Competitive masochism

the consumer. A “favourable balance of trade” really means exporting more than we import, sending abroad goods of greater total value that the goods we get from abroad…

The argument in favour of tariffs that has the greatest emotional appeal to the public at large is the alleged need to protect the high standard of living of American workers from the “unfair” competition of workers in Japan or Korea or Hong Kong who are willing to work for a much lower wage…It is simply not true that high-wage American workers are, as a group, threatened by “unfair” competition from low-wage foreign workers. Of course, particular workers may be harmed if a new or improved product is developed abroad or if foreign producers become able to produce such products more cheaply. But that is no different from the effect on a particular group of workers of other American firms developing new or improved products or discovering how to produce at lower costs. That is simply market competition in practice, the major source of the high standard of life of the American worker…

(Another) argument, one that was made by Alexander Hamilton and continues to be repeated down to the present, is that free trade would be fine if all other countries practiced free trade but that as long as they do not, the United States cannot afford to. This argument has no validity whatsoever, either in principle or in practice. Other countries that impose restrictions on international trade do hurt us. But they also hurt themselves. If we impose restrictions in turn, we simply add to the harm to ourselves and also harm them as well. Competition in masochism and sadism is hardly a prescription for sensible international economic