Recently on Facebook, I shared my Café Hayek post titled “Lower-Priced Goods are a Blessing, Not a Curse.” I prefaced this share with this remark: “Protectionism is the theory that 10+2=6, and 10-2=16. And protectionists proudly and tirelessly defend this theory, happy to dismiss as ‘elitists,’ ‘experts,’ or ‘globalists’ those of us who point out that 10+2=12, and that 10-2=8.”

Of course, my description of protectionism isn’t literally true. And yet it does truly capture protectionism’s essence, which is the bizarre belief that a greater abundance of goods and services made available from sources outside of a nation’s boundaries reduces the supplies of goods and services available to the people of that nation, while policies that diminish the abundance of goods and services made available from sources outside of a nation’s boundaries increase the supplies of goods and services available to the people of that nation.

Putting aside the national-security exception to the case for free trade, such an arithmetical impossibility is indeed what 90 percent of protectionism is revealed to be, when stripped of the vague and misleading language typically deployed to mask its essence. Tariffs and other protectionist interventions are sold as means of creating more and higher-paying jobs (which would, in turn, reverse the allegedly rising “cost of thriving”), of paving paths for the development of “the industries of the future,” of raising impressive amounts of tax revenue from foreigners, of making the economy more ‘competitive,’ and generally of strengthening the domestic economy, improving the living standards of ordinary citizens.

Because voters overwhelmingly like policies that promise them greater access to goods and services, protectionists understandably trumpet the alleged ability of protectionism to deliver on this economic front.

But what about the remaining 10 percent of the attempted justifications of protectionism (again, putting aside considerations of national security)? These justifications pretend to be non-materialistic and, therefore, presumably are ‘higher’ and more weighty than are ‘merely economic’ concerns. Such is the stance, for example, of Mr. Kang Chen, who offered this comment in response to my Facebook post: “No. Protectionism is the theory that there are things that matter besides the prices of goods and services.”

An easy response to a comment such as Mr. Chen’s – a response that’s accurate and appropriate despite its easiness – is to point out that the great majority of the pleas for protectionism promise improved material well-being. More jobs. Higher wages. Rising standards of living. A larger share of our tax revenues paid by foreigners. Protectionists such as Mr. Chen would be taken more seriously if the likes of Donald Trump and Elizabeth Warren campaigned for higher tariffs by explicitly announcing that “tariffs will significantly raise, now and into the future, the prices of the goods and services that you and all American households regularly purchase. Most of you, therefore, will see your real wages fall and your material standard of living worsen. But don’t worry! Your lower standard of living will be more than offset by non-material benefits.”

Protectionist politicians never say such a thing. On rare occasions, protectionists triumphantly declare that higher tariffs might reduce people’s access to cartoonishly frivolous luxuries such as “plastic baubles and trinkets,” or, as President Trump said last year, “maybe the children will have two dolls instead of thirty.” (Such declarations are meant to convince voters that the economic costs of protectionism are trivial compared to its economic benefits.) But never do protectionist politicians campaign on a platform of arranging for people to be economically poorer as a price to be paid for non-economic benefits.

No more need be said to dismiss Mr. Chen’s suggestion that protectionism, in practice, is about the sacrifice of economic well-being for higher non-economic ends. But more can – and should – be said.

What people such as Mr. Chen and others believe themselves to be doing when they insist that protectionism is about more than “the prices of goods and services” is distinguishing themselves from free traders, who are assumed to be concerned only with narrow material ends. Mr. Chen and Co. fancy themselves as standing in gallant opposition to the horde of mindlessly materialistic free-traders in order to promote ends such as job security, the family, and the character of towns and regions.

But Mr. Chen and Co. deeply misunderstand the case for free trade. It is not a case for the elevation of shallow materialism over profoundly important non-economic ends.

First, very many (most?) free traders — including myself — support free trade ultimately because it’s consistent with individual liberty, while protectionism is an offense against individual liberty. Even if free trade somehow resulted in a reduced material standard of living, I and many other free traders would still champion it because of its non-economic virtue of being consistent with freedom. It’s fair for Mr. Chen and other protectionists not to esteem individual liberty as highly as do we free traders. It’s unfair, however, and mistaken for protectionists to accuse us free traders of valuing nothing higher than material enrichment.

Second, all motives for economic action ultimately are non-monetary (that is, they’re not about accumulating money for the sake of accumulating money). Some of these motives are material in a narrow sense and, hence, might be called “materialistic”: everyone must eat and be housed and clothed. And some of these materialistic motives are indeed crass and shallow and even contemptible: Joe uses some of his monetary earnings to get drunk on Friday nights while Janet regularly feeds some of her monetary earnings into slot machines. But other of these motives are not materialistic in any narrow sense: Jane spends much of her monetary earnings on piano lessons for her grandchildren while Jerry donates a portion of his monetary earnings to a community children’s theater and uses another portion to improve his and his wife’s learning by subscribing to The Rest Is History podcast. Because free trade increases the opportunities to do all of these things, it’s erroneous to suggest that the case for free trade is a case only for narrow material or sensual gratification.

