to the weakest. Though the English are strong and skilled; possess immense invested capital, and have at their disposal the two great powers of production, iron and fire, all this is converted into the cheapness of the product; and who gains by the cheapness of the product? - he who buys it.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Supremacy by Labor

 

It is not in their power to absolutely annihilate any portion of our labor. All that they can do is to make it superfluous through some result acquired...to increase thus the force at our disposal.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Supremacy by Labor

 

Let the Belgians and English reduce the price of their iron, if they can, and keep on reducing it, until they bring it down to nothing. They may thereby put out one of our furnaces - kill one of our soldiers; but I defy them to hinder a thousand other industries, more profitable than the disabled one, immediately, and as a necessary consequences of this very cheapness, resuscitating and developing themselves.

BASTIAT, M. FREDERIC, Sophisms of Protection (Second Series), Supremacy by Labor

 

[N]atural advantages, like improvements in the process of production, are, or have a constant tendency to become, under the law of competition, the command and gratuitous patrimony of consumers, of society, of mankind. Countries therefore which do not enjoy these advantages, must gain by commerce with those which do; because the exchanges of commerce are between labor and labor. If then all the liberality of Nature results in cheapness, it is evidently not the producing, but the consuming country, which profits by her benefits. Hence we may see the enormous absurdity of the consuming country, which rejects produce precisely because it is cheap.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

The truth is, that the theory of the Balance of Trade should be precisely reversed. The profits accruing to the nation from any foreign commerce should be calculated by the overplus of the importation above the exportation. This overplus, after the deduction of expenses, is the real gain.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

The simple truth is: that whether men destroy their corn and cloth by fire or by use, the effect is the same as regards price, but not as regards Riches, for it is precisely in the enjoyment of the use, that riches - in other words, comfort, well-being - exist. Protection may, in the same way, while it lessens the abundance of things, raise their prices, so as to leave each individual as rich, numerically speaking, as when unembarrassed by it. But because we put down in an inventory three hectoliters of corn at 20 francs, or four hectoliters at 15 francs, and sum up the nominal value of each at 60 francs, does it thence follow that they are equally capable of contributing to the necessities of the community?

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

[O]ur adversaries...have a signal advantage over us...[P]rotection accumulates upon a single point the good which it effects, while the evil inflicted is infused throughout the mass.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

Imagine a legislative assembly composed of producers, of whom each member should cause to pass into a law his secret desire as a producer; the code which would emanate from such an assembly could be nothing but systematized monopoly; the scarcity theory put into practice...an assembly in which each member should consult only his immediate interest of consumer would aim at the systematizing of free trade; the suppression of every restrictive measure; the destruction of artificial barriers; in a word, would realize the theory of abundance.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

[T]o consult exclusively the immediate interest of the producer, is to consult an anti-social interest. To take exclusively for basis the interest of the consumer, is to take for basis the general interest.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

The laws...take part for the seller against the buyer; for the producer against the consumer...[t]hey act...upon the principle that a nation is rich in proportion as it is in want of every thing.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

[A]re the people under the action of these [protectionist] laws better fed because there is less bread, less meat, and less sugar in the country? Are they better dressed because there are fewer goods? Better warmed because there is less coal?

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

What difference does it make whether there be more or less coin in the country, provided that there be more bread in the cupboard, more meat in the larder, more clothing in the press, and more wood in the cellar?

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

Through the journey of life...man has many difficulties to oppose him in his progress. Hunger, thirst, sickness, heat, cold...In a state of society he is not obliged, personally, to struggle with each of these obstacles, but others do it for him; and he, in return, must remove some one of them for the benefit of his fellow-men...The separation of occupations, which results from the habits of exchange, causes each man, instead of struggling against all surrounding obstacles to combat but only ONE; the effort being made not for himself alone, but for the benefit of his fellows...To maintain that human labor can end by wanting employment, it would be necessary to prove that mankind will cease to encounter obstacles.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

[H]uman labor is not an end, but a means. It is never without employment...If one obstacle is removed, it seizes another, and mankind is delivered from two obstacles by the same effort which was at first necessary for one. If the labor of coopers becomes useless, it must take another direction. But with what...will they be remunerated? Precisely with what they are at present remunerated. For if a certain quantity of labor becomes free from its original occupation, to be otherwise disposed of, a correspondingly quantity of wages must thus also become free.

BASTIAT, M. FREDERIC, Sophisms of Protection (First Series)

 

With you they have ridiculed the let alone principle, that is to say, liberty. With you they have said that the law should not confine itself to being just, but should come to the aid of suffering industries, protect the feeble against the strong, secure profits to individuals at the expense of the community, etc., etc.

BASTIAT, M. FREDERIC, Spoliation and the Law

 

Do they suppose that after having realized a partial spoliation by the establishment of customs duties, other classes, by the establishment of other institutions, will not attempt to realize universal spoliation?

