Adam Smith wrote the most influential case for economic liberty, “The Wealth of Nations” (1776), but the best book on free trade probably came from our side of the Atlantic.
Though fewer people remember the American economist Henry George (1839-97), Milton Friedman once told me that George’s book “Protection or Free Trade” (1886) was, in his opinion, the most rhetorically brilliant work ever written on the subject. In it George demonstrated how free trade benefits a nation that opens its markets, even if other nations close theirs. “If foreigners will bring us goods cheaper than we can make them ourselves,” he declared, “we shall be the gainers.”
As George pointed out, trade is voluntary, driven by individual buyers and sellers. “Trade is not invasion,” he wrote. “It does not involve aggression on one side and resistance on the other, but mutual consent and gratification. There cannot be a trade unless the parties to it agree.”
He posed a thought experiment to challenge the common view that exports are good, and imports are bad: “To have all the ships that left each country sunk before they could reach any other country would, upon protectionist principles, be the quickest means of enriching the whole world, since all countries could then enjoy the maximum of exports with the minimum of imports.”
What about the argument that tariffs are needed to support vital domestic industries? George observed that these political favors will inevitably go not to the deserving but to the strong and unscrupulous. See if this sounds like Washington today: “infant industries have no more chance in the struggle for governmental encouragement than infant pigs with full-grown swine about a meal-tub. Not merely is the encouragement likely to go to industries that do not need it, but is likely to go to industries that can be maintained only in this way, and thus to cause absolute loss to the community by diverting labor and capital from remunerative industries.”
