Two Rothbardian Reductios
Despite his army of detractors, Murray Rothbard was a master of the reductio ad absurdum. In Power and Market, he out-did even Bastiat:
Suppose that Jones has a farm, “Jones’ Acres,” and Smith works for him. Having become steeped in protariff ideas, Jones exhorts Smith to “buy Jones’ Acres.” “Keep the money in Jones’ Acres,” “don’t be exploited by the flood of products from the cheap labor of foreigners outside Jones’ Acres,” and similar maxims become the watchword of the two men. To make sure that their aim is accomplished, Jones levies a 1,000-percent tariff on the imports of all goods and services from “abroad,” i.e., from outside the farm. As a result, Jones and Smith see their leisure, or “problems of unemployment,” disappear as they work from dawn to dusk trying to eke out the production of all the goods they desire. Many they cannot raise at all; others they can, given centuries of effort. It is true that they reap the promise of the protectionists: “self-sufficiency,” although the “sufficiency” is bare subsistence instead of a comfortable standard of living. Money is “kept at home,” and they can pay each other very high nominal wages and prices, but the men find that the real value of their wages, in terms of goods, plummets drastically.
Properly interpreted, the point of this reductio is not that a 1% tariff put us on the slippery slope to destitution. What this extreme example highlights, rather, is that protectionism has a major downside: It prevents you from taking full advantage of the division of labor.
Yesterday I came across another Rothbardian gem: A reduction to absurdity of the view that “getting tough” with other countries is a free lunch. Let us consider, he says…
[T]he toughest possible policy: an immediate American ultimatum to Khruschev and Co. to resign and disband the whole Communist regime; otherwise we drop the H-bomb on the Kremlin. What about this policy of maximum toughness, which would certainly accomplish one thing: it would bring about a quick showdown between East and West? What is wrong with this policy? Simply that it would quickly precipitate an H-bomb, bacteriological, chemical, global war which would destroy the United States as well as Russia. Now, it is true that perhaps this would not happen. Indeed, if we accept the favorite Right-wing credo that the Soviet leaders will always back down before any of our ultimatums, and will never fight if we are only tough enough, then maybe it is true that the Communist leaders will quickly surrender, perhaps on promise of asylum on some remote Elba. But are you, Mr. Right Winger, willing to take this risk?
Properly interpreted, the point of this reductio is not that aggressive policies put us on the slippery slope to armageddon. What this extreme example highlights, rather, is that aggressive policies have a major downside: The risk of provoking an enemy would otherwise would have left you alone, or even eventually fallen apart under internal pressures. You can call Rothbard’s point obvious, but I’ve talked to plenty of people – including more than a few economists – who deny the trade-off – or at least act as if it doesn’t exist.
Do you need a reductio to see this point? Hardly. Introspection should suffice: When someone “gets tough” with you, how often do they succeed? Still, when an issue gets emotional enough, sometimes a good reductio is the only way to cut through the fog.