Third, nearly all of the alleged non-materialistic benefits of protectionism are, in fact, materialistic benefits.

Consider, for example, job security. Job security is valued largely because a secure job is a secure stream of income. If job security really were a non-economic goal that trumps ‘mere’ material well-being, workers who have this goal could greatly increase the security of their jobs by offering to take a significant cut in their monetary wages. Yet, tellingly, such wage-cut offers seldom occur. The case for using protectionism to increase the job security of workers in protected industries is the case for having fellow citizens other than the protected workers pay the economic cost of making the protected jobs more secure.

It’s admirable to have non-economic goals. But it’s detestable to force other people to subsidize the achievement of these goals, and hypocritical to accuse those of us who object to such subsidization of being excessively materialistic. If any group in this situation is excessively materialistic, it’s the protected workers and the protectionists who apologize for them. These protectionists never pause to ponder what non-economic goals a policy of protectionism prevents the bulk of their fellow citizens from pursuing. As a result of having to pay prices driven higher by tariffs, how much leisure does a working mom lose? How much does a family’s education budget shrink? How much health care must another family forego? By how many years does dad postpone retirement?

If protectionists are in search of people who are mindlessly and narrowly materialistic – of people who are blind to the non-economic goals that most individuals have – protectionists should look in the mirror.

Private markets work well when they are allowed to function free from big government directives. The latest example is in the world of financial data sharing, where Washington tried to dictate prices, warring industry interests warned of disaster, and the free market quietly delivered a solution on its own.

Since the passage of major financial industry reform legislation in 2010, policymakers have debated how to create a regulatory framework within which personal data portability and sharing can occur safely and securely. Unsurprisingly, the Biden Administration sought to finalize rulemaking that was supposed to put an end to some 15 years of speculation on what this framework, under Section 1033 of Dodd-Frank, would look like.

For years, banks were required to provide financial technology companies with customer data for free, with few limits on how that data could be monetized. The Biden Administration embraced that policy, finalizing a rule that required banks to share data with aggregators at no cost. It was a government-mandated price control of zero dollars, delivering a “solution” to a problem that didn’t exist.

President Trump saw the absurdity of the so-called Rule 1033 and acted swiftly to stop it. By forbidding banks from charging for access, the rule would have forced them to absorb the infrastructure, cybersecurity, and compliance costs of data sharing while allowing fintech firms — favored by the Biden Administration — to profit from the very data they received at no charge. The result would have been a system where the costs were socialized, and the profits were privatized.

After a federal court issued an injunction halting enforcement of the Biden-era rule, some claimed that government needed to put its thumb on the scale to negotiate fair compensation for access. Those arguments have already collapsed.

In recent weeks, JPMorgan Chase — the country’s largest bank — reached market-based pricing agreements with 95 percent of the data middlemen in the market. One such actor supporting greater government involvement went so far as to confirm that its updated agreement with the bank “wouldn’t affect current customer deals or pricing.” 

The success of these agreements makes one thing clear: market participants can solve complex problems through negotiation and partnership far better than regulators can through compulsion. Voluntary, market-based arrangements have succeeded where central planning failed.

As the Consumer Financial Protection Bureau prepares to issue an updated rule, it should reject the false premise that consumer privacy and innovation can only thrive under government control. Embracing a market-based framework will strengthen consumer protection and foster responsible innovation far more effectively than price mandates ever could.

The best course of action would be to eliminate the agency entirely, and transfer its powers to other areas in the federal bureaucracy. If that is not possible, there is a menu of options to reform the structure to better serve taxpayers. Over the past decade, the agency’s priorities have swung dramatically with each administration, creating instability for consumers and industry alike. Concentrating so much authority in a single director has proven unworkable. A bipartisan commission structure, like the Securities and Exchange Commission (SEC) or Federal Trade Commission (FTC), could restore accountability and consistency.

Congress should also bring the CFPB’s funding under the normal appropriations process, rather than letting it draw money directly from the Federal Reserve. Transparent funding would improve oversight and focus CFPB’s work on real consumer benefit instead of political goals.

Most importantly, CFPB should pursue modern oversight that protects consumers while supporting innovation. Its failure to evaluate the data security risks of mandatory data sharing under the Biden-era Rule 1033 shows the danger of heavy-handed policymaking.

President Trump’s CFPB should build a lasting legacy of practical, forward-looking regulation that respects both consumer protection and market competition. The fall of the Biden-era Rule 1033 is a reminder that the free market, when allowed to work, delivers the best results for everyone.

