Restrictions on cross-border trade are a grave infringement of the individual’s liberty to buy from, or sell to, whoever offers him the best price. Frédéric Bastiat explained: “A man who would consider himself a bandit if, pistol in hand, he prevented me from carrying out at the border a transaction that was in conformity with my interests has no scruples in working and voting for a law that replaces his private force with the public force and subjects me, at my own expense, to the same unjust restriction.” (Economic Harmonies, 1850).
Added to the moral argument is the economic argument, explained by Adam Smith:
It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor . . . What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it off them with some part of the produce of our own industry, employed in a way in which we have some advantage. (An Inquiry into the Nature and Causes of the Wealth of Nations, 1776).
The larger a market is, the more prosperous its participants are due to the beneficial effects of competition. The worldwide market is the biggest of all, and the greatest advantage accrues to those countries that most readily allow imports and refrain from subsidizing or hindering exports. The argument that jobs and wealth are being exported is illogical; it is akin to claiming that a man who stays at home and grows his own food and makes his own clothes will be wealthier than the man who goes into the city and gets a job. It ignores the benefits of specialization.
Subsidizing domestic producers violates free trade. Subsidies amount to taxing the whole population to line the pockets of a few. Not only is this unfair, it causes economic stagnation due to the misallocation of resources. Speaking of these kinds of measures, Benjamin Franklin observed: Therefore the Governments in America do nothing to encourage such projects. The people, by this means, are not imposed on, either by the merchant or mechanic. If the merchant demands too much profit on imported shoes, they buy off the shoemaker; and if he asks too high a price, they take them off the merchant; thus the two professions are checks on each other.” (Information to Those Who Would Remove to America, 1782).
In addition to moral and practical arguments, there is another consideration: free trade is the best method by which to spread civilization, and spreading civilization is the best way of preserving peace. Therefore, free trade should be the foremost element in the foreign policy. As William Graham Sumner noted:
Trade has been the handmaid of civilization. It has traversed national boundaries, and has gradually, with improvement in the arts of transportation, drawn the human race into closer relations and more harmonious interests. The contact of trade slowly saps old national pre-judice and religious or race hatreds. The jealousies which were perpetuated by distance and ignorance can not stand before contact and knowledge. To stop trade is to arrest this beneficent work, to separate mankind into sections and factions, and to favor discord, jealousy, and war. (Protectionism: The -ism Which Teaches That Waste Makes Wealth, 1888.)
This article is an extract from the book ‘Principles of Good Government’ by Matthew Bransgrove
