With U.S.-China trade wars escalating, debate rages about who bears the burden of tariffs, whether or not U.S. farmers (beset by their loss of the huge China market) will be made whole when U.S. taxpayers send them meaningful income assistance, and the possibility that China will satisfy U.S. concerns by revising its troublesome trade practices. While these topics get headlines and long-drawn-out TV conversation, hardly anyone, and certainly not any leading politician, has addressed the most fundamental concern of all.
Tariffs and any other government trade interference are a denial of freedom, the fundamental reason that our nation was formed and the protection of which is the reason for having a government in the first place.
Individuals in our free society are otherwise empowered by their government to pursue happiness by contracting voluntarily with other people, no matter where they may reside, who offer their legal goods and services for trade in American markets. Any government interference with such voluntarily arranged contracts is a denial of freedom.
Sadly, it seems freedom by its very nature has no political constituency. How could this be? The benefits of enhanced freedom accrue to all citizens taken together. In economics jargon, it is a public good, meaning that freedom provided to one accrues to all; it cannot be packaged or walled off. This means there is surprisingly little economic incentive for any of us to take the lead to spend precious resources protecting it. The benefits cannot predictably be directed toward a selected group of people, who might then spend resources lobbying for more of it.
Regulation and market interferences, like tariffs, are a different story. Their benefits can be carefully packaged and targeted so that the politically powerful gain when freedom is denied to others. Government-provided restrictions can form what are called private goods. For this reason, there are always special interest groups chomping at the bit to use government’s regulatory powers to restrict their competition, raise rivals’ costs, and cartelize markets.
Those who would impose tariffs and other restrictions on trade bear the burden of justifying why a government formed to protect freedom should choose to deny ordinary people freedom, even to the point of celebrating it. This is the heart of the matter and, for some, the moral case for maintaining a free society that operates under a rule of law.
In this moral sense, it makes no difference how much tariff revenue may flow to the Treasury’s purse or whether or not China or the United States has the most to gain or lose in the ongoing trade war, nor that some foreign governments subsidize their producers in ways that differ from ours. It makes no difference if one can show that changes in currency values following the imposition of tariffs may neutralize some or all of the costs.
What does matter is freedom. Yet this precious condition has no political constituency. We should eliminate tariffs for the sake of freedom.
Bruce Yandle is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business and Behavioral Science. He developed the “Bootleggers and Baptists” political model.
