Correspondence

...His letter reveals the strongest emotional animus...

...Anthony Harrigan's diatribe against free trade and free traders begins by quoting Disraeli's observation: "Free trade is not a rule...

...We would do well to remember Milton Friedman's point: The plea for protectionism is made by the vocal few who are individually heavily benefited, while the smaller individual losses of the vast majority, overwhelming in the aggregate, are silent and hence left out of the calculation...

...Hammett undoubtedly fits that description...

...The visible losses to the affected producers can always be identified and these producers can easily organize and lobby for protection...

...Congress listens to the Jeffersons, not the theorists...

...The consumers apparently can't see that benefit, and the protectionists have yet to come up with a coherent statement of where to look for it...

...Jefferson, Chairman of the DuPont Co...

...Indeed his letter is the most revealing of all...

...William M.H...

...The same can be said for state-owned or controlled enterprises in any country of the world...

...published in the Wall Street Journal this past February): "The strength of our economy is being impaired as imports displace domestic production...

...No amount of cheering from starboard will make this fair for American entrepreneurs or their former employees...

...Our foreign competitors are rapidly segmenting the American marketplace with a "liberal" reliance on internal economic subsidies to favored industries...

...Har-rigan's world, there are no automobile import quotas, no restrictions on foreign steel, no tariffs, no subsidies for farmers, no Export-Import Bank, and no World Bank loans to Third World nations to enable them to buy our products...

...After all the anxiety, however, which they have excited about this, after all the vain attempts of almost all trading nations to turn that balance in their own favor, it does not appear that any one nation in Europe has been in any respect impoverished by this cause...

...Certainly there is much that needs to be reconsidered by traditional liberals, but I can't escape a sense of alarm at the ritual incantation of "free enterprise, free markets, free men" as the magical remedy for every economic and social evil...

...economic facts of life-the colossal trade deficit and the loss of jobs and profits...

...If he doesn't believe the United States is awash in imported goods, what does he make of the $123 billion trade deficit for 1984...

...Second, Mr...

...A more accurate re-creation of the Boston Tea Party would be that of a mob of American car buyers throwing a few Chryslers into the harbor...

...Any person versed in American History will remember that the Boston Tea Party did not occur because the English were shipping low-cost, high-quality tea to the colonies...

...CORRESPONDENCE Protecting Rree Tkade I read with amusement Anthony Har-rigan's tirade against what he seems to imagine is our own "free trade" policy in the United States ("Free Trade's Costs," TAS, February 1985...

...It is possible that some short-term disruptions from imports are worth tempering...

...instead of being ruined by this free trade, as the principles of the commercial system would lead us to expect, have been enriched by it...

...The result would be that you spend a lot of money, have little effect on your original problems, and generate a plethora of new ones...

...Harrigan represents a group that fancies itself as an other and wishes desperately to be a some...

...Neither are the corporate socialists of the Fortune 500 interested in the issue of fairness...

...Hammett President, Manhattan Institute for Policy Research New York, New York Just a note of congratulations on your decision to carry Anthony Harrigan's essay recounting the costs associated with the current conservative enthusiasm for free trade in an unfree world...

...Therefore, according to him, the subsidies and other attention paid by the Japanese Government to favored Japanese industries have no negative impact on the rest of the Japanese economy...

...Department of Housing and Urban Development Washington, D.C...

...In short, intervention means that everyone benefits, and no one pays the piper...

...In the fact department, I call to your readers' attention the following statement by E.G...

...Perhaps it's painful to confront economic reality...

...That is a view that all protectionists can endorse because it is so easy to make a case for protecting this or that industry from the ravages of competing imports...

...However, Dr...

...Harrigan quotes a Chrysler official who calls for dumping Japanese cameras in our harbors, likening it to a modern-day Boston Tea Party...

...But this has nothing to do with permanent protectionism, which attacks the good part of the deal-the cheap imports-instead of dealing with the unfortunate side effects...

...The future can be threatened by greed as much as it can by the coercive Utopians so feared on your pages...

...Harrigan further suggests, these subsidies can continue indefinitely because they are paid by IMF and World Bank resources derived from the US...

...and it is far more difficult for the injured consumers and exporters to organize to protect themselves against protection...

...It doesn't contain any factual material but complains because I quoted Disraeli (not a libertarian...

...If, as Mr...

...I suppose I am one of those "old liberals" you are hoping to attract to the new political culture...

...It's fascinating, albeit sad, that these commentators completely ignore the US...

...The plea for protection is a plea to continue subsidizing the illusion that we get some kind of benefit from having a steel mill or an auto assembly line aside from the tangible products that are sold to the consumers...

...The economic sins he commits are many (more than can be discussed in this letter), so I'll only dwell on those that are most obvious...

...But try to grope around for a better idea of what that is, and you come up with empty hands...

...Executive Assistant to the President The Government National Mortgage Association U.S...

...William M.H...

...The jobs that are lost are lost simply because society has to put more into them than it gets out in product, when compared to the foreign alternative...

