Trade Protectionism
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Trade Protectionism If we had a situation where these [steel workers] were our constituents and someone was breaking in their house and raping and robbing and pillaging them, we would want to send in a policeman to do something. In this instance, they [importers of foreign steel] are just coming in and taking their future, they are taking their jobs, they are taking all of their dreams away. … We must stand up for the people of this nation. We must stand up with a force of steel and with a backbone of steel. …the [steel import quota] bill before the Senate is a job killer, a trade war starter, and it is a bill that will destroy 40 jobs in steel-using industries for every one job it saves in steel producing. 1. If free trade is efficient why isn't it universal? Explaining trade protectionism has been one of the most fruitful areas for the application of public choice analysis. Economists have long faced a conundrum. If our theory is correct that seldom do deviations from free trade improve economic efficiency, why is it that in the real world free trade is the exception rather than the rule? Public choice analysis provides the answer. In common practice, economists ascribe the property of aggregate economic efficiency to any policy moves that create sufficient gains so that the winner could compensate the losers with something left over, i.e., to any policy which expands the utility possibility frontier beyond the initial equilibrium. In practice, however, such compensation is seldom paid; a policy that expands the utility possibility frontier often makes some worse off. From the standpoint of political economy, policies that potentially raise everybody's utility have much less appeal than policies that actually make everybody better off. Despite the frequency with which international trade theory is mischaracterized, it does not prove that everyone gains from free trade, even when there are no domestic market failures. It proves only that in money
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