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Who does protectionism protect? Not you


Thomas L. Knapp

In August, Congress passed and President Joe Biden signed the CHIPS and Science Act, a $280 billion corporate welfare bill for U.S. semiconductor manufacturers.

In October, the Biden administration added new restrictions on semiconductor exports to China, banning not just sales of semiconductors, but of the tools to make them — including by and to companies located in neither the U.S. nor China.



All of this activity is essentially an extension of Donald “Tariff Man” Trump’s trade war with China, waged for the purpose of “protecting” Big Business from foreign competition at the expense of American consumers.

That’s not how its promoters put it, of course. Advocates of “industrial policy” say they just want to bring manufacturing jobs back to the U.S., reduce American dependence on imports and, of course, guard our “national security” from an ever-growing list of Enemies of the Week.

But the two ways of putting it amount to the same thing.

Contrary to what you may have heard from advocates of “industrial policy,” the U.S. manufactures more stuff now than it ever has apart from the same worldwide dip during the COVID-19 pandemic — more than half again as much by value than it did 25 years ago.

Yes, there are fewer manufacturing jobs, but that’s a good thing, not a bad thing.

The less labor required to manufacture a thing, the cheaper it is to make that thing and the more people can afford that thing. More efficient, less labor-intensive manufacturing leaves workers free to put their labor into areas where it offers a greater return — and with historically low unemployment levels, why shouldn’t they?

Instead of welding auto frames or making shoes, more Americans are providing health care, information technology services and other things we need at least as much as cars and shoes.

As for dependence on imports, such dependence promotes peace and friendship between countries. People who need and value each other’s products and services don’t fight, they trade. The recent downturn in U.S.-China military relations is not mere coincidence.

That’s not to say protectionism doesn’t have beneficiaries. It certainly does.

Protectionism’s beneficiaries are politically connected business interests who want to charge you $500 for a laptop computer and so ask the government to keep you from buying a competing Chinese model for $350. And, of course, the politicians who give those business cronies what they want.

American consumers don’t benefit. We pay. Every “new American job” created by protectionist policies costs means that every American consumer — including the workers in those  “new jobs” — pays more for the products or services involved.

Advocates of “industrial policy” want you to believe their ideas make you better off. Unless you’re a large stockholder in a  “protected” corporation, they’re lying to you.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.