Bonus Quotation of the Day…
… is this recent Facebook post by the great economic historian Bob Higgs:
What’s wrong with protectionism? In a word, everything.
Economically, protectionism is destructive of wealth by obstructing gains from trade by willing transactors. Fiscally, protectionism is a poor source of government revenue that dries up completely as tariffs are increased so much that they reduce trade flows to zero. Morally, protectionism is vicious because it coercively substitutes the ill-informed and ill-directed judgment of government officials for the judgment of people making deals with their own private property.
People who believe that protectionism enhances the general public interest resemble the people who believe that the earth is flat and stationary and the sun passes over it each day and deny that the earth is spherical, revolves on its axis every 24 hours, and rotates around the sun once each year. Defenders of protectionism are either ignoramuses or con men trying to find an excuse for special interests to pick the pockets of the public.
When protectionism is erratically constructed, applied, and timed, as it is now under Trump’s control, it is even worse because it creates regime uncertainty that destroys the confidence investors need before they will use current resources to increase fixed capital, equipment, and knowledge bases for future use, and thereby slows economic growth or even brings about recession or depression of the overall economy.
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