A “red herring” is a fact or assertion that diverts attention from the essence of an argument. Among the reddest of such herrings are observations about some specific but irrelevant features of a particular market.

It’s common, for example, for proponents of minimum wages to deny that the same economic analysis used to accurately predict the consequences of rising prices of inanimate goods, such as walnuts, is useful for predicting the consequences of rising prices of human labor. “Workers aren’t walnuts!” the wavers of red herrings protest.

Duh. No one mistakes workers for walnuts. But the difference between workers and walnuts is irrelevant when the discussion is of hikes in minimum wages. What is relevant is the fact that raising a person’s cost of taking an action makes that person more reluctant to take that action.

Especially fertile breeding waters for red herrings are discussions of international trade. “Adam Smith never anticipated the regulations imposed by 21st-century governments!” is an argument that I’ve heard many times from protectionists who aim to discredit the case that Smith made in 1776 against tariffs and other trade restraints.

Not only was Smith familiar in general with governments’ itch to interfere in people’s private economic affairs, his case for free trade isn’t specific to any one kind of regulatory regime. Smith’s arguments remain valid regardless of the extent and details of government regulations.

Smith understood two crucial facts. First, the economy becomes more productive as workers become more specialized. Second, workers become more specialized as the number of people with whom they trade increases.

Because free trade maximizes the number of people who trade with workers, free trade maximizes the production of goods and services.

This reality is in no way altered by changes in the amounts or kinds of regulations imposed by either the home government or by any foreign government. Burdensome and destructive regulations imposed by governments undoubtedly make economies less efficient and productive. But the people in these economies still would become more prosperous if they are allowed to trade freely with foreigners than if they’re obliged to suffer trade restrictions in addition to suffering other harmful government diktats.

Another red herring is the alleged loss of the home-government’s sovereignty caused by trade agreements — agreements such as the pending Trans Pacific Partnership. Ignore here the fact that all intergovernmental agreements necessarily involve each signatory agreeing to curtail its range of action. (A government no more sacrifices its sovereignty by entering into treaties and other agreements with foreign governments than you sacrifice your sovereignty by entering into contracts with other individuals.) In my experience, everyone who complains about the alleged “loss of sovereignty” from trade agreements really objects to the trade-liberalizing effects of such agreements. Unable to make sound economic arguments against freer trade, protectionists resort to the cheap scare tactic of warning, without basis or logic, that trade agreements undermine the home-government’s sovereignty.

Donald J. Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.

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