Henry George’s 1886 book on trade is a devastating critique of the arguments of protectionists. George used an analogy to war to show what trade was unlike (in fact, he called trade “the extinguisher of war”), and an analogy to the body, particularly the circulatory system, to show what trade was like, with both showing the folly of protectionism. He said, for example, that civilized nations “do not use their armies and fleets to open one another’s ports to trade.” FULL ARTICLE
Source link: http://blog.mises.org/3781/protection-is-like-war/
Protection is Like War
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Protection is a panacea (and I mean that in the sense of the greek godess panakea who taught the greeks cures for the diseases instead of hygea who taught them how to live to avoid disease).
Many otherwise good conservatives end up with this prescription, because they don’t want to get Uncle Sam off the credit crack cocaine.
US: “But I feel good, I just don’t want to have a heart attack – can you give me something for it”.
Dr: “No, just stop taking bernanke brand crystal meth and greenspan brand cocaine in the morning, and you won’t need those other pills to fall alseep instead of being wired all night”.
US: “But I’m so much more productive when I don’t sleep”.
Dr: “You’ll be productive until you’re dead – you weren’t meant to run at 120% all the time and you’re falling apart (picture of an emaciated addict weighting 80 pounds – we’ve lost our manufacturing base) – you might feel like you are doing well but you aren’t”.
Instead of getting rid of the strong/weak/whatever this week dollar policy, credit expansion with interest rates raised to try to stem inflation at the same time (yes, just take both amphetamines – easy credit and barbiturates – but at higher interest rates) and the various other bits of manipulation which drove manufacturing away and is killing other areas of our economy, they want to add protectionism.
Our economy is on steroids and it is a bad thing. Steroids also cause strange growths and side effects though it makes muscles bigger for a while.
This is the economy, this is the economy on credit, (sizzling sound). Any questions?
To get back to a clean and sober economy will be painful – it would have been less without the housing bubble and would have been difficult without the nasdaq bubble.
Yet we might still end up as a 3rd world economy in the gutter because we won’t be willing to face the pain.
Henry George was a land value socialist. Not saying that as a slight against him, just something the people here should know.
AntiGeorgist, you’re too funny! His single land tax concept was a dud, true, but he couldn’t have been all bad if this article was based on his writings could he?
I like the article and I agree with this: “Can there be any greater misuse of language than to apply to commerce terms suggesting strife, and to talk of one nation invading, deluging, overwhelming or inundating another with goods? Goods! What are they but good things—things we are all glad to get? Is it not preposterous to talk of one nation forcing its good things upon another nation? Who individually would wish to be preserved from such invasion? Who would object . . . who would take it kindly if any one should assume to protect him by driving off those who wanted to bring him such things?”
I would add that if a nation such as China is willing to go one step further and subsidize the goods it exports to another nation such as the US, US consumers, which we all are here in the US, should be thankful. I know there’s no such thing as a free lunch, but that seems about as close to one as it gets!
the people are already used to competition at any cost, so we are used to suffer indifference…but china is not growing to become stupid: they need intelligence so they’re welcoming it. So the people who had no time to agree on compassion are not using sharing at a time where we make immense thing and then share it. But at the same time we must respond with violence because it is right inside our hearth: the need to compete when we feel death is a violent moment.
I have just started reading Henry George Protection or Free Trade so perhaps my question is already answered. The question is when you have an aggressive nation that is preparing for war against a second and that the aggressor is using state run supported business to acquire technologies and to damage the targeted counties economic ability by bankruptcy and other business ruination strategies in preparation for war, how should such a nation defend its self against such actions with out the use of protectionism and other economic barriers if that nation largely practices free trade.
Lorenz H. Menke, Jr.
Simply do the same thing as when other conditions change (climate, technology, whatever): adapt and find new, more profitable avenues of production. The protectionist country is making its citizens poorer, and their attempts to adapt to changing conditions more diffilcut.
In response to Mr. Menke’s comment about an aggressive nation preparing for war, I would like to add a further point:
The analogy of free trade as a circulatory system and the members of the body as trading “partners” is a good one..
Could it not be true, however, that an “aggressive trading partner, preparing for war [against the rest of the body]” could be analogous to a cancerous tumor.. which grows rapidly, takes from the body and weakens it, and at the same time seeks to replicate itself ?? If this analogy is considered, might not the case FOR PROTECTIONISM be analogous to cutting off the blood flow to such a tumor in order to prevent it from overtaking the rest of the body and killing off those members that we would wish to preserve?
Just a question for discussion.
I wonder if someone who feels able and inspired, would elaborate in some detail how “an aggressive nation that is preparing for war” might implement its plan to use “state run supported business to acquire technologies and to damage the targeted counties economic ability by bankruptcy and other business ruination strategies”. Are we talking about say as a hypothetical example, China’s government buying up Microsoft shares and then intentionally submarining it into bankruptcy, or eliminating the benefits of Windows from, say, Americans? I would need some serious persuasion to believe that a tactic of that nature could do anything but bring financial ruin to the aggressor.
Couldn’t it be argued that free trade with an “aggressive nation, preparing for war” could expose a second nation to military risk over the short haul?
The problem I have with the “free traders” is that they seem to think that all businesses are “equal” from a strategic point of view. In other words, it doesn’t matter if all of the steel plants in the US move to China, since the US has all of the world’s “movie studios”.. which happen to be more profitable.
The thing is, however, a steel mill or an iron mine isn’t something that can be started up over night. In the event of an unexpected conflict, I wouldn’t want to be the nation producing only “movies” in conflict with a nation that produces steel and explosives.
I realize we are NOT in that situation now, but that is the road that unrestricted free trade will take us down.
I thought this was funny, from
http://news.yahoo.com/news?tmpl=story&u=/nm/20050713/pl_nm/energy_unocal_congress_dc_5
The second to last paragraph shows lawmakers saying it is “naive to focus on market logic”. There you have it. Market logic can cause one to loose sight of the bigger picture and make the mistake of thinking that 0.23% of the market is insignificant.
“The only witness called who saw no harm in the proposed CNOOC-UNOCAL linkup was Jerry Taylor, director of natural resource studies at the free-market-oriented CATO Institute, who argued the deal could never give China an “oil weapon.”
“He said Unocal production accounted for a “small and trivial” 0.23 percent of world oil output and any oil China derived from Unocal would displace oil it now buys elsewhere.
“China would have to occupy the entire Middle East to have a significant impact on oil flows and prices, Taylor said.
“But Taylor was attacked by other witnesses and by lawmakers, who said he was naive to focus on market logic.
“Robin Hayes, a North Carolina Republican, closed questioning with a warning that: “It would be a catastrophic mistake to allow Unocal, a security asset, to be sold to the Chinese government-slash-military.” “
I am no historian and am just a burgeoning Austrian, but I think that not only is protection like war, but protection causes war. Note the way we treated Japan before they attacked America or the way Athens treated Megara before the Peloponnesian War. Protection is what states do to there enemies during war and what they do to themselves before it.
Jon
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