If free trade is so good, why is protectionism so popular? Part of the answer lies in a simple political principle — interests that are concentrated (those of the producer) are more politically effective than interests that are diffused (those of the consumer). Protection does not create jobs or move goods; rather, it forces us to expend greater effort to get the goods we produce, since they cost more to produce at home than abroad. The balance of payments can take care of itself, provided we do not manipulate foreign exchange markets to put an artificial value on the dollar. The right solution is to dismantle systematically our own trade barriers and set an example for the rest of the world.
Although economists often disagree, one point has been met with almost unilateral acceptance. “With respect to the question of whether it is desirable for a country to have free trade or to have tariffs and other restrictions on imports and exports, in that particular area economists have spoken with almost one voice for some two hundred years. Ever since the father of modern economics, Adam Smith, published his great book, The Wealth of Nations, in 1776 -the same year in which the Declaration of Independence was issued in this country – ever since then the economics profession has been almost unanimous on the subject of the desirability of free trade.”
Hear about the damage protectionism has done and why free markets are so misunderstood in the podcast Milton Friedman Speaks – Free Trade: Producer vs. Consumer.