Thursday, May 01, 2008

Why Do We Use Blockades/Sanctions if International Trade is Bad?

When two countries go to war, one of the first things they try to do is form a blockade around the other, preventing their trade with other nations. When a country engages in policies we don't like, we put trade sanctions on them and encourage others to do the same.

This is de facto recognition that international trade is important to economic well-being. Why then, do policy makers try to get elected using the rhetoric that represents self-blockade or self-sanctions (i.e. protectionism)? I chalk this up as being a consequence of the phenomenon discussed in Bryan Caplan's book. When a conflict or survival is on the line, we abandon irrational views of free trade as bad and pursue the rational course of action.

Note: This post was inspired by this article in on Iran's view of the primaries.

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