...To do anything else is to conspire in crisscrossing the skies with dollars...

...Bill Anderson Chattanooga, Tennessee Tony Harrigan's outburst on "Free Trade's Costs" in the February issue is painful to witness...

...A grim world, indeed...

...Experience, however, has taught us differently...

...Harrigan sees it as patriotism...

...really does have a free trade policy...

...Everyone who sounds the alarm serves the public good...

...taxpayer, then the evident solution is to withdraw the subsidies to those institutions...

...His scenario of America is one of a nation awash in the products of the Yellow Peril with unemployed, starving people clicking snapshots of one another with Nikons...

...no doubt Mr...

...The emotional component in several of the letters makes it very clear why overhaul of these policies is so difficult...

...It clearly disturbs him that a view contrary to his own is presented to the public...

...Har-rigan has been arguing for several years now that unless we band together to keep out dreaded imported goods, we will all be relegated to flipping hamburgers for our colonial masters from Europe, Brazil, and the Far East...

...For them competition is merely a transitional phase between economic chaos and monopoly...

...On the other hand, the costs of protection to everyone else, though even greater in magnitude, are much more difficult to (continued on page 45) CORRESPONDENCE (continued from page 2) identify...

...Now this surely can't be true in every possible case...

...The vague idea that we can't all be employed in service industries, even if true, doesn't tell us where to draw the line short of that...

...I suppose Mr...

...Hammett would like to quote Adam Smith, chapter and verse, to Mr...

...Every town and country, on the contrary, in proportion as they have opened their ports to all nations...

...it is an expedient...

...In Mr...

...He admits that "it is possible that some short-term disruptions from imports are worth tempering...

...The heart of the piece is the thesis that less expensive foreign goods are really more expensive, because they involve the "hidden price" of the "loss of industrial jobs...

...it is an expedient Protection is not a rule...

...He very conveniently fails to mention it...

...Public deliberations on meeting import competition should not ignore them...

...Miller Hudson Chairman, Denver Democrats Denver, Colorado Anthony Harrigan replies: The spate of letters criticizing "Free Trade's Costs" reveals the range of arguments and emotional reactions involved in the opposition to reform of our nation's trade policies...

...That admission may bring down on him the fury of free trade dogmatists, who admit of no possibility of "protection" under any circumstance...

...This is a characteristic response from a free trade dogmatist...

...Bill Anderson refers to my "tirade" and my "economic sins...

...My economic studies called that behavior rent-seeking...

...Then he quotes "scripture"-Adam Smith-at length as though that were sufficient to overcome my arguments...

...Jefferson...

...Rather, the Tea Party happened in reaction to the British government's attempt to force American colonists to buy their higher-cost, lower-quality tea...

...He seems to be telling us that bureaucratic intervention overseas has enabled countries to raise their standard of living, a line that is akin to any statement released from Socialist International...

...It is the kind of article that is hardest of all to come to grips with, because there is so much that is wrong, even at the most elementary level, that it exhausts a critic to undertake a serious and complete analysis...

...Harrigan fancies government intervention in the economy to be a costless entity...

...Louis C Gasper, Ph.D...

...Thus, unless we take a principled position for free trade against protection, we will be at the mercy of every special interest group that can come along with a plausible case for the expediency of protection...

...jobs lost to imports during the past few years now number around two million...

...In closing, Mr...

...he describes my article as a "diatribe...

...For example, the vast subsidies given to British Steel have helped to drain the British economy, not help it...

...Of course, anyone who has dealt in any form of international trade either as an exporter or importer knows this nation does not follow a policy of laissez-faire...

...Harrigan writes as though the U.S...

...First, and foremost, Mr...

...They prefer textbook theories to objective facts...

...Keep it up...

...Harrigan suggests that "all that is needed" is an "alternative trade policy" that would limit imports subsidized by foreign states...

...Through such programs as unemployment insurance, we do this for domestic market disruptions, and it is conceivable that something somewhat different is appropriate for shocks arising from the international sector...

...Let's hope the U.S...

...Gasper isn't as much a purist as the other respondents...

...Nonetheless, I greet each new issue with anticipation...

...As for the dangers to our economy from our current trade deficit, I believe the words of Adam Smith ought to carry a little more weight with conservatives than those of Anthony Har-rigan, or even Benjamin Disraeli: There is no commercial country in Europe of which the approaching ruin has not frequently been foretold by the pretended doctors of this system, from an unfavorable balance of trade...

...There must be some goods that would be better gotten in foreign trade, and presumably we would determine them on the basis of just how much extra benefit we get, aside from product, from the "lost jobs...

...But if those subsidies are paid by foreign taxpayers, it is hard to see why we should object to them, provided that we in effect use some of the gain to care humanely for the disruptions that would be caused for the relatively brief time that the foreigners can afford to be foolish on any large scale...

...Louis C. Gasper accuses me of an "outburst" which he says "is painful to witness...

...Government aids some- of course, at the expense of others...