The Cost of Protectionism: Should the Law Favor Producers or Consumers?
30 Pages Posted: 1 Nov 2016
Date Written: 1993
Abstract
There is no doubt that protectionism costs. But it is less clear exactly how much it costs and who pays. And while protectionism results in a deadweight loss — there are more losers than winners — some individuals and groups gain from protectionism. And it is those who stand to gain who have the ear of the legislature, at least for the most part.
Part II of this article provides an overview of protectionism and the costs associated with it. Part III examines the monetary costs of protectionism, with emphasis on the costs of protectionism in the auto, steel, textile and agricultural industries. Part IV discusses the nonmonetary costs associated with protectionism, such as unemployment, reduction in social harmony, reduced choice and rights violations. Part V concludes that protectionism is a bad policy, whether viewed from a utilitarian or rights perspective, and recommends that laws that support protectionism should be repealed because protectionism is not in the public interest.
Keywords: Trade, Free Trade, Protectionism, Tariffs, Quotas, Antidumping, Ethics, Utilitarian, Rights
JEL Classification: D63, D72, F1, L61, L62, L66
Suggested Citation: Suggested Citation