Wednesday, September 16, 2009

Boudreaux on the Intellectual Absurdity of Trade Retaliations

This Cafe Hayek post by Boudreaux on trade retaliations is wonderfully written. I partially reproduce it below:

If your neighbor chooses to become utterly self-sufficient, refusing to consume anything produced outside of his own household, you might properly regret (1) that he and his family will likely become much more materially impoverished than your neighbor realizes, and (2) that you and other people in the economy will be deprived of the additions to total output that your neighbor would have added had he chosen not to cut himself off from the larger economy.

But ultimately it’s none of your business. You have no right to insist that, in the interest of a larger GDP, your neighbor must integrate himself more fully with the outside economy.

Now suppose that your self-sufficient neighbor, still refusing to consume anything not produced by his own household, offers to sell to you — say, in exchange only for a friendly smile from you — some tomatoes from his garden. You examine his tomatoes and determine them to be first-rate. Should you refuse to accept your neighbor’s tomatoes in exchange for a quick smile, on grounds that your neighbor will not, in exchange for his tomatoes, really purchase anything from you or from the outside economy? Would you make yourself richer by refusing his offer?

You may legitimately question the wisdom of your neighbor’s policies. But regardless of what you conclude, your best course of action will always be to trade freely with him, and with everyone else.