There are two basic visions of it. Protectionism, in the free trader's eyes: When an economy gets sick, it wants to withdraw from the world. A protectionist psychosis sets in. The invalid retreats into the house and locks the doors and windows and pulls the shades. Hypochondriac, jittery, paranoid, the economic system settles down to feed upon its own inadequacies. It sits in its slippers by the cold furnace and thinks about how well it used to make things, long ago. It disconsolately guzzles Old Smoot-Hawley, far into the night. Then it passes out. Another economy gone, as defunct as Mayan civilization.
Or else, the protectionist's happy dream: The prospering American family gathers at its bright windows to peer outside. There, in the dusk, the streets are clogged with trade-crazed foreigners, Brazilians burdened down with shoes, Koreans with shirts, Japanese revving their Hondas, bearing a million videotape recorders on their heads. The foreigners wail and gnash their teeth as they hurl their inventories against the impenetrable American trade barriers. The American economy waves smugly to the rest of the world, then settles in to savor a bit of roast beef and full employment.
Both visions are fantasies, cartoons of the harder, drearier, subtler economic realities. The first is closer to the truth. Unfortunately, the months of recession and traumatic unemployment have begun to attract many Americans to the second vision, the protectionist illusion.
As their plants close down and workers go onto indefinite layoff and the hard winter sets in, Americans want help. They begin to regard themselves as the suckers of international trade, the only free trade purists left in a world of venal nationalisms.
The impulse to protect American products by tariffs and other means begins to seem irresistible. Politics comes lumbering in. The 1984 election is likely to turn upon the condition of the American economy. Walter Mondale, long a free trader, began sounding like a tough-guy protectionist as he toned up last fall for the presidential race. Congressmen heard the cries from home. The House passed a "domestic content" bill that would have required that American parts or labor must be involved in producing most foreign cars sold in the U.S. The Reagan Administration figured that the bill would prompt retaliation from U.S. trading partners, raise U.S. car prices by 10% and cost the economy from $3 billion to $5 billion overall.
What is wrong with protectionism? Americans for much of their history kept themselves snugly wrapped in protectionist laws. The famous Smoot-Hawley Tariff Act of 1930 set up the highest general tariff rate structure that the U.S. had ever had. One nation after another retaliated. The tariffs helped deepen the Great Depression worldwide and thus at least indirectly brought on World War II. Protectionists say that was an extreme case. No one wants to go back to Smoot-Hawley. Protectionists today want subtler, more modulated laws.