Protectionism and Unemployment; H. Sennholz

THERE is a disturbing thing about foreign affairs: they are foreign. They do not conform to the world we admire, which is our own. Foreign matters are viewed with suspicion, yea, even dislike and contempt. Pro tectionism, which proposes to use the authority of government and its in struments of coercion to restrict trade with foreigners, builds on this psychological foundation. In the minds of many people the ancient association of foreigner with enemy still lingers. Foreigners are blamed for all kinds of evil, real and imagined. They are censured for being inscrutable and unpredictable in their trade relations, engaging in ruthless competition, gouging their trade partners through prices too high or too low, exploiting their Dr. Hans Sennholz heads the Department of Econom ics at Grove City College in Pennsylvania. He is a noted writer and lecturer on economic, political and monetary affairs.

Hans F. Sennholz Protectionism and Unemployment workers through sweatshop wages and conditions. But above all, trade with foreigners is believed to be most disruptive to commerce and indus try, ever changing in composition and structure, requiring painful readjustment. Protectionists offer instant gains through removal of foreign compe tition and protection from the pains of readjustment. Appealing to people who do not care to change and others who uphold domestic changes, but are set at odds with foreign changes, they promise peace and profit through legislation, regulation and the use of police power. But despite all the opposition to change, the world is a scene of changes. Today is not yesterday. We ourselves change as do our thoughts and works. Change may be painful, yet ever needful. In our economic lives we may face important changes that require our 159 160 THE FREEMAN March attention and adjustment. The tastes, habits, choices and prefer ences of consumers may change, which may dictate production ad justments. The worldwide pattern of division of labor may change, which affects the structure of trade and commerce. The costs of produc tion may change either here or abroad, which may create competi tive advantages or disadvantages.

There may be a never-ending se quence of changes in labor costs, cap ital costs, material costs, transpor tation costs, government costs, and many other costs. Man faces changes in interna tional trade and commerce to which he must adjust. After all, foreign trade is merely an extension of do mestic trade, which is a corollary from the principles of division of la bor. Cooperation and specialization bring the same kinds ofbenefits to all people regardless of race, religion or nationality. They make human la bor more productive through ex change rather than direct produc tion. If trade between the people in California, Texas, Florida and Maine is advantageous, it follows that free trade between people in Guatemala and Mexico, or Canada and Costa Rica may also be advantageous.! Protectionism, Old and New Most of the arguments in favor of restriction stem from the distant past. Many are crudely Mercantilistic; they favor exports and oppose imports. Mercantilists are con cerned about an unfavorable bal ance of trade which, they believe, in flicts loss and waste. In the past they restricted imports and promoted ex ports in order to bring money into the country. The Neo-Mercantilists of our time favor exports for bring ing in jobs and profits, and oppose imports for taking them out.

Mercantilistic notions, although discarded by most economists, live on regardless of the criticism that is levied against them. Businessmen remember them when they are en countering difficulties and calling on government, pleading protection from foreign competitors. The agents of labor retreat to the armory of Mer cantilism when they are enmeshed in depression and unemployment. And government officials may plead the case for Mercantilism when they impose their regulations and con trols on foreign trade and commerce, or grant subsidies, set rates, or gather information to promote ex ports and limit imports. They all hold to the persistent belief that ex ports are especially beneficial and praiseworthy, and imports ipso facto harmful. The recrudescence of Mercantil ism dates back to the early part of this century, and came to a head dur ing the 1930s. Guided by a spirit of nationalism it sought national self sufficiency through restrictive tar1985 PROTECTIONISM AND UNEMPLOYMENT 161 iffs, import quotas, and exchange re strictions. It differed from the older Mercantilism in that it received strength and support from a philos ophy of militant nationalism and economic welfarism. It was associ ated with comprehensive central planning by powerful governments engaging in economic warfare and military struggle.