BASTIAT, M. FREDERIC, Spoliation and the Law

 

David Ricardo...deposited the previous orthodoxy of mercantilism into the waste receptacle of history. Comparative advantage is an elaborate theory based upon a profound and simple premise: each producer which has resources that are distinct from his neighbor has a production efficiency profile which differs from each of his neighbor's. His efficiency in line A may be lower or higher than his neighbor's, but it is highly unlikely to be exactly the same. I grow potatoes on my acres, you grow peas on yours. Each of us does what we do best. The combined efficiency of our production is greater than were we both to grow crops...Mercantilism, by contrast, posited a zero sum game of international monopoly in which the winner was that player who accumulates the most of a particular commodity (usually gold). The 20th century provided a global laboratory experiment in which state mercantilism (the autarky of the Soviet Union) challenged an increasingly free market liberalism of the Dollar, European and Yen zones. I think most of the world is in agreement as to which model proved to be the best.

BAXENDALE-WALKER, PAUL

 

Tariffs, quotas and other import restrictions protect the business of the rich at the expense of high cost of living for the poor. Their intent is to deprive you of the right to choose, and to force you to buy the high-priced inferior products of politically favored companies.

BURRIS, ALAN, A Liberty Primer

 

Protectionism violates human rights. It is an act of plunder that deprives individuals of their autonomy - an autonomy that precedes any government and is the primary function of just governments to protect.

DORN, JAMES A., Freedom to Trade - Refuting the New Protectionism

 

No nation was ever ruined by trade.

FRANKLIN, BENJAMIN, Essays, Thoughts on Commercial Subjects

 

But a tariff is not irrelevant to the question of wages. In the long run it always reduces real wages, because it reduces efficiency, production and wealth.

HAZLITT, HENRY, Economics in One Lesson, Chap. IX, Who’s “Protected” by Tariffs?

 

Protectionists argue that Mexicans, Chinese, and other foreigners should not be allowed to sell their products freely in America. But that is simply another way of saying that willing, individual Americans should not be free to purchase products from a willing merchant. Trade restrictions limit the sovereign right of individual Americans to enter into voluntary contracts with others.

HUDGINS, EDWARD L., Freedom to Trade - Refuting the New Protectionism

 

[F]reedom to trade is first and foremost a policy that places individual freedom ahead of power exercised by government to aid specific interest groups at the expense of others.

HUDGINS, EDWARD L., Freedom to Trade - Refuting the New Protectionism

 

[T]he record of economic successes resulting from trade liberalization is unambiguous: freedom to trade brings prosperity.

HUDGINS, EDWARD L., Freedom to Trade - Refuting the New Protectionism

 

Suppose that we did not allow free trade between the 50 American states. Citizens like me in New Jersey would be far worse off if we could not buy pineapples from Hawaii, wine and vegetables from California, wheat from Kansas, and oil from Texas and Louisiana while we sell pharmaceuticals to the rest of the country. The specialization that trade makes possible allows all of us to live better. The situation is the same with respect to world trade. Both we and the Chinese are better off if we can import inexpensive clothing from China and sell them large-scale computers and data storage equipment.

MALKIEL, BURTON G., Congress Wants a Trade War, February 5, 2009

 

Many people simply do not realize that the only effect of protection is to divert production from those places in which it could produce more per unit of capital and labor expended to places in which it produces less. It makes people poorer, not more prosperous.

MISES, LUDWIG VON, Human Action: A Treatise on Economics, The Market

 

The interest of a nation in its commercial relations to foreign nations is, like that of a merchant with regard to the different people with whom he deals, to buy as cheap and to sell as dear as possible. But it will be most likely to buy cheap, when by the most perfect freedom of trade it encourages all nations to bring to it the goods which it has occasion to purchase; and, for the same reason, it will be most likely to sell dear, when its markets are thus filled with the greatest number of buyers.

SMITH, ADAM, The Wealth of Nations

 

Nothing, however, can be more absurd than this whole doctrine of the balance of trade.

SMITH, ADAM, The Wealth of Nations

 

[T]rade which, without force or constraint, is naturally and regularly carried on between any two places, is always advantageous, though not always equally so, to both...

SMITH, ADAM, The Wealth of Nations

 

[N]ations have been taught that their interest consisted in beggaring all their neighbors. Each nation has been made to look with an invidious eye upon the prosperity of all the nations with which it trades, and to consider their gain as its own loss...The wealth of a neighboring nation...is certainly advantageous in trade...in a state of peace and commerce it must...enable them to exchange with us to a greater value, and to afford a better market, either for the immediate produce of our own industry, or whatever is purchased with that produce. As a rich man is likely to be a better customer to the industrious people in his neighborhood, than a poor, so is likewise a rich nation.

SMITH, ADAM, The Wealth of Nations

 

In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.

SMITH, ADAM, The Wealth of Nations

 

Probably most of us would agree that preventing trade between Floridians and Alaskans would be stupid and costly. That conclusion would change not one iota if Alaska happened to be another country, instead of another state.

WILLIAMS, WALTER, Prescription for Less Wealth (May 14, 2003)