Friedrich List (1789-1846)
I’m reading some of the works of Friedrich List, an influential anti-liberal protectionist. I highly recommend them as a collection of all of the protectionist fallacies we’re accustomed to hearing in popular discourse (or from CNN’s Lou Dobbs). When I’m done with the work, I’ll probably write a short posting cataloguing some of the fallacies. It’s really remarkable how every absurd argument for protectionism (there are few non-absurd arguments for protectionism) seems to be laid out clearly and concisely by List.
How long can fallacies persist?
They can persist indefinitely when people in power have strong incentives to present fallacies as facts, and when economies function–as they do–independent of people’s understanding of how they work.
RL
I think that the second issue identified by the good Dr. Levatter is the key. I think that the former is of minimal significance. What’s amazing to me is how often we run into the same fallacies (notably about the “balance of trade”) from the mouths of reporters, people on the street, politicians, just about everybody (excepting those who know anything about the topic). How many times does one have to drive the stake into the heart of that beast before it finally dies?
Given that it is from Dr. Palmer’s insights, from years ago, that I first focused on the issue of the Visible Hand of Govt., and the incentives facing it, rather than simply the Invisible Hand of the Market, I am surprised he now feels “the former [that people in power of strong incentives to present fallacies as facts]is of minimal significance” and wish he had chosen to further elaborate.
(To refresh Tom’s memory, should it be needed, I believe the topic many years ago was raising the minimum wage…)
Just out of curiosity, what ARE the non-absurd arguments for protectionism, if any exist?
For Dr. Levatter: I just don’t think that the persistence of absurd thinking about the “balance of trade” is dependent on the self-interest of politicans for its propagation or perpetuation. An awful lot of policy makers understand that it’s nonsense or, if they don’t quite understand it fully, they still don’t buy into it. The last few administrations have been generally in favor of freer trade (with lapses, to be sure) but the way that the “balance of trade” doctrine keeps popping up is an obstacle to their achievement of generally freer trade, not a tool they have used to get more protectionism. So I think that the problem is much more one of the persistence of an absurd view than of manipulation and lies on the part of the holders of power.
For Adam W: Most of the arguments for protectionism can be refuted by means of the reductio ad absurdum. You can point out that I have a “trade imbalance” with the Safeway grocery store down the road, and you can ask how, if blockading the ports of enemies in times of war is bad for our enemies, is it good for us in times of peace to blockade our own ports, etc., etc. The arguments for protectionism collapse when you think them through; they are absurd. But there are some other arguments of a generally “cultural” or “nationalist” sort that are not so easily refuted. It may be that if you want to keep your nation “pure” from foreign influences, protectionism will help to achieve that. There are good reasons to be opposed to such policies, but they are not irrational or self-defeating in the way that most “economic” arguments for protectionism are.