Protectionism No Better than Socialism

by | May 6, 2016 | Trade

“The philosophy of protectionism is a philosophy of war.”

New research suggests China’s economic future may not be bright because of the country’s aging population and its low fertility rates.

China’s problem is not the aging of the population. A free market could handle that. So could political freedom, which would permit Chinese individuals to make all personal decisions about their lives, such as the number of children they may have, without government control or interference.

China’s problem is that it’s a state controlled economy, and that it lacks individual liberty. It’s no longer totalitarian Communist, as it was in the Maoist era. But it’s still state-run and managed. “State-run,” in an economic context, refers to a system where any wealth accumulated is considered the property of the government. If wealth creators (or others, such as the politically connected) are permitted to keep any of that wealth, it’s only because the government approves of it. State-run is not only wrong, because it impairs liberty; it’s also impractical, and unsustainable, as morally wrong things always are.

America was originally just the opposite. The original American premise was that anything you earned was yours. Period. The government only got involved if you were a thief, a fraud, or a violent offender. That has been progressively changing over the decades. Under the rule of today’s “progressives,” not to mention their enabling Republican lackeys, we are fast approaching (if we have not already reached) the very same premise of a statist society like China’s, in which you get to keep only what the government says you may keep; and you will spend your money as the government sees fit. It’s known as statism. That was the premise of Obama’s takeover of medicine, as well as his desired takeover of American retirement plans, where – if he gets his way – all retirement savings will be controlled by the government. If government is responsible for us in retirement, the least we can do is give them total control, right? It never ends.

Many Americans object to the statism, because they sense its injustice and, for healthy emotional reasons, rebel against it. But instead of defending the only logical alternative to statism—the restoration of the private property concept—they lash out against countries, such as China, who seem to be doing better. “China is ruining us. If we declare economic war [tariffs, etc.] on China, then we’ll be prosperous again.”

That’s not how it works. It’s kind of like saying, “If my neighbor didn’t have two nice cars while I struggle to pay the mortgage, I’d be better off.” It’s irrational, and it’s self-defeating, because trying to put another down will not lift you up. Leaving aside any legitimate grievances the U.S. government may have against the Chinese government with respect to trade and economic policies, the fact remains: America will never be economically great again until America is economically free again. Totally free.

The brilliant Austrian economist Ludwig von Mises got it right when he said, “The philosophy of protectionism is a philosophy of war.” Protectionism refers to government setting limits and restraints on trade with other countries, not for reasons of national security, but to promote some economic activity over others. It’s just another way of politicians picking winners and losers, just as they currently do with our massive, regulating welfare state.

I don’t want Donald Trump determining what happens in our economy, any more than I want Barack Obama or Hillary Clinton doing it. Granted, Donald Trump has a lot of experience in the private sector, while neither Obama nor Clinton ever worked an honest day in their lives. But regardless of who we put in charge to run the economy, the economy will not run, until or unless we learn to leave it the hell alone.

The only people qualified to make economic decisions—to pick winners and losers—are people with financial and psychological stake in the activity: consumers, customers, producers, profit-makers and owners. The least qualified are the politicians we install as third parties to interrupt, limit, restrain, or otherwise impair the process of economic transactions. Morally, government has no more business butting into arrangements between businesses and customers than it has in butting into personal, sexual relations. Practically, the government is about as qualified in making economic decisions for the population as a whole as it would be at determining spouses/mates or selecting family size for people.

America desperately needs a heavy dose of anti-statist capitalism. The anti-statist premise is simple: If you earn $50, it’s yours. If you earn $1 million, it’s yours. If you earn $1 trillion dollars, it’s yours.

Such a policy means that wealth will remain in the hands of those who earned it, or wherever they choose to invest it (most often, in job-creating business and sometimes charities). Arguably, a reckless drunk could spend money more wisely than the average politician or bureaucrat at Command Central in Washington DC; and at least the reckless drunk would be spending his own money, or the money of someone who voluntarily gave it to him.

While government may not control or manage where that money goes in a free economy, it will be far better utilized by those who earned it than the corrupt people we keep elevating to office to spend trillions of dollars of other people’s money, not to mention $20 trillion more of not-yet-created wealth.

If you want to beat a statist country like China—demographic weaknesses and all—then the best way to do so is to promote the restoration and development of unhampered, liberty-promoting, totally free markets.

Free markets, free minds and private property protected by an unbiased, justice-supporting government is the only way to peace. So long as we keep promoting the opposite, we will keep getting the opposite results.

Dr. Michael Hurd is a psychotherapist, columnist and author of "Bad Therapy, Good Therapy (And How to Tell the Difference)" and "Grow Up America!" Visit his website at:

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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