The muddled thinking of protectionists
Pierre Lemieux has a new post discussing how some people oppose US gas exports because they drive up prices to American consumers. This is interesting, as the sorts of groups that gain and lose from gas exports are quite difference from the case of import competition.
Economists traditionally support free trade because the gain to consumers from trade exceeds the cost to producers (in terms of lost profits and wages.) Protectionists are not convinced by this sort of cold utilitarian logic, pointing to the fact that the losses from imports are highly concentrated (such as autoworkers losing jobs) while the gains from imports are widely dispersed (slightly lower car prices for millions of consumers.)
With exports, this all gets flipped around. If we restrict natural gas exports, millions of consumers benefit from slightly lower gas prices, while a smaller number of blue color workers lose good jobs in the fracking industry, and become “hamburger flippers” (to use the derisive terminology of protectionists.)
Actually, if you apply the logic used by the auto industry protectionists to gas exports then not only should we not restrict exports; we should actually subsidize them, even if it means a greater increase in gas prices to consumers.
It’s clear to me that while protectionists may believe that some sort of consistent logic supports their position, in fact it is comprised of an incoherent grab bag of faulty intuitions. It “seems bad” when auto workers lose jobs. It “seems bad” when natural gas consumers in New England pay higher prices. It’s an application of the idea that “something must be done”, when there are what Frédéric Bastiat would call negative “effects that are seen“, even of the positive unseen effects are even greater.
You might wonder if I am being inconsistent. In the auto import case I favor the policy that helps the widely dispersed group (consumers), while in the gas export case I favor the policy that favors the concentrated (producer) group. Actually, both policies have something in common; free trade maximizes the total welfare of society. The only consistency in the protectionist position is that they always favor the policy that makes society as a whole worse off. Their justification for that in the import tariff case (favoring the concentrated group of blue collar workers), would suggest that we should actually be subsidizing gas exports, even if it drives up gas prices for America consumers. Good luck with that idea on Capitol Hill!