The First Law of Economists: For every economist, there exists an equal and opposite economist. The Second Law of Economists: They’re both wrong. – Economist David Wildasin
It has been accurately noted that economists don’t agree on much.
Consider the example of the Obama administration’s nearly $1 trillion economic stimulus package, passed during the Great Recession. You can find well-known economists who think that the spending package was far too big. You can find others who believe that it was far too small. Too big? Too small? At least no one says that it was just right.
There is one area of policy where the First Law of Economists doesn’t hold: international trade. In a 2009 survey by the American Institute for Economic Research, 83 percent of economists agreed the United States should “eliminate remaining tariffs and other barriers to trade.” Since 2009, the numbers have been even more one-sided. In a 2012 survey of economists by the University of Chicago, 98 percent of respondents agreed that Americans are better off as a result of the North American Free Trade Agreement. In the university’s October 2016 survey, 100 percent of respondents agreed that levying import tariffs to increase U.S. production is a bad idea. One hundred percent. In the March 2018 survey, 100 percent of respondents agreed that U.S. tariffs on steel and aluminum will not improve Americans’ welfare.
The reason for unanimity is that the economics of free trade are simple. And the evidence is both dramatic and clear.
International trade is not a zero-sum game with a winner and a loser. Rather, it’s a series of voluntary exchanges that make each side better. American consumers value an LG washing machine more than the $650 required to purchase one. American consumers and the South Korean appliance company are both made better off with each purchase. We can impose a tax on imported washing machines, like the 50 percent tariff passed in January, in order to steer consumers in the direction of American-made machines. But the effect is to increase the price of all washing machines. This makes American consumers worse off and makes the entire U.S. economy smaller.
Even if our goal is simply to protect Maytag and other American appliance manufacturing workers from foreign competition, we would actually do less damage to the economy by simply writing the Maytag employees a check. There are much more efficient ways to redistribute income than import taxes.