Instead of accepting protectionism
What labor should demand is freedom
| As Henry George recognized, protectionism by its nature harms the vast majority of workers. Protectionists often are protectionists in politics. When it comes to buying what they want, they become free traders. This 2010 op-ed was posted at the Ventura County Star, Sept 4. The writer is an economics professor at Pepperdine U (bordering Los Angeles CA). |
by Gary M. Galles
Aware that their government insulation from competing workers ends at the border, labor unions are the central force behind protectionism. They punish any politician willing to expand people’s freedom to arrange their own domestic and international economic affairs.But “labor” has not always been so hostile to the freedom that is, in fact, the primary source of worker well-being.
American economist Henry George is an example. His 1886 book, Protection or Free Trade?, demonstrated the case for free trade by demolishing protectionist fallacies, yet labor organizations twice persuaded him to run for mayor of New York. For his Sept. 2 birthday, instructively near Labor Day, his recognition of free trade as being the true interest of workers merits remembering his words.
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Protection conflicts with those ideas of natural right and personal freedom which received national expression in the establishment of the American Republic.
What was done was not to force the people to trade, but to force their governments to let them.
Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force. What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.
As trade becomes free and extensive, so does wealth augment and civilization grow. Trade has ever been the extinguisher of war, the eradicator of prejudice, the diffuser of knowledge.
If the end of labor be, not the expenditure of effort, but the securing of results, then whether any particular thing ought to be obtained in a country by home production, or by importation, depends solely upon which mode of obtaining it will give the largest result to the least labor.
The ability of any industry to establish and sustain itself in a free field is the measure of its public utility, and that “struggle for existence” which drives out unprofitable industries is the best means of determining what industries are needed under existing conditions and what are not ... the only safe course is to give to all a fair field and no favor.
Protectionism enables the favored producer to collect “encouragement” from his fellow-citizens in higher prices the gain to some involves loss to others.
It may be to the interest of a shopkeeper that the people of his neighborhood should be prohibited from buying from anyone but him, but who would contend that this was to the general advantage?
All these special pleas for protection are met when it is shown, as it can be shown, that a country can always increase its wealth by foreign trade. Trade between them will give to each country a greater amount of all things than it could otherwise obtain with the same quantity of labor.
Anything that reduces the aggregate income of the community must be injurious to working men.
The direct object and effect of protectionism is to raise the price of commodities. But men who work for wages are not sellers of commodities; they are sellers of labor. They sell labor in order that they may buy commodities. How can increase in the price of commodities benefit them? To increase the amount of labor for which certain commodities will exchange reduces the value of labor.
Especially around Labor Day, unions reiterate long-debunked assertions that they benefit all workers. But their domestic and international protectionism by its nature harms the vast majority of workers, as George recognized.
He also saw that they did not really believe their own propaganda because “Protectionists are only protectionists in theory and politics. When it comes to buying what they want, all protectionists are free traders.”
That is why George’s work justifies renewed attention from workers and policy makers. It reveals that union protectionism “has been invented merely to serve the purpose of its inventors,” and that for workers to advance their true interests, “instead of accepting protection, what labor should demand is freedom.”
JJS: The opinions people hold about economics are more like superstitions, and people hold them vigorously. To persuade unions to forgo tariffs on imports, a geonomist might also propose broader tax reform: Remove taxes from wages, too. Also, eliminate taxes on the sales of goods that workers (and everyone) buy. And while you’re at it, abolish the taxes on the buildings that workers (and everyone) live and work in.
As long as you have the workers’ attention, go ahead and also advocate ending corporate welfare (and all subsidies that tilt the playing field). And to really cement the deal, tell them what we all could do with the mounds of surplus public revenue -- share it, as Alaskans do with oil revenue.
The complete geonomic program is a policy that should win over labor, capital, and just regular human beings.
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Editor Jeffery J. Smith runs the Forum on Geonomics.
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Also see: US bill aims to ease Cuba travel
'Buy American' plan could cost US jobs
Foreign firms create jobs on American soil |
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