'Does National Security Justify Trade Restrictions?'

6 months ago 11

ARTICLE AD BOX

"In a recent article, 'Why Trade Should Be Free,' I made the case for free trade. ... [T]he case for free trade is one that many economists, including Adam Smith, have made. Free trade causes people in the free trade country to produce the goods and services for which they are the least-cost producer and to import goods and services for which people in other countries are the least-cost producers. The case for free trade is no more complicated than the case for hiring someone to mow your lawn.

    "The conclusion that free trade is good for a country’s government to adopt does not depend on other countries adopting free trade. Even if other countries’ governments impose tariffs, we are better off, on average (there could be some losers), if our government refrains from restricting trade.
    "Are there any exceptions to the case for free trade? There’s one main one. Adam Smith himself laid out this exception in 'The Wealth of Nations': restricting trade when the traded item is crucial for national security. But the case for restricting trade even in such cases is not airtight and, indeed, other ways to assure a supply of such items may be better than restrictions on trade. One such way is by stockpiling the crucial items and that may well involve more trade, not less. 

    "Whatever the measures taken to assure availability of crucial inputs to defence, we, unfortunately, depend on government officials with information and competence, two characteristics that are typically in short supply in government."

~ David R. Henderson from his article 'Does National Security Justify Trade Restrictions?'

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