Source: EconLog
by Pierre Lemieux
“[I]n the roaring ’60s, it was popular among the ruling establishments of underdeveloped countries, supported by the Western intelligentsia, to impose large tariffs on foreign manufactured goods in order to help domestic manufacturing. Only when, a few decades later, it was realized that such an industrial policy was a fool’s errand, were the poor people of underdeveloped countries able to jump on the bandwagon of free trade and to escape dire poverty. A basic economic reason why ‘unfairly traded steel’ or the underlying ideal of mercantilist and industrial policy is a fool’s errand is that it presupposes a central economic planner possessing what he does not and cannot possess, that is, the information of time, place, costs, and preferences that is carried by prices determined by supply and demand on free markets.” (09/05/25)