At a debate in New York last year entitled “Buy American/Hire American Policies Will Backfire,” with hundreds of people in attendance, my team of three free-trade proponents took on a trio of protectionists who are often in the public eye.
We expected that we would lose the final audience vote by 55% to 45%. As it happened, we wiped the floor with them, winning by an unprecedented margin of 80% to 20%. The feedback from several voters was that we had won handily because we had the “arguments and the evidence,” whereas our opponents had “assertions and invective.”
Evidently, the pessimism and despair that often overwhelms free traders today is unwarranted. The arguments of protectionists, new and old, are just so many myths that can be successfully challenged. Consider some of the most egregious examples.
Myth 1: “The cost of protection and its flipside, gains from trade, are negligible.” This means, of course, that if protectionism is politically convenient, you need not shed tears over harming the country by surrendering to it, an attitude that many Democrats in the United States find convenient to adopt. Ironically, this myth was a product of inappropriate methodology and resulted from the research of my eminent Cambridge teacher Harry Johnson; and it has inexplicably been a favorite thesis since 1990 of my celebrated MIT student Paul Krugman. But, while this theme continues to play well in Washington, no serious scholar buys into it, owing to the compelling refutations published in 1992 by Robert Feenstra, the most accomplished trade policy empiricist today, and in 1994 by Stanford’s Paul Romer.