Trade suffers from similar misconceptions. In their quest to protect American jobs from overseas competition, the opponents of free trade ignore the benefits of imports and the hidden costs to consumers that result from restricted choice.
For instance, if a foreign manufacturer can deliver T-shirts to the United States that sell for less than domestically produced alternatives, then Americans can spend less on T-shirts.
The money saved would be available to be spent on other things....skateboards perhaps. This would benefit the skateboard companies that may still be located in the United States and that can deliver the most valuable product in their category.
But what about the workers of the domestic T-shirt manufacturers who lose their jobs? If their employers cannot find ways to compete more effectively in the T-shirt business, it is true that the workers will have to find other work. But it is not the aim of an economy to provide jobs. The goal is simply to maximize productivity.
Society as a whole is not helped by perpetuating inefficient use of labor and capital. If the United States no longer has a competitive advantage in T-shirts, it must find something else in which it does.
If trade barriers were erected to protect those jobs, the cost of T-shirts would stay high. People would have less money to spend on skateboards (for instance), and those manufacturers would suffer. And so while its easy to put your finger on the job that is saved, it's far more difficult to see the job that is lost.
It makes no sense to waste our labor making things that can be produced more efficiently abroad. If we focus on the things that we can make more efficiently than anyone else, then we can trade those products for the things that others produce better. In the end we'll have more stuff.
Of course, the problem is that because of our artificially high currency, high taxes, and restrictive wage and labor laws, we just are not competitive in enough product categories. That has to change.
— Peter Schiff; How an Economy Grows and Why It Crashes
