Protectionist Policies Hurt Consumers, Benefit Powerful Producers at Nation's Expense
The article explores why countries sometimes choose to impose trade barriers despite the potential harm to their overall welfare. The authors assume that governments act in the best interest of their citizens when setting trade policies. Protectionist measures may be used to correct market distortions, raise revenue, or adjust terms of trade, but they often result in a net loss of national welfare. While most people are negatively affected by protectionist policies, the costs are spread out, making it difficult for them to oppose these measures effectively. However, certain groups, like producers, may lobby the government to implement protectionist policies that benefit them. In summary, protectionist trade policies can harm a country's overall welfare, but they persist because the costs are dispersed, and some groups actively push for their implementation.