Tuesday, May 22, 2018

Trade Walls and Trade Wars Equal Government Planning

Richard Ebeling emails:
Dear Bob,
I have a new article on the Future of Freedom Foundation website on, “Trade Walls and Trade Wars Equal Government Planning.”

Protectionist policies impose many burdens and costs on consumers and producers who are not the lucky beneficiaries of government intervention to limit the foreign competition that various selected domestic sellers would otherwise face.

But it is worth highlighting that trade restrictions also represent a form of government planning. It may not seem as dramatic or comprehensive as the old Soviet or Nazi forms of socialist central planning, but it is nonetheless the government using its regulatory and fiscal powers to intentionally redirect investment, production and employment into those avenues that the protectionist social engineers consider better than if the free market interactions of competitive supply and demand were fully determining what gets produced, where, by whom and to serve whose consumers’ demands.

Trade walls and trade wars result in government using their interventionist planning authority to pick “winners” and “losers” both at home and abroad, and necessarily incorporates corrupting elements of favors and privileges for some at the expense of many others, no different than under the Soviet and Nazi systems of central planning.

In the current trade dispute between the United States and China, for instance, both of the respective presidents, Donald Trump and Xi Jinping, are guided by conceptions of making their own countries “great again.” But precisely because the power of the State raises this all to level of “national interest” and “national security,” the visible hand of political decision-making replaces the private and peaceful choices of individuals. And as a result, nation’s potentially clash in the from of trade wars to the detriment of both societies, as a whole.



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