I am getting close to finishing “The Locavore’s Dilemma: In Praise of the 10,000 Mile Diet” which is a really fascinating look at the modern food system, at least in developed parts of the world.  While the book is focused on food, much of what he says can apply to trade in general.  Today’s quote, from the beginning of chapter 7, is a good example.

In the name of greater food security and economic benefits, countless political rulers have historically sought to increase local food production while keeping foreign imports at bay.  Because people only bothered to import foodstuffs from great distances if they provided cheaper and better alternatives, however, protectionist policies have always and everywhere resulted in a higher price tag.  Not surprisingly, the available evidence strongly suggests that in most places and most of the time, “food patriotism” needed to be forced down consumers’ throat with coercive measures.  Although they might have said something different in public, given a choice, most people apparently always found the notion of paying more for less quality food rather unpalatable.

You can basically replace “foodstuffs” with any item you can think of and the results are the same.  It doesn’t matter what product you are talking about, policies that result in higher prices for those products will always result in an overall lower standard of living.

The reason for this is especially easy to see in agriculture.  To paraphrase the author from earlier in the book, “while 1% of the American population is a farmer, 100% of the population eats.”  As an example of this, the Northeast Dairy Compact worked (I believe it no longer functions) “to keep the price of milk in the region high enough so New England’s dairy farmers can stay in business.”  The compact results in milk prices about 5% (15 to 20 cents) higher than they would be otherwise.  (It should be noted that as the compact worked in conjunction with federal programs, which at times included the government dumping “excess” production, the actual increase in milk prices is likely more than listed here.)   It doesn’t end there of course as there are other government programs, for example the ethanol mandate, which raise the costs (for feed in the case of the ethanol mandate) to the dairy farmer which in turn raises the minimum provided under the compact in order to keep the dairy farmer in business.

In Vermont, dairy farmers account for less than 1% of the population, so in order to protect the livelihood of a minuscule fraction of the population, nearly the entire population pays out more than they would otherwise, not just for milk but for anything that uses milk in its production.

Similar issues can be seen all over the economy from sugar where the US consumers pay about double the world market price to support domestic producers; to raisins where some growers are forced to give up half their harvest without compensation in order to maintain “stable prices”; to solar panels where a 24% to 36% import tariff on Chinese solar panels intended to protect domestic production not only raised costs to US consumers but hurt local installers (not to mention causing the Chinese government to impose import tariffs of their own on US polysilicon, used in making solar panels, resulting in at least hundreds of job losses in the US.)  The list of examples could go on and on.

Whenever the government interferes in a market by setting prices or placing restriction on the voluntary exchange of goods, the consumers always suffer either in the form of higher prices, non-existent goods, and/or the misapplication of capital to areas that would not be profitable without the government intervention.  Every one of these situations reduces the standard of living of the entire population.