i read hazlitt and other economists' and economic-popularizers' arguments against protectionism years ago, when i devoured most of the corpus of austrian economics, from menger to post hayekian austrians of the various splinter schools.
the basic comparative advantage argument in favor of division of labor, within and beyond borders, is of course valid, and is true as far as it goes.
however, economic efficiency does not inherently trump other considerations, value judgments or political ends. there is a political side to reality as well as an economic one, and you can't use economic arguments of efficiency to say x political goal is wrong. economics does not determine the validity of political ends or ultimate values, as a cursory reading of mises would tell you.
whether people in iceland, or panama, or argentina feel it is a good idea to use the power inherent in government to help foster independent domestic industries, as an alternative to market dominant firms that are headquarted in the US, is a political decision. it can't be refuted by arguments of economic efficiency.
arguments of economic efficiency will never convince japan that it does not need its own aircraft industry, or that it needs to import lots of cheap labor and lose its national identity. economic efficiency is not inherently a higher value than other final goals or ends.
there has never been anywhere 100% freedom of trade because, as good an argument it is economically, political considerations of a higher order often trump purely economic ones, no matter how true the economic axiom might be within its limited domain.
1. states won't trade with other states with which they're in direct physical war.
2. states won't permit trade with companies known to be foreign intelligence assets or known to finance or act as fronts or arms of terrorist or criminal organizations (at least, those on the other side).
those are two examples of restriction of trade that have existed everywhere, even in very liberal or libertarian countries.
the principle is easy to establish that there are some cases where trade should be restricted. the question is how to delimit those situations.
countries with immature industries that want to become industrial powers have always used protection in order to foster their young industries. this is true england, america, democratic germany and japan post ww2, and modern capitalist china.
mercantilist strategies of fostering domestic industry win the argument because they work. history trumps theory. the classical liberalism of america or england did not prevent protection of industry for national interests when they were becoming industrial powers. china is not stupid. they have access to all the economic literature that claims uinlimited free trade is always best. they simply disagree, and so become an economic powerhouse by using the actual proven methods.
it's easy to call it wrong from the comfort of an industrially advanced country that is the world's top power. from the other perspective, it is obvious that certain political policies promote the advancement of a nations domestic industries more than others.
none of this contradicts fundamental truths of economics about comparative advantage of division of labor. it is just confirmation of what we already knew. political ends, as final ends or subjective value judgements, can trump economic efficiency as a primary goal.
mises was clear that economics does not determine ends, but just analyzes the means of reaching ends. economics can never determine whether or not having x or y national industry is of higher value than having unlimited free trade. that is a moral or value judgement every person has to make for themselves.
the market guarantees no outcome or ends. the market can be perfectly happy with tyrannical governments or free peoples. with lackey, de-clawed journalism or aggressive investigative journalism. with private prisons and draconian laws or very few laws and prisons. with garbage culture or higher culture. with centralized control of industry and concentration of wealth, or their opposites.
the market is never 100% free, since it is the product of the legal arrangements in the political structure. to the extent it is free, its freedom does not guarantee any particular political or social outcome, positive or negative.
what the proper goals of society and politics are is an open debate, and ultimately up to individuals to decide. if liberty is a goal or value, it is up to individuals to determine how much liberty is desirable versus other competing factors, such as order and security. how high a place liberty holds has to be determined by each individual.
some people will come to the moral conclusion or the final value judgement that no use of any coercion by anyone, anywhere, for any purpose can ever be moral. i find that to be unrealistic and accordingly will never influence more than a tiny minority of unrealistic dreamers.
whatever our beliefs, we don't have the right of verbal imperialism -- to impose our narrow personal beliefs as the only definitions of broader political phenomenon, like 'liberalism' or 'libertarianism.' you don't get to say 'my beliefs are libertarian' and excommunicate others, for example mises, hayek, or friedman, who did not share this belief.
people like hayek and friedman and mises were not anarchists. they accepted a social order based on the coercive power of law. whatever arguments they made for free trade were practical and utilitarian. if they had moral beliefs, they were outside of their economic claims.
my post merely raised particular situations in which, on principle, the favoring of some industries key to a nations political independence might be in the interests of its citizens. nations exist, national identity exists. as long as this state of things persists, nations will often not have regard for the interests of other nations' citizens, and so people will continue to use states and government to protect their collective interests against other similarly organized gangs. such is life...
your utopian moral notion that nations should not exist on moral grounds, is a valid opinion. but it does not impact the practical reality of the moment. if you ever achieve a world that actually reflects your moral demands of humanity, then the world will be able to abandon all use of physical force under any circumstances. law will be unnecessary, everyone will be in inherently good and altruistic.
while the real world persists, realistic people will have varied and nuanced positions on issues like national borders, immigration, trade, military policy, the value of social welfare programs, etc.
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