The Neo-Mercantilism of the 1970s and 1980s differs from the 1930s' version in two important respects: it is devoid of the blatant nationalism of the first half of the century and its beggar-my-neighbor attitude; but it is saturated with the notions and doctrines of full employment by gov ernment fiat. Mindful of interna tional sensibilities, it resorts to more subtle but equally deadly restric tions, to subsidies rather than tariffs and quotas. It does not· aim at eco nomic autarky for nationalistic ends, but at income and employment in fa vored industries. It does not spring from international confrontation, but from an inter-industry conflict that pits some industries against all others. In the American steel industry, for example, capital and labor together conspire to restrict imports in order to boost corporate earnings and la bor benefits. Embarassed by the low rates of production and the high rates of unemployment, they both call on government to restrain com petition in any shape or form. They both plead as ardently for minimum wage legislation, which is designed to handicap other industries, as they argue forcefully against the compe tition of foreigners. For labor unions especially, government protection is of crucial importance. After all, to win substantial boosts in wages and benefits and subsequently suffer from staggering unemployment is casting serious doubt on the ration ale of unionism.

Workers' Rights Movements in Europe and the U.S.A. The labor movement in the U.S. closely resembles the workers' rights movements in the European welfare states. They both expound the doc trine that workers have an inherent right to a job, in their particular in dustry, at their present location and at rates of pay that exceed the mar ket rates. To secure their right, gov ernment is expected to restrain for eign competition in any possible way and~ if needed, subsidize both labor and capital. 2 In this respect, protec tionism is a symptom of relatively weak national governments cater ing to powerful domestic interest groups, especially labor. Protectionism also draws strength and support from the Keynesian mandate that government is respon sible for full employment and that it must use its fiscal powers in a con tracyclical manner. Such use of pow ers for purposes of market interven162 THE FREEMAN March tion may necessitate protection from foreign competition. After all, Keynesian recipes are national rec ipes that differ from those for world markets and international division of labor.

When Keynesian efforts succeed in raising goods prices, domestic pro ducers suffer in competitiveness at home and abroad. Threatened by for eign competition, they may call for protection through import restric tions. When Keynesian efforts fail to achieve full employment the Keyne sian planners further express their faith in government intervention as they turn to protectionist measures. The failure of Keynesianism breeds protectionism. Many Keynesians are joining the workers' rights move ment and lending new luster to the promises of protection. 3 Old Notions in New Garb The labor movement and its Keynesian allies like to parade as champions of the less-developed countries. They are quick to dis burse foreign aid to any and all ap plicants and finance their schemes of government enterprise. But many immediately draw the line when jobs are "exported" for the benefit of for eigners. They are dead set against capital and labor mobility that per mits capital to move to less-devel oped countries and labor to more productive countries. 4 In all such matters they plead for restrictions that are said to bestow net benefits on society.

Man often errs through selfish ness. Economic restrictions always benefit some people at the expense of others, and inflict net losses on so ciety. Protectionists do not look be yond the range of direct involvement and dealing. American steel workers may see only their own wages and benefits which trade restrictions are meant to protect. They point at the market of goods and services cater ing to the steel industry in general and to steel workers in particular, and warn of dire consequences if these markets be permitted to de cline. They completely ignore all other consequences and ramifica tions of restrictions, and refuse to admit that any favor bestowed on the steel industry is a disfavor to all oth ers. Domestic trade is substituted for foreign trade, and domestic steel for foreign steel. The quantity of steel offered in exchange for other goods is reduced, which makes economic society universally poorer. The sell ers of food, clothing, housing, edu cation, and the like receive less steel in exchange for their goods and ser vices. They would have been better off if they had been permitted to trade with foreign steel makers.

