I have just read Barriers to Riches, by Edward Prescott and Stephen Parente, in which the authors argue that trade barriers are an important cause of the unequal distribution of world income. Their analysis is focused on policies that poor countries impose that keep out efficient productive processes. However, not all trade barriers are self-inflicted. For example, on Friday there appeared this reminder that the textile industry of Bangladesh has been held back by U.S. tariffs and quotas designed to protect our garment industry.
Parente and Prescott argue that incumbent suppliers often propose trade barriers in order to avoid having to compete against efficient competitors. To succeed, the incumbents must work in industries with some degree of monopoly power and they must have some support from the government.
One way to illustrate this process is with the reluctance of baseball's American League to recruit black players in the 1950's. The National League moved more aggressively to recruit black stars, which gave it a distinct advantage in quality.
By 1958, Willie Mays, Ernie Banks, Hank Aaron, and Frank Robinson already had demonstrated the skills that put them in the top tier of the Hall of Fame. They would soon be joined by Juan Marichal, Willie McCovey, Roberto Clemente, Maury Wills, and Bob Gibson, giving the National League a distinctly higher quality of star players. If the All-star game is used as a measure of inter-league parity, then it took almost twenty-five years for the American League to recover from the damage caused by holding on to racist practices.
In October 1964 David Halberstam writes that after Jackie Robinson broke the color line,
the National League moved with speed, but the American League moved with deliberate speed...
In the American League, the tone was set by the New York Yankees...and their ownership in those critical years was, to be blunt, racist...the National League gradually began to pull away as superior, with better teams and more exciting younger players.
By 1964 the National League had virtually all the best young black players...[p. 54-55]
In baseball, the incumbent suppliers (white players) were threatened by a superior process, which was to field the best team, regardless of color. With a monopoly position, protected by a government exemption from anti-trust laws, major league baseball was able to maintain a barrier against the superior process until 1947. Even by 1964, ballplayers who were black had to be stars to earn roster positions, and not even stars were welcome on many American League teams.
When we think of the damage done by the color barrier in baseball, the most obvious harm was to the black baseball players. However, harm also was done to the quality of major league baseball, which kept some of the best players out of view of the typical baseball fan. I believe that this detrimental effect on quality is a metaphor for the way Prescott and Parente would explain the low standard of living in underdeveloped countries.
Discussion Question: In the case of major league baseball, the trade barrier now seems particularly odious because it was racist. The tariffs and quotas that we impose on foreign textiles are not racist...or are they?
