Henry George on the scramble to get government favors known as trade “protection” (1886)

In this chapter Henry George examines two common arguments for government favours to “protect” industry from competition. One is the “infant industry” argument, and the other is the “support of domestic industry” argument. Concerning the former, he raises the “knowledge problem” which any government faces in trying to identify out of the myriad of existing industries (not to mention the industries which do not yet exist) which one would repay such “investment” on the part of the government (or rather the taxpayers). He also notes that in the pushing and shoving of would-be recipients of such favors the winners are more likely to the politically “influential” and the “flatterers and dependents of those in power.” Concerning the latter, George notes the “malinvestments” or distortions which the trade protection causes. Investments are diverted from more productive and profitable activities and towards industries which may never become profitable without ongoing government support. He concludes that the struggle to survive in an open and free market teaches firms to adapt and improve the services they provide to consumers. The alternative in his view is the prospect of seeing more and more industries behaving like young pigs squabbling over who gets to the food trough first.