The protection argument for full employment is similar to that for net benefits. To working people it seems self-evident that import restrictions add to the demand for labor, and that 1985 PROTECTIONISM AND UNEMPLOYMENT 163 steel and automobile quotas provide employment for steel and auto work ers. Such evidence, unfortunately, is rather shallow and deceptive; it fails to consider other effects that are bound to follow. Import restrictions are restraints imposed by politicians and enforced by the apparatus of coercion, the courts and police. They constitute the use of brute force against people who voluntarily and peacefully are engaged in interna tional exchange, in order to force them to act in a way they would not act if they were free. Methods of Restriction Are Widely Available The methods of restriction may vary greatly, from monetary exac tions to outright confiscation of pri vate property; they are highly effec tive in setting bounds to human action. When trade restrictions are imposed, the protected industry may temporarily enjoy special gains, which may cause it to expand and hire more labor, or retain more labor than it otherwise would. But this ex tra demand for labor, for instance, steel labor, is marred by a simulta neous decline in the demand for other labor, e.g., for food, clothing, housing. After all, the extra money spent on steel and steel products cannot be spent on other products, and the economic resources em ployed in the production of steel can not be employed in other production.

And the labor needed for the pro duction of steel is no longer avail able for the production of food, cloth ing, housing, and so on. At this point protectionists are quick to object that there is always unemployed labor and capital wait ing to be called provided govern ment lends a helping hand by re straining foreign competition. They point at mass unemployment in basic industries, such as steel, autos, mining, and transportation, and de mand immediate correction through protection. Unemployment undoubtedly is a great social evil that concerns us all. It is an economic phenomenon of loss and waste that harms not only the jobless but also their fellow workers who are forced to support them. In time it tends to turn into a political issue that breeds confrontation and conflict. To alleviate the evils of un employment becomes an important political task. But it also raises the basic question of the suitability of the policies that are to create em ployment. In particular, it poses the question: can tariff barriers and other trade restrictions raise the de mand for labor and alleviate the evils of unemployment?

Unemployment is a cost and wage phenomenon; foreign trade is ex change by individuals separated by political boundaries. The former is a manifestation of the law of price, which rests on the valuations by all 164 THE FREEMAN March members of society; the latter per tains to the scope of the division of labor which man is willing to prac tice. This scope does affect goods prices, including the price of labor. Improvements in the division of la bor generally raise labor productiv ity and wage rates; deterioration re duces them. When government imposes trade restrictions it reduces the marginal productivity of labor and thereby lowers wage rates. If, in this situation, workers should refuse to suffer wage cuts, they are invit ing mass unemployment. When seen in this light, trade barriers are ef fective instruments for causing unemployment. In many respects production re strictions and trade barriers are like natural obstacles that thwart hu man effort and impair man's pro ductivity. They both may increase the demand for specific labor. De struction of housing by war, flood, earthquake or fire increases the de mand for housing material and con struction labor. But it also reduces the demand for a myriad of other goods which the destruction victims now must forgo. Similarly, import restrictions on steel may boost the demand for domestic steel, but they also reduce the demand for other goods which the restriction victims, that is, consumers must forgo. Steel producers and their workers may benefit from the new barriers; but the producers and workers in all other industries are likely to. suffer losses.

Many workingmen welcome trade restrictions in the same way as they greet the breakdown and destruc tion of labor-saving tools and appli ances. They are aware of the demand for their particular kind of labor' and know how to increase it through pro tection and elimination of labor-sav ing tools. They apply the particular to the general and conc1ude that pro tection provides employment and de struction creates jobs. U nfortu nately, they fail to see that both, restriction and destruction, are bound to reduce the marginal pro ductivity of labor throughout the la bor market. If, in this situation, af fected workers should resist a prompt reduction of wage rates, which organized labor is likely to support with conviction and force, they face mass unemployment. After all, unemployment always visits that labor the cost of which exceeds its productivity. Trade Restrictions Offer Temporary Relief Trade restrictions may temporar ily create new employment oppor tunities for a protected industry while other industries are forced to contract. But even in the protected industry they do not provide long term employment, as the root causes of unemployment continue to be at work. The basic industries suffering 1985 PROTECTIONISM AND UNEMPLOYMENT 165 from stagnation and unemployment generally are unionized industries with wages and benefits far in excess of nonunion market compensation.

