Protectionism No Better than Socialism

by | May 6, 2016

“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: www.DrHurd.com.

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.

20 Comments

  1. Tell ’em, again.

    I recently read where somebody said the President is the CEO of the economy. There’s no CEO of ‘the economy’. There’s no ‘the economy’, even. There are CEOs over only specific economic entities. If the President is CEO over anything, it’s only over the enforcement of inalienable individual rights. He presides over that and only over that. He enforces individual rights domestically. He enforces them, and protects the government itself, against foreigners and other countries when they try to encroach. For these same purposes, he forms alliances with friendly countries against threatening countries and their proxies. In foreign policy, these purposes can be summarized as national security. National security can, indeed, justify limiting and restraining trade and other relations with other countries. But nothing else can justify it.

    To purge the elements from law and government which operate outside the proper function of government, we must define morality, meaning individual self interest, and with reference to all the relevant human knowledge, extend the meaning of self interest as far as that knowledge can permit. With that definition and full meaning in mind, we must review our definitions of crime, law and government, then review the full meaning of each. We must understand these concepts, the concepts of self interest, crime, law and government. Then we must know how to APPLY these concepts in action to purge those contrary elements from law and government. We don’t understand these concepts. The first order of business is to nail them down, or we’ll never get anything but more statism, and maybe, totalitarian dictatorship. Mike Kevitt

  2. Another display of la-la-land from Dr Hurd. Total detachment from reality and the requirement for more borders, if the west has a chance to exist.

  3. “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.”

    Sorry, Dr. Hurd, but you won’t get what you want because either Donald Trump or Hillary Clinton is going to be president. The question for you (and for all of us), therefore, is — who would you prefer be president, someone who has a lot of experience in the private sector or someone who had never worked an honest day in her life.

  4. On conservative sites I argue that in addition to is advocacy of protectionism, Trump has proven over his entire life and business career that his specialty is simply a pragmatic approach to achieve whatever he can in partnership with any government and that such partnerships makes him the poster-boy for crony-capitalism. But not surprisingly the conservatives are all over the board by insisting that pro-America tariffs will somehow work and that Trump will simply make America great again while refusing to discuss what made us great in the first place, which they insist is just some kind of exceptionalism. The reason so many authors have claimed their own version of conservatism is that it is huge tent under which anything anti-Democrat and pro-America is accepted.

  5. Protectionism has been tried and failed every time over centuries, so what is this la-la-land that you imagine. This article focused on free market economics which can be separated from border and immigration issues so what attachment to reality are you claiming. Protecting our borders and immigration policies is a separate issue and no where can I find that Hurd mixes it up.

  6. Take a deep breath and let it out slowly Steve. From all of his comments Hurd would clearly prefer Trump over Hillary but that is no reason to start blindly accepting most of his “all over the place” policy statements, but the most troubling is his consistent advocacy of protectionism which if implemented would have a devastating effect on our economy. And the mantra against trade deficits is a political game to attracts fools. The only time America didn’t have a trade deficit was our most prosperous, 1936. It is like whining about your trade deficit with your grocer, car dealer and mortgage company. Just like socialists views it is ignorant about the function of money in the economy, which is only part of the equation.

  7. I thought the same as you for many years until last year.

    No country has ever had full protectionism nor full free trade. Recent decades have seen Japan, South Korea, China, Thailand and Singapore adopt a smart mix in their own respective self interests. The west on the other hand has submitted to the free movement of everything and everyone as a general bromide, and are seeing themselves physically replaced. The issues are intimately joined.

  8. Your assertion that Hurd’s detachment from reality referred to borders, not economic protectionism, which is the subject of his article. You continue to assert immigration policies and a border directed at the movement of people is “intertwined” with what? Tariffs? The common beliefs about China’s economic strength is mistaken and there are international sanctions for currency manipulation that this administration refuses to do use. Tariff protection has been proven in every case to costs more jobs that it is seeks to save and the entire internal economy pays a higher price for all related goods, every study in every case and it violates the freedom of individual consumers. China will tank within one year and cause a worldwide recession.

