Trade policy should be realistic
I’m what philosophers call a “consequentialist.” Consequentialists believe that human activities are best judged by the goodness or badness of the consequences they produce. Activities that generally produce good consequences are ethical; activities that generally produce bad consequences are unethical. Working at the local factory to feed your family is ethical; burgling neighborhood homes to feed your family is unethical.
Feeding your family, of course, is good in both cases. But working as a burglar is bad. Unlike people working proper jobs, burglars produce nothing. Burglars at best merely transfer goods from some people (their owners) to other people (burglars). Worse, in practice, burglars reduce society’s total well-being. Not only do burglars not produce anything new, their thievery prompts homeowners to spend resources protecting their homes from being robbed.
The higher the incidence of burglary, the greater the amount of resources spent by homeowners on the likes of window bars, home-security systems and guard dogs. If there were no burglary, the resources used to protect homes against thieves would instead be used to produce goods and services such as improved medical care, more education and greater amounts of air travel. While successful burglars are personally enriched by their thievery, each of their victims — and society at large — is made poorer. This reality is why burglary is universally condemned and burglars punished.
We all agree that burglary is bad.
But suppose that I describe for you a hypothetical situation in which the consequences of an act of burglary are unquestionably good. Suppose, for example, that while burgling the Jones’ home one night, Sam discovers a fire in the kitchen. Acting on instinct, burglar Sam extinguishes the fire. Suppose that had Sam not been there, the fire would have quickly engulfed the home and killed all six of the family members sleeping upstairs.
We can easily imagine such a situation occurring in reality. But do our vivid imaginations cause us to reconsider our opposition to burglary? Of course not. The chances that any act of burglary will produce good results for society are so small that we outlaw burglary, period.
We should be equally wise about government economic policies. Regrettably, we often are not. A good example involves trade policy.
Freedom to trade is nothing more than the freedom of those who earn incomes to spend their incomes as they choose regardless of the nationality of suppliers. Because your ultimate purpose of working to earn an income is for you to use that income to acquire goods and services that improve your family’s standard of living, if you choose to buy an import you obviously believe that your buying that import helps to raise your family’s standard of living. It follows that if you are prevented from buying that import, you are thereby prevented from using your income to maximum effect in raising your family’s standard of living.
So, as a rule, each of us should be free to spend our incomes as we judge best. As a rule, obstructions of this freedom make us poorer. And while a vivid imagination can concoct scenarios in which such obstructions make us richer, such scenarios are no more realistic than that of burglary being good for society.
Donald J. Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.