Labor unions enforce their rates through restriction of labor compe tition; the basic effect is unemploy ment. They apply their unrelenting pressures until they are enmeshed in depression and unemployment. To come to their rescue and grant them protection from foreign competition is to invite new restriction and more unemployment. In a profound study, M. Kreinin re cently demonstrated that labor com pensation in the American automo bile industry, in 1982, amounted to some 165 percent of that in all man ufactures. To become competitive with Japanese car makers, he con cluded, United Auto Workers' com pensation would have to fall by 24 percent, which would leave their compensation still 25 percent above the U.S. manufacturing average. Similarly, in iron and steel produc tion workers' wages and benefits amount to 189 percent of those in all manufactures. To restore competi tiveness with Japan they would have to fall by 39 percent, which would leave their compensation still 15 percent above the U.S. manufactur ing average. s But no such solution to the chronic unemployment in the steel and auto industries is under consideration. Instead, their spokes men are clamoring ever louder for protection from "unfair" foreign competition.

Trade barriers destroy more jobs than they create. And yet, they have retained their popularity because most workers are convinced that they safeguard wage rates from the competition of low-cost labor. With out trade barriers, many Americans believe, foreign products made by cheap labor would flood the markets and force American labor to suffer substantial wage cuts or face un employment. Free trade is said to be advantageous only between coun tries that have similar wage rates and similar standards of living, but thought to be harmful to people with high wages trading with people earning less. Americans and Cana dians can trade with each other be cause they are similar in income and living conditions; but they must not trade with Mexicans who engage in unfair pauper-labor competition and cause U.S. living conditions to fall. There are few arguments in favor of protection that are more popular and yet so specious and fallacious.

When carried to its logical conclu sion the wage-rate argument bars all trade across political boundaries as no two countries are identical in la bor productivity and income. U.S. wage rates are generally higher than Canadian rates, which would call for American government protection from low-cost labor competition in Canada. Labor conditions may differ 166 THE FREEMAN March from state to state, yea, from com munity to community. Wage rates in New York state are generally higher than in Maine and Mississippi, which would call for government in tervention in favor of labor in New York. Differences in Productivity and Income Lead to Trade In freedom, differences in labor productivity and income lead to ex changes of goods and services. As in dividual inequality brings forth man's division of labor so does his inequality in national productivity and output lead to international di vision of labor and goods exchanges.

Adam Smith already taught that it is advantageous for a country to specialize in the production of those goods in which it has a cost advan tage. David Ricardo added the law of comparative cost according to which it also is advantageous to a country to specialize in those items in which it has a comparative· advantage. To reap the advantages of an in ternational division of labor a coun try may concentrate on production with greatest comparative advan tage, importing even some items that can be produced at lower cost at home than abroad. 6 Improvements in international division of labor raise labor productivity and, wher ever institutional restrictions have created unemployment, may ac tually lift some labor over the threshold of employability and thereby create jobs. The competitive position of an in dustry may depend on the capital labor composition of the product. A labor-intensive product, such as a hand-embroidered tablecloth, may be manufactured most advanta geously in a low-wage country. A capital-intensive product requiring the application of large sums of cap ital may be manufactured most ef ficiently in the country with the largest per capita supply of capital and lowest interest rates. The man ufacturers of Hong Kong, where wage rates are rather low when com pared with U.S. standards, have a clear advantage in the production of hand-embroidery; U.S. manufactur ers who benefit from efficient capital markets and relatively low capital costs have a clear cost advantage in the manufacture of capital-intensive products, for instance, $50-million airplanes.

Trade advantages may change when factor costs change. Where capital is being formed and made available at ever lower interest cost, capital-intensive industries are likely to prosper and expand. Where society and its political institutions consume productive capital, the in dustries can be expected to contract and discharge labor. When Toyota may secure capital for moderniza tion and expansion at 7 percent while General Motors is forced to pay 1985 PROTECTIONISM AND UNEMPLOYMENT 167 To ABOLISH the market determination of wages-that is, the commodity character of labor-it would be necessary to destroy private enterprise and resort to socialism. Then the worker really would become a chattel. No longer would his wages depend upon his individual ability to make himself useful, as determined ultimately by the current state of industrial productivity, but upon the will of a political master, from whose decision there would be no appeal. No longer would he be free to choose his occupation, or even his place of residence; he would have to work at his assigned task, whatever and wherever it happened to be, at the bidding of the same political master.

