In today's New York Times, Walter Block employs some excellently Rothbardian logic in exposing just how absurd is the argument that protectionism increases wealth. In this case, Block notes that if protectionism helps to increase the living standards of people in American states who import from other states, then New York would surely benefit from slapping tariffs on imports from Iowa:
As an illustration, assume Mr. Trump is the governor of New York. He is devoted to making the Empire State “great again.” Right now, both New Yorkers and Iowans raise pigs — but Iowa produces far more than New York. So Governor Trump sets up a protective tariff against the importation of Iowa-raised pork. Will this make New York great again?
Hardly. There is a very good reason the Empire State does not produce a huge amount of this product: economic efficiency, the true path toward economic greatness. Of course, pork product jobs will increase in New York thanks to the Trump tariffs. But this is the way to ruin the state’s economy.
Surely, New Yorkers would be far better off continuing to produce goods and services in which they have a comparative advantage (Broadway shows, dairy products, financial services, jewelry, maybe even newspapers) and trading them for pork, rather than trying to grow more of it locally. Ditto for the Iowans. They, too, would be well advised to stick to what they do best and trade for what they want.
There are good reasons the United States is such a prosperous country, one of which is this: The country is a gigantic free-trade zone among the states. Yes, every once in a while a state legislature will get in the way. Wisconsin may try to reduce the importation of wine from California. But this only interferes with the specialization and the division of labor that maximizes output. Happily, the Supreme Court has typically given the back of its collective hand to all such attempted interferences with interstate economic freedom. ... Maybe we should be happy that the president hasn’t yet kicked Hawaii out of the union and imposed a tariff on pineapples to strengthen the weak pineapple industry in other states. Absurd, yes, but hardly less bizarre than thinking tariffs on foreign goods will make the American economy great again.
To my knowledge, I have never seen a protectionist "argument" that refutes the appropriateness of this analogy. Clearly, if protectionism between sovereign states is economically sound — as its supporters contend by spinning intricately crankish theories — then protectionism is also good between jurisdictions like New Mexico and Kentucky.
Indeed, these analogies can be used to illustrate the problem with other interventions as well. Rothbard, for example, quoted this reductio ad absurdum used earlier by Oscar Cooley and Paul Poirot:
If it is sound to erect a barrier along our national boundary lines, against those who see greater opportunities here than in their native land, why should we not erect similar barriers between states and localities within our nation? Why should a low-paid worker ... be allowed to migrate from a failing buggy shop in Massachusetts to the expanding automobile shops in Detroit. ... He would compete with native Detroiters for food and clothing and housing. He might be willing to work for less than the prevailing wage in Detroit, “upsetting the labor market” there. ... Anyhow, he was a native of Massachusetts, and therefore that state should bear the full “responsibility for his welfare.”
If newly arrived workers "steal" jobs from the native population, then shouldn't states close their borders to new workers from other states? Few are willing to show themselves to be so obtuse as to argue that closing the Illinois border to migrants from Ohio would make Illinois richer.
To be fair, on the matter of immigration, there can be an actual cost stemming from the reality that migrants are political and economic actors of their own. But, unlike a migrant, an imported sweater from some other land does not vote, or collect welfare, or drive on the highways. An imported inanimate object has no downside. After all, it was only imported in the first place because someone wanted to buy it. No sweater or automobile or TV in the history of the world has ever crossed a border of its own accord.
What the philosophy of protectionism tells us is that it's good for people in Colorado to be taxed in order to purchase a car from Michigan. But, we have long seen that free trade between these two jurisdictions benefits both sides, and most recognize that free movement of goods is an important factor in what has made the United States wealthy.
