John Robson: Barriers to Trade Make Everyone Poorer

Commentary

People laugh at Yogi Berra’s “If you don’t know where you are going, you might wind up someplace else.” Then they do. Especially in government.

For instance, in horrified response to Donald Trump’s deliberate turn to trade protectionism, Canadian governments at every level have responded with… what’s this? Protectionism? Isn’t it the bad thing?

They say they think so. They say the world learned a lesson in the 1930s about how trade wars lead to the other kind, partly because “beggar thy neighbour” tariffs, quotas, and so on make everyone poorer. But if you ask why barriers to trade make everyone poorer, you’re lucky to get even a brief inaccurate response.

If you do, it’s usually that we can’t get away with pursuing unilateral advantage by subsidizing exports and penalizing imports because everyone else will too, in a downward spiral. But this explanation is wrong in theory, and hence wrong in practice.

Actually, British economist David Ricardo proved the gains from trade through comparative advantage two centuries ago by… and here I am firmly shooshed, including in a graduate history seminar by the professor. It’s too technical, too nerdy, and too “theoretical.” We need pragmatism, not ideology. So instead of good articulate ideas and sound policy, we get muddled slogans and the very race to the bottom we tried to avoid.

The real argument against protectionism isn’t that it would make us richer and the other guy poorer, except he retaliates. It’s that it makes us poorer directly, then he hurts himself because he doesn’t understand the theory either. The point of exports isn’t for our stuff to knock their stuff down then kick sand in its face. It’s to pay for imports.

Exporting gives up valuable goods and services in return for colourful bits of paper or plastic showing dead foreign politicians. Which mostly aren’t even good art. Their only use is to pay for valuable goods and services foreigners made. So making imports more expensive is a cunning plan to give away more useful things and get fewer in return.

Oh no, people will say, you’re too “ideological.” Or “that’s true in theory, but not in practice.” But I reject the pejorative use of “ideology” to indicate some perverse or obtuse resistance to clear evidence, partly because the only reliable test for whether someone is an “ideologue” seems to be them persisting in holding their own opinion even after you tell them yours.

I say an ideology is simply a coherent worldview. Call it a “paradigm,” “Weltanschauung,” or “philosophy” if you like. But please do not call it a mental disease, nerdy, or fanatical.

Indeed, a major reason public policy is so dreadful in Canada is a strong ideological resistance to systematic expositions of political philosophy, working from first principles by logical steps to detailed policy. Instead, people pride themselves on being “pragmatists.” Or say they’ve moved beyond right and left, implying that both clear positions are for rigid purists, whereas the self-promoter in question is open-minded.

Unfortunately, pragmatists’ plans never work because they have not thought things through properly. On purpose. It doesn’t mean they don’t have an ideology. It means they have a bad one, in large part because it’s unexamined.

For instance, on free speech. Almost everyone claims to favour it, then goes “but” and lists exceptions, all things they don’t personally believe. What they don’t do is attempt to demonstrate how these exceptions are compatible with their reasons for supporting free speech.

The big three were decisively articulated by John Stuart Mill. First, an unpopular idea might turn out to be true. Second, even if the conventional view is right, actually arguing for it instead of just chanting it deepens your understanding and appreciation of the truth. Third, the “Dracula effect”: sunlight destroys evil.

Mill didn’t use that phrase, of course, partly because Dracula wasn’t written yet and partly because it wasn’t his style. But modern politicians don’t put it that way because they never heard of it, and fiercely defend free speech for their own views or on trivia while bringing down the censor’s hammer on important things they dislike.

It’s not that they’re inconsistent. It’s that they don’t understand what they believe, and act accordingly. As on trade.

We may all be free traders rhetorically. But most people’s ideology is protectionist, not least because so many politicians also haven’t heard Mill’s anecdote about calling something true in theory but not in practice, only to be rebuked by his father that if it’s not true in practice, the theory is wrong.

Since free trade is a correct theory, protectionism is a bad ideology, and politicians proudly do things to make us richer that actually make us poorer.

How did we end up here? Because they didn’t know where they were going, and scorned maps as being for losers.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.