The true "Magna Charta" of labor lies in the very fact that labor is "a commodity or article of commerce," not a pawn in a totalitarian game. From The Guaranty Survey, July 1956 14 percent in a depleted capital mar ket, it becomes rather obvious that Toyota will continue to expand and employ more labor while GM must be expected to contract and dismiss some labor. Many Factors Affect the Degree of Competition The costs of capital and labor are merely two of many factors that de termine the competitiveness of an industry. There are many other fac tors such as the methods of produc tion and the state of technology, transportation costs for materials and supplies and for products to their markets, government regulation, taxation, environmental costs and other institutional costs. A change of anyone, at home or abroad, may ma terially alter the competitive posi tion of an industry. The formation of capital per head of the population generally raises labor productivity and reduces unemployment; the con sumption of capital lowers labor pro ductivity and depresses wage rates.

Where labor resists the reduction and insists on remuneration that ex ceeds market rates, it invites mass unemployment. It is significant that governments generally do not protect industries with relatively low rates of produc tivity and wages, industries with a great deal of unskilled labor. In the U.S. these industries are forced to la bor under great difficulties created by minimum wage legislation. The U.S. government, under the influ ence of powerful labor interests, ap parently prefers foreign imports from low-wage countries such as Ko rea, Hong Kong, and Taiwan over domestic production in the South and especially Puerto Rico. But it is granting considerable protection to 168 THE FREEMAN March industries that are known to pay the highest wage rates in the world. The U.S. government is guided by the doctrine of "no injury," which brought into being the "escape clause" where injury is reported, and the "peril points" below which im port duties must not be reduced. Pro tectionism is visible in the trade ad justment assistance granted to workers, in agreements with foreign exporters, the establishment of the International Trade Commission, and other concessions granted to in terests with congressional clout.

Protectionism springs ever anew from the efforts of "distributional co alitions," which use political power to restrict competition and output. U.s.-Japanese Trade Relations Protectionists in the U.S. spend a great deal of time and effort worry ing and complaining about Japanese trade practices. They focus their con cern on Japan with which the United States is running a huge deficit in its merchandise trade account. Accord ing to the Council of Economic Ad visers Annual Report, the 1976-83 deficit amounted to some $95 billion primarily as a result of Japanese sales of textiles, television sets, au tomobiles, motorcycles, radios, pho tographic equipment, video tape re corders, watches, machine tools, and steel. 7 A Business Week cover story calls it "America's Hidden Problem: The Huge Trade Deficit is Sapping Growth and Exporting Jobs." (Au gust 29, 1983) American complaints about Japa nese trade practices may have some merit, but they do not lead to the conclusions drawn by Business Week and other protectionists. They do not justify making Japan the "whipping boy" for trade deficits for which the U.S. government is primarily re sponsible. After all, it is an undeni able fact that U.S. trade restrictions completely bar Japanese buyers from important U.S. markets and thereby inflict visible losses not only on American producers but also on the Japanese people as consumers.

Trade deficits may spring from a number of causes among which dis ruptive policies conducted by the U.S. government must not be overlooked. There is transcendent power in ex ample. U.S. leadership in interna tional policy-making may be slip ping because the U.S. example is unconvincing. The U.S. surely is no free-trade country; the U.S. govern ment has entered into international trade agreements on cocoa, coffee, rubber, sugar, and tea. It has built trigger price mechanisms in steel and imposed "voluntary" quotas on autos and textiles. The maritime in dustry represented by seamen's unions and unionized domestic ship builders has managed to obtain leg islation that forces Alaskan oil pro ducers to ship their products in high1985 PROTECTIONISM AND UNEMPLOYMENT 169 cost U.S. tankers to uneconomic des tinations in the U.S. The legislation hit hard at Japanese levels of living by cutting the Japanese people off from Alaskan crude oil. It is esti mated that, under free-trade condi tions, they could be expected to buy s,ome $15 billion annually, which alone would eliminate the merchan·· dise trade deficit with Japan. s The Japanese people must import almost all of their oil. In a free world unhampered by trade barriers Alas kan producers would be their least cost suppliers. In the political world of trade restrictions special interests in the U.S. deny them access to the Alaskan market. The Trans-Alaska Pipeline Authorization Act of 1973 and the 1977 and 1979 amendments to the Export Administration Act virtually shut the Alaskan door to foreigners and forced them to seek supplies in far-distant Arabian and African markets. It is obvious that transport charges per barrel of Saudi oil are substantially higher than for Alaskan oil, and materially higher for Alaskan oil shipped to the West Coast and the Gulf Coast than for oil shipped to Japan.