When the internet went mainstream at the turn of the twenty-first century, it was widely celebrated as a revolutionary force for freedom and democracy. Its decentralized architecture promised to empower individuals, expand free expression, and weaken the grip of authoritarian states. Many believed that open information flows would make censorship obsolete and repression impossible to maintain.

That optimism has not merely faded — it has been decisively overturned. The same technologies once hailed as instruments of liberation are now being repurposed as tools of surveillance, censorship, and control. What is unfolding is not a sudden collapse of digital freedom, but a slow, structural transformation of the internet itself — one that is quietly reshaping how power operates in the digital age.

Crucially, this shift is not confined to authoritarian regimes. It is increasingly spreading into liberal democracies that once saw themselves as custodians of an open and global internet.

A Global Recession of Digital Freedom

Internet freedom is deteriorating globally at an unprecedented rate. The Freedom on the Net 2025 report marks the fifteenth consecutive year of decline, representing the longest recorded recession in digital freedom. Nearly 80 percent of internet users live in countries where a social-media post could result in arrest, and two-thirds are in nations where people have been assaulted or killed for their online expression. Governments in 65 percent of assessed countries block political, social, or religious content, while more than half restrict access to major platforms altogether.

This erosion is no longer confined to the usual suspects. Even established democracies are backsliding. U.S. internet freedom fell to a record low in May 2025, dropping three points in a single year — reflecting a growing willingness among democratic governments to deploy tools once associated with authoritarian rule. 

That shift is already visible in practice. During the unrest in New Caledonia, France restricted access to TikTok; meanwhile, authorities in the United States, India, and Brazil have pressured platforms to remove political content. At the same time, Meta and X have rolled back transparency tools that once enabled researchers to track disinformation and government influence.

Two decades ago, such a trajectory would have seemed implausible. In 2000, President Bill Clinton famously mocked China’s early censorship efforts, likening them to “trying to nail Jell-O to the wall.” Yet China went on to build the Great Firewall — the most comprehensive censorship system in modern history — reshaping global assumptions about what information control could achieve. 

What once appeared to be a uniquely authoritarian experiment has since evolved into a widely adopted model of digital governance, replacing the open, participatory internet imagined in the 1990s with a controlled, increasingly surveilled digital environment shaped not by a single censor but by the combined pressures of regulation, corporate incentives, and algorithmic control.

How the West Is Quietly Adopting Authoritarian Tools

In Western democracies, digital control rarely takes the form of overt repression. It advances quietly — through regulatory creep, technical adjustments, and procedural changes that seldom provoke public alarm. Surveillance expands, encrypted spaces shrink, and the line between state authority and corporate power blurs. Control is not imposed as repression but framed as protection, administered through law, normalized by bureaucracy, and legitimized by democratic institutions.

Encrypted communication — once indispensable for journalists, activists, and dissidents — is increasingly under threat. Europe’s proposed Chat Control legislation would require scanning private messages, weakening end-to-end encryption by mandating content inspection before or after transmission. In parallel, the UK’s Online Safety Act and Australia’s identity-verification rules introduce new points of access to private communication — often justified in the language of safety or child protection.

If eroding encryption compromises private communication, mandatory digital identity systems go further by undermining anonymity itself. Proposals such as the UK’s BritCard, the EU’s Digital Identity Wallet, and similar frameworks in Australia and parts of the United States would link online activity to state-verified identities. When integrated with corporate datasets — biometric, location, financial, and browsing data — these systems enable continuous monitoring without requiring explicit surveillance orders.

Much of this infrastructure is now supplied by private firms rather than built by the state. Companies such as Palantir have become central actors, providing data-fusion platforms to intelligence agencies, police forces, militaries, and immigration authorities across multiple (otherwise) democratic states. What began as narrowly framed security tools has evolved into systems that aggregate vast troves of personal data and deploy predictive analytics at scale — raising profound concerns about bias, accountability, and oversight, even in societies long committed to strong privacy protections.

Together, these tools are beginning to form an integrated surveillance system. Digital identity systems, predictive algorithms, and surveillance technologies increasingly reinforce one another, creating a state–corporate surveillance architecture that — though softer and more bureaucratic — mirrors key features of digital authoritarianism. Platforms police users to meet regulatory demands, while governments rely on private firms to enforce political priorities. Control expands not through overt repression but through routine administrative processes that quietly shrink the space for individual freedom.

Pavel Durov’s warning is therefore not an exaggeration. Digital liberty is not taken away all at once. It erodes through the accumulation of quiet legislation, routine deployments, and the gradual weakening of institutional safeguards, which slowly remake the internet into something it was never meant to be. If freedom is to endure, it must remain the starting point of governance — not its exception.

Otherwise, Durov’s warning may be remembered not as a call to action, but as a record of freedoms already gone.