Politics and Foreign Trade

SEPTEMBER 26, 2013 by DWIGHT R. LEE

With rare, and typically short-lived exceptions, governments reduce economic productivity and their citizens’ prosperity by either taxing or imposing quotas on imports. This is because when a trade restriction is being considered, politicians will hear plenty from those favoring the restriction and little from those harmed by it. The result is a bias toward providing concentrated benefits and ignoring much larger but dispersed costs. (7.51 minutes)

ABOUT

DWIGHT R. LEE

Dwight R. Lee is the O’Neil Professor of Global Markets and Freedom in the Cox School of Business at Southern Methodist University.