Higher Shipping Costs The higher transportation costs visibly raise total cost, which in creases world prices, reduces labor productivity and impairs economic well-being. But a few American sea men and shipbuilders are enjoying a windfall through trade disruption. It is estimated that more than 90 per cent of U.S. shipping capacity, mea sured in deadweight tonnage, and probably more than half of all Amer ican seamen serve to carry oil from Alaska to U.S. ports. 9 Notions of full employment and fa vors to organized labor have led the U.S. government to impose an em bargo not only on the shipment of Alaskan crude but also on the sale of timber to Japan. There are 20,000 saw mills in Japan, supplying hous ing and furnishings for .120 million people, but U.S. legislation passed in 1968 practically bars them from American markets. It bans exports of unfinished logs cut on Federally owned land, which amount to some 65 percent of the softwood sawtim ber inventory in the U.S., and dic tates that all such logs must be pro cessed prior to export. The law even prohibits "substitution," that is, the purchase ofFederal timber by Amer ican merchants who export timber cut on private lands. 10 Surely, such measures neither re duce the U.S. merchandise trade def icit with Japan nor improve U .S. Japanese relations. And yet, they continue to spring forth from the pri mitive notion that the log export ban forces foreigners to purchase fin ished products and thereby provides employment to wood processors and furniture makers. Fortunately, po litical force does not produce sales 170 THE FREEMAN March and employment; both obey only the laws of the market. The timber leg islation actually has reduced em ployment in the American timber in dustry and prevents employment in cutting and shipping timber to Ja pan. It serves to reduce the marginal productivity of labor, to lower wage rates in both the U.S. and Japan and, wherever labor resists the down ward pressure, contributes to mass unemployment. It puts the misun derstood interest of a powerful spe cial-interest group ahead of national interest and gives much ammuni tion to the Neo-Mercantilists who are fretting about the merchandise trade imbalances.

"Buy American" There are many more U.S. bar riers to trade with Japan and other countries. The most noticeable prob ably are "Buy American" statutes that give preference to domestic products in Federal and state gov ernment contracts. Federal agencies are required to pay up to 6 percent more for products made in the U.S. The Federal aid program to mass transit systems requires that only American materials be used. The foreign aid program requires that at least 50 percent of the gross tonnage of all commodities thus financed be carried by American flag vessels. At least 18 states restrict the use of for eign steel and aluminum and order the purchase of domestic. products. Many require state bids to carry a clause restricting the use of foreign materials and calling for American made products. Many local authori ties enact building codes that ban the use of foreign materials. Countless Federal statutes and regulations prevent or limit imports of agricultural products such as beef, dairy produce, mandarin oranges, and sugar. In recent years the U.S.