  9. Economic protectionism specifically refers to the things that separate one country from another. These are borders. Movement of labour is one of the aspects we are talking about; it is that which is so often intertwined with the movement of goods and services. I’m not concerned with China one way or the other; would you say that the Federal Reserve’s history constitutes “currency manipulation”? Perhaps it is the USA which tanks soon…or the ECB…are you privy to some inside info?

    Would not the US administration’s use of sanctions constitute statism and interventionism? Since you know China will tank within one year, how much have you got at stake in the futures market?

  10. Dean did you file income taxes this year? If yes, you have displayed a “pragmatic approach” to life.

  11. I am betting on it. China’s economic reports are about as reliable as this gov’ts. unemployment percentages, If the GDP wasn’t such an established standard and controlled by the gov’t, we would be getting from them annual growth figures of 8% or more. If you can’t distinguish between the flow of goods and the flow of people, no reasoning is possible with you and I disagree with immigration studies that wish away the costs of the social net because they disagree with it. Changing immigration policy both legal and illegal will be easier than undoing the war on poverty.

  12. What an avalanche of nonsense. “No reasoning is possible with you…” “If you can’t distinguish between….” “Changing immigration policy easier than undoing war on poverty”. Very USA centric but most of the world isn’t in the USA. Sounds like a typical obleftivist flounce coming on!

  13. Very intuitive since America First is exactly my and Hurd’s point. By returning to our free market roots America would succeed again over all competition making all these protection measures and trade deficit worries irrelevant and history. Our economic problems start here where taxes and regulations are making us less competitive and that is the only problem.

  14. That’s the kind of blind faith that obleftivists are known for. Very blind especially when shariah law kicks in.

  15. No objectivist or libertarian here but our exchange is my fault and my mistake. I thought as a reader at this website you were at least on the right side of the national debate. Good Luck.

  16. I’m on the side that recognizes the threat to the west. Are you on some other side?

  17. If you’re talking about objective morality which governs actions between two individuals the definition is easy. All actions are allowed except those involving the initiatory use of force, threats of force or fraud.

  18. You’re right. Morality in ones hermetical activities (activities not involving anybody else) is defined as pursuit of ones needs and desires for ones own life. In ones activities in relations with others (between two or more individuals), that definition means all actions are allowed except initiatory force, threats and fraud. This meaning (no initiatory force) is the guide in pursuing ones needs and desires in relations. In relations, this meaning serves as the definition of morality. It comes from the definition of morality in ones hermitical activity.

    The big mistake (I think it’s more of a deliberate evil than a mistake) is thinking that once laws are set up, plus a government which works according to those laws, it’s ok to start initiating force, as long as it’s done thru government or under cover of the guise of law and government. What definitions and meanings are at work in that notion? Mike Kevitt

  19. The sole function of government is to defend individual negative liberty with the retaliatory use of force.

  20. The sole function of government is to defend individual liberty with retaliatory force. True. I’m not sure what you mean by ‘negative’ liberty. Minus the word negative in your response, I say, you’re right. But even then, you seem to flick off my comment above as decipherable and incoherent. I know what I was saying, but if it hit you as garble, please tell me. What I said as meant to add up to what you’re saying.

    What I said was meant to back up the ‘sole function of government’. That function needs intellectual, philosophical, backing. If I fell on that, please fill me in however you can, incorporating or discarding the word, negative, if you can. Individual rights needs knowledge fundamental to it to stand it up and to keep it standing, FOREVER. Mike Kevitt

Submit a Comment

Your email address will not be published.

Help Capitalism Magazine get the pro-capitalist message out.

With over 9,000 articles online Capitalism Magazine is completely free. We rely on the generosity of our readers to keep us going. So if you already donate to us, thank you! And if you don’t, please consider making a donation today. One-off donations – or better yet, monthly donations – are hugely appreciated. You can find out more here. Thank you!

Pin It on Pinterest