Putin Repeats an Old Protectionist Canard
Vladimir Putin, the Russian autocrat, repeats an old protectionist canard that few economists would admit in its nakedness after David Hume and Adam Smith studied the matter in the 18th-century. We have often heard remnants of the same discarded intuition from Washington, especially over the past half-dozen years. According to the Financial Times (“Russian Forces Seize Ukrainian Nuclear Plant After Fire,” March 3, 2022), Putin acknowledged that punitive sanctions imposed by Western government were harming his country, but that they (“we“) would ultimately benefit:
In the end, we will only gain advantages from this, since . . . we will acquire additional skills.
In other words, since protectionism, imposed by one’s friendly local government or by a foreign one, forces some degree of autarky on people would would otherwise trade, the latter benefit because they will have to eschew some division of labor and learn to do more things by themselves. This intuition is false.
If it were true, individuals in any town would benefit from being forbidden to trade with individuals of other towns, and mutatis mutandis for individuals in every neighborhood, every street, and every house. Ultimately, following that logic, every individual should be banned from exchanging with any other individual.
Or, to use a “revealed preference” argument (as economist say): if an individual, free to either make a trade or decline, chooses to trade, he thereby reveals that he evaluates the net benefit for him to be higher than the net benefit of not trading. This is a powerful argument that only an elitist or a paternalist can easily counter.