government sought voluntary re straints of foreign sales, which were as voluntary as a judge's temporary restraining order. In recent months it finally dispensed with the pre tense of voluntarism. Protection from foreign competition now covers all basic industries that are forced to compete in U.S. markets. Its costs to American consumers in the form of higher goods prices amount·to many billions of dollars. A recent study es timated the 1980 costs at more than $58 billion, or $255 per American consumer. ll They probably have more than doubled since then. Its costs to American workers in the form of lower labor productivity and higher rates of unemployment can only be surmised. The pressures for protection from foreign competition continue to grow in the U.S. and other countries. Well organized groups, especially orga nized labor, use the political appa ratus to reap economic gains through political force. Unable to compete ef fectively and suffering from depres1985 PROTECTIONISM AND UNEMPLOYMENT 171 sion and unemployment, for which they deny all responsibility, they seek refuge with government and its coercive powers. They noisily de mand protection from foreign com petition that is held responsible for their plight. Economists do know, however, that mass unemployment, no matter how painful it may be, cannot be placed on the doorsteps of foreigners. It is a self-inflicted evil of radical interventionism that cannot be alleviated by beggar-thy-neigh bor policies. Protectionism only ex acerbates it. ~1 -FOOTNOTESlCf. theoretical works: Gottfried Haberler, The Theory of International Trade (London: Hodge, [1933] 1936); also his Survey of Inter national Trade Theory, Rev. and enl. edition, (Princeton University International Finance Section, [1954] 1961); James E. Meade, The Theory of International Economic Policy, Vol.

2; Trade and Welfare (New York: Oxford Uni versity Press, 1955); Ragnar Nurkse, Problems of Capital Formation in Underdeveloped Coun tries (New York: Oxford University Press, [1953] 1962); Jacob Viner, Studies in the Theory ofIn ternational Trade (New York: Harper, 1937); LelandB. Yeager, and David G. Tuerck, For eign Trade and U. S. Policy: The Case for Free International Trade (New York: Praeger Pub lishers, 1976). Cf: also the classical historical work of Frank W. Taussig, The Tariff History ofthe United States (New York: Putnam, [1888] 1931). 2See Melvyn B. Krauss, "Ill Fares the Wel fare States," Policy Review 18 (Fall 1981), pp. 133-38; also The New Protectionism: The Wel fare State and International Trade (New York: New York University Press, 1978). 3Robert B. Reich, "Beyond Free Trade," For eign Affairs 61 (Spring 1983), pp. 773-804; Bob Kuttner, "The Free Trade Fallacy," New Re public, 28 March 1983, pp. 16-21; G. William Miller, ed., Regrowing the American Economy (Englewood Cliffs, N.J.: Prentice-Hall, 1983); Leonard Silk, ]'he Economists, (New York: Avon Books, 1978); see also Allied Industrial Worker, Official Newspaper of the Allied In dustrial Workers of America (AFL-CIO) Inter national Union, Milwaukee, Wise.; September, 1984; CWA News, Communication Workers of America, AFL-CIO, Washington, D.C., Sep tember 1984.

4See Melvyn B. Krauss, Development Without Aid (New York: McGraw-Hill, 1983), especially Chapter 7. 5Mordechai E. Kreinin, "Wage Competitive ness in the U.S. Auto and Steel Industries" Contemporary Policy Issues 4 (January 1984), pp.39-50. 6Cf. David Ricardo, Works and Correspon dence, Edited by Piero Sraffa (Cambridge Uni versity Press, 1951-1955), Vol. I, On the Prin ciples of Political Economy and Taxation. 7Council of Economic Advisers, Annual Re port (Washington, D.C.: Government Printing Office, 1984). 8Beth deHamel, James R. Ferry, William W. Hogan, and Joseph S. Nie, Jr., The Export of Alaskan Crude Oil' An Analysis of the Eco nomic and National Security Benefits (Cam bridge, Mass.: Putnam, Hayes, and Bartlett, Inc., 1983). 9Steve H. Hanke, "U.S.-Japanese Trade: Myth and Realities," Cato Journal, 3/3, Winter 1983/84, p. 762. lOBarney Dowdle and Steve H. Hanke, "Pub lic Timber Policy and the Wood-Products In dustry," in Forest Lands, Public and Private, ed. M. Bruce Johnson and Robert Deacon (Cam bridge, Mass.: Ballinger Publishing Co., 1984).

USee Murray L. Weidenbaum, Business, Gov ernment and the Public, 2nd ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1981), pp. 253-55; also "The High Cost of Protectionism," Cato Journal, Ibid, pp. 777-791.