Free To Choose: A Personal Statement – Charter 2 : The Tyranny of Controls (1)

In  discussing tariffs and other restrictions on international trade in his   Wealth of Nations,  Adam Smith wrote:

What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage. . . . In every country, it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest, that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interested sophistry of merchants and manufacturers con- founded the common sense of mankind. Their interest is, in this i

These words are as true today as they were then. In domestic as well as foreign trade, it is in the interest of “the great body of the people” to buy from the cheapest source and sell to the dearest.

Yet “interested sophistry” has led to a bewildering proliferation of restrictions on what we may buy and sell, from whom we may buy and to whom we may sell and on what terms, whom we may em- ploy and whom we may work for, where we may live, and what we may eat and drink.

Adam Smith pointed to “the interested sophistry of merchants and manufacturers.” They may have been the chief culprits in his day. Today they have much company. Indeed, there is hardly one of us who is not engaged in “interested sophistry” in one area or another. In Pogo’s immortal words, “We have met the enemy and they is us.” We rail against “special interests” except when the “special interest” happens to be our own. Each of us knows that what is good for him is good for the country—so   our  “special interest” is different. The end result is a maze of restraints and restrictions that makes almost all of us worse off than we would respect, directly opposite to that of the great body of the people.

We lose far more from measures that serve other “special interests” than we gain from measures that serve our “special interest.” The clearest example is in international trade. The gains to some producers from tariffs and other restrictions are more than offset by the loss to other producers and especially to consumers in general. Free trade would not only promote our material wel- fare, it would also foster peace and harmony among nations and spur domestic competition.

Controls on foreign trade extend to domestic trade. They be- come intertwined with every aspect of economic activity. Such controls have often been defended, particularly for underdevel- oped countries, as essential to provide development and progress.

A comparison of the experience of Japan after the Meiji Restora- tion in 1867 and of India after independence in 1947 tests this view. It suggests, as do other examples, that free trade at home and abroad is the best way that a poor country can promote the well-being of its citizens.

The economic controls that have proliferated in the United States in recent decades have not only restricted our freedom to use our economic resources, they have also affected our freedom of speech, of press, and of religion.