Should the Law Favor Consumers or Producers? A Look at the Effects of Protectionist Trade Policies

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 I of this article provides an introduction and overview of the topic. Part II 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whether viewed from a utilitarian or rights perspective, and recommends that laws that support protectionism should be repealed because protectionism is not in the public interest.

JEL Classification: F13