Classical liberals stress that all are equal before the law. Although liberals have disagreed about countless questions, they are united by a belief in impersonal, rules-based governance—the rule of law. John Adams captured the ideal when he defined a republic as “an empire of laws, and not of men.” Liberty depends not upon finding benevolent rulers but upon constructing institutions in which no person or group is entitled to stand above the rules governing everyone else. 

Economic liberty is not separate from the rule of law but one of its clearest applications. A free market does not mean anarchy. It means an economy governed by general and predictable rules that apply equally to everyone. The alternative is not more laws but a different kind of law: commands, permissions, and exceptions designed to favor particular industries and professions over others.

As F. A. Hayek wrote in The Constitution of Liberty, “freedom of economic activity had meant freedom under the law.” The relevant distinction is not simply between government action and inaction, but between general rules applied to all and discretionary interventions favoring some. 

People generally accept equal treatment when discussing civil liberties such as freedom of religion. The case for a general rule is relatively clear. Religious freedom must apply even to unpopular faiths. But when we apply the same principle of universality to issues of economic liberty, equal rules become much more controversial.

Seen through the rule of law, tariffs, subsidies, licensing restrictions, and selective regulations are not merely economic interventions; they are legal privileges. These policies do not merely manage economic activity in a neutral fashion; they use political power to protect some people from competition while forcing others to bear the costs. Economic liberty is not simply a demand for lower taxes or fewer regulations. It is the demand that rules be general rather than arbitrary.

Yet many people have friends, family members, and communities whose livelihoods depend upon some form of economic protectionism. Being empathetic people, they believe an exception ought to be made in particular cases. They may oppose protectionism in principle while insisting that this industry is too important, this profession is too vulnerable, or this particular group is too deserving to face the ordinary pressures of competition.

The problem is that almost everyone has a particular exception they believe is worth making.

The eighteenth-century French economist and statesman Anne Robert Jacques Turgot captured this tension perfectly:

“For example, the world is full of people who condemn exclusive privileges, but who believe that there are certain commodities for which they are necessary. This exception is generally based on their personal interest, or on that of individuals with whom these people are connected. Thus the majority of people is by nature well disposed toward the sweet principles of commercial freedom. But nearly all, either through interest, or through habit, or through subordination, insert some small modifications or exceptions.”

Turgot understood this problem before he acquired the political power to confront it himself. Associated with the Physiocrats, a group of eighteenth-century French intellectuals who championed free markets, Turgot was appointed controller-general of finance by King Louis XVI in 1774. He became one of the first people to be invested with the real political power to implement free-market policies on a national scale.

He attempted to remove internal restrictions on the grain trade, weaken the power of the guilds, reform taxation, and abolish forms of compulsory labor. His goal was to replace a maze of inherited privileges with a system that gave no favors to any particular class or profession.

But by objecting to all exceptions at the same time, he united every protected interest against him. Each group could agree that privileges granted to others were harmful while remaining convinced that its own privilege was necessary. They disagreed about which exceptions should exist, but they agreed that a system without exceptions threatened them all. These groups did not need to share a common political philosophy and definitely did not agree about how France should be governed. They needed only to recognize that a commitment to general rules threatened their particular exceptions.

Despite his best efforts, Turgot’s reforms were opposed and eventually repealed. In 1776, less than two years after his appointment, Turgot was dismissed, and his political career ended in ruins.

The lesson is that policies like free trade, which benefit society as a whole, may still provoke fierce opposition because protectionism creates concentrated benefits and diffuse costs. Modern public-choice theory helps explain why these exceptions are so difficult to remove. In the book The Logic of Collective Action, the economist Mancur Olson observed that “small groups will further their common interests better than large groups.” Government favors are concentrated among organized and influential groups, while their costs are spread thinly across the wider public, who lose too little to justify organizing in opposition.

Bruce Yandle’s Bootleggers and Baptists explains how these privileges acquire moral legitimacy. Concentrated interests often prosper by attaching their private advantages to a persuasive public cause. Moral advocates supply the language of safety and compassion, while the beneficiaries provide the organization and political pressure. The result is a policy whose costs are broad and difficult to see, whose benefits are narrow and fiercely defended, and whose privileged character is disguised as service to the common good.

A modern example is the Jones Act, a 1920 law requiring cargo transported between American ports to travel on vessels that are American-built, American-owned, and largely American-crewed. The law remains in force despite raising shipping costs throughout the economy and failing to produce the strong maritime industry its supporters promised.

Research by Cato scholars estimates that the Jones Act imposes an annual burden of $1.4 billion on Puerto Rico’s economy alone. Puerto Rican households bear an estimated $692 million of that burden, or roughly $203 per resident, yet these costs are dispersed across millions of transactions. Its benefits, by contrast, flow to a small and highly organized collection of shipbuilders, shipping companies, and maritime unions with every reason to defend it.

The Jones Act, therefore, illustrates both Olson’s concentrated-benefits problem and Yandle’s “Bootleggers and Baptists” theory. The protected maritime interests supply the political organization, while appeals to patriotism and national security provide the respectable public justification. Everyone pays a little more, while a concentrated few gain enough to fight fiercely for its survival.

Being empathetic toward people whose livelihoods are disrupted is not wrong. But sympathy does not answer the question of whether the government should use the force of law to protect one group from change at everyone else’s expense.

Once one exception is made, there is no principled reason to deny others. A single precedent establishes the groundwork for a hundred more. Every industry can describe itself as essential and claim a need for special rules.

The rule of law is easy to praise but difficult to uphold. It is easiest to support when it restrains someone else. Classical liberalism does not promise a painless world. It offers a framework in which no group is entitled to live at the expense of others and no interest is elevated above the rest by political force. The rule of law survives only when we accept that the same rules, risks, and freedoms must apply to everyone. Liberty begins where privilege ends.