Protectionism is a vibe, not an argument. Its exponents hold a series of positions that are more esthetic than empirical. They don’t like cheap goods. They don’t like the corporate suits whom they imagine to be the beneficiaries of globalization. They do like horny-handed sons of toil in coal mines and steel mills — or, at least, they admire them from the outside. They themselves have little ambition to do such jobs, being, in most cases, lobbyists, politicians, or corporate attorneys à la Robert Lighthizer.
Can I be so glib in dismissing the intellectual arguments for protectionism? Yes. Their lack of internal coherence should disqualify their advocates from being taken seriously. Supporters of tariffs make a series of claims that are not only false but are logically incompatible with one another.
Taking their lead from President Donald Trump, they make three main claims. First, that tariffs will bring in revenue, allowing taxes to fall — or spending to rise. Second, that tariffs will bring jobs to America — or bring jobs “back,” as they usually put it, though more people are in work today than ever before. Third, that tariffs are a negotiating tool, a way to make other countries open their own markets.
For what it’s worth, each of these claims is untrue. Tariffs are not an alternative to domestic taxation, but a variety of it. They destroy more jobs than they protect. The proposed 25% aluminum levy, for example, will cost 100,000 jobs according to the aluminum company Alcoa — 20,000 in the smelters and 80,000 in industries that use aluminum. The 2018 steel and aluminum tariffs had precisely this effect. The damage to downstream industries, from cars to beer cans, was five times greater than any benefit to a selected number of producers. And they are a terrible negotiating tool. Harming yourself is never a wise way to convince others, and many of the retaliatory measures imposed on America in 2018, including in China, Europe, Turkey, and India, remain in place.
But never mind all that. There is a more elemental flaw. If one of those three justifications were true, the other two could not be. Think about it. If tariffs bring in revenue from foreign goods, it is because those goods are still being imported in significant numbers. So no extra domestic jobs, even on protectionist logic. If, on the other hand, they bring jobs to America, then local production has replaced imports, so they bring in no revenue. And if they are a negotiating tool to be dropped once the other country opens its markets, then they neither reshore jobs nor raise revenue.
This is basic logic. X and Not-X cannot be simultaneously true. The readiness of tariff advocates to skip back and forth between these contradictory positions suggests motivated reasoning.
Now, motivated reasoning is what most of us do when confronted with an unfamiliar subject. We have a rough sense of what feels right, and we subconsciously fit the facts around it. We lead with our gut instincts. We reason backward. And our starting hunch is almost always protectionist. Mine certainly was until I read some basic economics.
More than 200 years have passed since David Ricardo proved, as a matter of mathematics, that free trade always benefits the weaker and the stronger participants. When I first came across his thesis, I reread it a couple of times, convinced there must be some flaw, but there was none.
Nowadays, people come out with all sorts of justifications for not believing him. All these justifications reveal that they have not read him. “Ricardo did not imagine a world where services had replaced manufacturing!” “Ricardo’s theory only works if the other side reciprocates!” “Ricardo did not foresee the huge differences in salaries in today’s world!” He literally dealt with what he called the “pauper labor” fallacy.
SENATE CONFIRMS LUTNICK AS COMMERCE SECRETARY TO IMPLEMENT TRUMP TARIFF AGENDA
None of this is surprising. It is how our brains are wired to deal with counterintuitive ideas. It is why the rest of us struggle to see the universe in the way that theoretical physicists do. It is what P.J. O’Rourke was getting at when he described protectionism as an IQ test rather than an ideological test. There is a reason that almost every economist supports free trade.
For the past 70 years, those economists have shaped Western policy. Voters never shared their enthusiasm, but their policy worked, and the world became richer faster. Poverty, as we understood it for 10,000 years, has almost disappeared. When economists and politicians start playing to the gallery, though, and doing things that they know to be harmful, that progress will stall. And they know it.
