Hans F. Sennholz, “Protectionism, Old and New” (1995)

Hans F. Sennholz’s “Protectionism, Old and New” is a short single-author political-economy essay. Its scope is polemical and analytical: it attacks American protectionism by treating tariffs, import restrictions, and export promotion as recurring errors shared by older mercantilism and newer labor-nationalist arguments.

Sennholz begins by defining protectionism as a policy rooted less in economics than in political prejudice and misinformation. Its ancestry runs from tribal suspicion of outsiders to modern anxieties over stagnation, unemployment, and dollar weakness. The essay’s governing premise is that protectionism is not a technical adjustment to trade but a coercive redistribution disguised as national defense.

Every form of protectionism builds on raw political force.

This is the essay’s central conceptual move: to redescribe “protection” as state compulsion. Tariffs and restrictions do not merely shield industries; they transfer costs to consumers and competing producers. Hence Sennholz frames protectionism as a domestic conflict before it is an international one.

Protectionism builds on the governmental power to tax one man to help the business of another.

The essay then maps the political coalition behind such policies. Protectionism attracts politicians seeking power, economists committed to national planning, business petitioners, and especially labor unions defending above-market wages in particular places and industries. Sennholz’s critique of planning is direct: national management of employment and output cannot coexist with free international exchange because trade continually reallocates resources beyond political design.

His main economic argument concerns employment. Protectionists claim that restricting imports preserves jobs; Sennholz replies that it lowers labor productivity and consumer purchasing power, temporarily benefiting one industry while damaging others. The analogy to natural disaster is revealing: destruction can increase demand for specific kinds of labor, but only by making society poorer.

Trade restrictions thus destroy more jobs than they can possibly create.

From there, Sennholz attacks the “cheap foreign labor” argument. If wage differences justified barriers, he argues, trade would be impossible not only among nations but among American states. Labor cost is only one factor in competitiveness, and the strongest American protectionist agitation often targets producers in high-wage countries such as Japan and Germany. This reversal lets him present protectionism as internally inconsistent: when low wages cannot explain imports, protectionists shift to another doctrine.

That doctrine is the old balance-of-payments argument, recast in modern form as a jobs policy. Sennholz identifies it with sixteenth-century mercantilism: exports are treated as gains, imports as losses, and money inflows as national enrichment. He rejects both the old and modern versions.

Both versions, the old and the new, are spurious and erroneous.

The contemporary example is the U.S. deficit with Japan. Rather than depicting Japan’s trade surplus as a threat, Sennholz emphasizes that dollar earnings were invested in U.S. Treasury obligations, financing American deficits and supporting the bond market. He also shifts explanation away from foreign unfairness toward American monetary and fiscal policy: low interest rates, capital taxation, weak saving, and federal deficit spending.

America is consuming too much while saving and investing far too little.

The essay’s relevance lies in this reframing of trade politics. Sennholz treats protectionist rhetoric as a recurring alliance of fear, political power, and economic fallacy. Its final force comes from showing that “old” and “new” protectionism differ mainly in language, not logic: both turn consumer loss into producer privilege and mistake national economic weakness for evidence against free exchange.