The Unconstitutionality of Protectionism

Article excerpt

Even the staunchest free trader might reluctantly concede that the apparatus of protectionism-tariffs, import quotas, and antidumping duties-is constitutional because clause 3 of Article I, section 8, of the U.S. Constitution delegates to Congress "power . . . to regulate commerce with foreign nations. . . ."

Before we make too hasty a concession, however, let's take a closer look. Clause 1 of the section establishing Congress's powers states, in part, "The Congress shall have power to lay and collect taxes ... to ... provide for the general welfare of the United States. . . ." The preamble to the Constitution also declares that one purpose of the document is to "promote the general welfare."

What function does the phrase "general welfare" serve? We need not enter the debate over whether the phrase was intended to confer a plenary power on Congress or whether it was only to provide a context for the enumerated powers. That's an interesting discussion, but it has no bearing on my point, for whatever its function, the phrase contains the word "general," and the general cannot be the particular. That's a simple matter of syntax and logic. We are thus entitled to conclude that the government may not grant privileges to special interests.

It may be argued that clause 1 of section 8, where the term "general welfare" appears, exclusively concerns Congress's power to tax. This ignores the fact, already noted, that the term also appears in the preamble. But let that go. Are we to believe that while Congress may tax only to serve the general welfare, it may borrow and coin money, raise a navy, regulate commerce, and do all the rest for any other purpose it pleases? That's implausible.

Moreover, when you consider that anything the government does requires taxation, we are back to the position that all the enumerated powers must be wielded for the general welfare only. Tariffs and antidumping duties of course are kinds of taxes. An import quota isn't a tax, but tell me how the government is to enforce quotas without taxing the population. How will it pay the customs agents, main' tain their offices, and so on? If Congress may tax only for the general welfare, then it follows that anything else it does must be for the general welfare.

That principle having been established, let's look next at protectionism. Economic theory and history teach us that protectionism perforce harms large segments of society for the benefit of a smaller segment. It is classic special-interest government action. Every time the steel industry asks for restrictions on foreign competition, some sound thinker correctly points out that granting that wish would harm the U.S. auto industry and other steel users, not to mention consumers. As the old Paul Simon song says, "One man's ceiling is another man's floor." One industry's output is another industry's input.

The upshot is that since trade restrictions can never serve the general welfare but only particular interests (in the short run), and since the Constitution forbids the government from serving particular interests, all trade restrictions are unconstitutional.

This was driven home recently when it was reported that a group of retailers was trying to stop the Bush administration from doing American tex tile and clothing makers a favor by limiting competing products from China. According to the Chicago Sun-Times, "Four-decade-old quotas on textile trade are set to expire at the end of the year, ending a system that limited trade in 2,400 items, including cotton shirts and denim. The expiration is pitting U.S. textile makers, who fear more competition from China, against retailers, who want access to cheaper fabrics."

The retailers' concern is legitimate. If Chinese imports are not allowed to reach the level they would have freely reached, then textile and clothing prices will be higher in the U.S. market than they would have been. That will hurt U.S. …