As promised, I am going to write about the comments I saw attached to the Times article on Obama's decision to back away from his protectionist promises. They differ in specifics, but all are good examples of how both the right and left seem to be coming together in their absurd protectionist theories.

So, let us look at some of these comments:

First this one, which presents the protectionist fallacy in its most basic form:

ihv>> we should buy america... but we cant... we cannot compete with countries who sell to us but do not buy our products.... they want free trade? good trade them a usa made ford for a overseas toyota... trade them food for oil that the same price ....

And then, a slightly different take:

American steel is the best in the world. Charity begins at home my mother always told me. US first and then the rest of the world! Importing steel to the US makes no sense. Free trade is a myth when other countries are supporting their products artificially.

Which is similar to another comment, offering slightly more specific advice:

One of the big things that made me want to vote for Obama was his stand on unfair trade. Now that he is cowtowing to the foreign governments, I'm wondering what might make him any different on that subject that McCain, or Bush. Max out the United States steel production, THEN import the rest.

This is a slightly different mistake, coupled with the usual populist denigration of bankers:

First the move from the North to Southern States, then to offshore loactions and then to other entirely non US factories.
The banker became ever more wealthy and we had a temporary few affordable crumbs.
Nafta and GATT come home to roost now. I have no sympathy for Ignorant Americans.

And, finally, an openly protectionist post, which also suggests I am an agent of Communist China:

Buy American is a must, we will not survive as a strong nation if we let the crooks send our jobs to China. Free trade is totally one sided at this time, it means the we import and they buy our Treasury Bills. protectionism is NOT a dirty word, it's a mechanism which is used by China and others.

(Strictly speaking, only first relates to Lord Say, but as Say's Law underlies all refutations of protectionist fallacies, I shall deal with them all.)

Now, as some other comments pointed out, protectionism is a political position adopted by scoundrels during tough economic times (as is populism), so it is no wonder both the right and left are united in having strong protectionist wings. However, this is unusual in that the traditional protectionists (unions and "anti-globalists" on the left, "paleo-cons" and nationalists on the right)* are not the loudest voices of protectionism, but instead many of the respectable moderates (or at least those seen as such) have come out in favor of protectionism. That is troubling, as the last time protectionism moved from the fringe (and unions) to the mainstream, we saddled ourselves with Smoot-Hawley and prolonged a short downturn into the Great Depression.

I suppose I should start with the first error, as it inspired my title. Lord Say invented the well known "Say's Law" which states, in its simplest form, goods exchange against goods. It is this law which makes it absurd to talk about other nations selling to us without buying, and also why talk of a "trade deficit" is so silly. When another nation sells us something, they want something in return. It may not be consumer goods, it may be services, or land, or capital, or rental of land, or something else that creates a paper "trade deficit", but, unless they are giving us their good as a gift, they are taking something in exchange. (Sometimes they take money and trade it to another nation which wants our goods, but at some point, for every dollar of imports we provide one dollar in exports of SOMETHING.) So it is silly to talk of getting goods from foreign nations without selling to them.

Actually, that "gift" bit answers another objection, the complaint that other nations subsidize their industries. While to those obsessed with labor (about which I will not write, but refer readers to "Free Trade, Employment, Outsourcing, and Protectionism" and "Jobs, Jobs, Jobs, and More Jobs"), this means we do not have as many jobs as we would, but in truth, if other nations subsidize industry all it means is they are taxing their citizens to give us that money. Why we should complain about other nations giving us a free gift, I can't explain, but the protectionists think it is a harmful thing.

I have written on all of these at great length, so I won't go into them in depth, but I do want to deal with one specific complaint. First, that US steel is superior in quality, so any imports must be motivated by sinister motives.

Whether US steel is superior or not is irrelevant. How so? Do you buy a Rolls Royce every time you buy a car? Or an Ferrari Enzo every time you want a sports car? No? Why not? Because you balance quality and price. And companies do the same with steel. US Steel nay be ten times as strong as Japanese steel, but if it is twenty times more expensive, it may make more sense to use more Japanese steel to make up for the inferiority of the steel. Or, even if American steel is ten times stronger and only twice as expensive, it may make sense to use Japanese steel, provided Japanese steel is adequate for a given use, the higher quality may not make up for the higher price.

I originally planned to recap all of my protectionist essays in this post, but as I wrote, I realized I had already rebutted most of these complaints as well as I can. So, I would ask that anyone who wants a more complete explanation should read "More Proponents of Protectionism" and follow the links in that post, as those articles provide a comprehensive rebuttal of protectionism and related foolishness.

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* I excluded corporations which spout protectionist rhetoric for self-serving ends, such as the US sugar industry, or our automakers form time to time, as they tend to fund both parties, and change their rhetoric and rationale to suit their audience. They are not true protectionist anyway, simply people willing to cash in on the stupidity of others.