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Posts Tagged ‘protectionism’

Biden Has Embraced Trump’s Protectionism | Mises Wire

Posted by M. C. on December 9, 2021

https://mises.org/wire/biden-has-embraced-trumps-protectionism

Joseph Solis-Mullen

The Biden administration’s decision this week to raise import duties on some Canadian lumber has US trade policy back in the headlines. Since taking office President Biden has moved to end a pair of trade spats with the European Union, while simultaneously leaving in place the Trump administration’s tariffs on Chinese exports. Despite the wide-ranging applause Biden received for his transatlantic deal making, this freeing up of trade has been an exception to the general trend. Indeed, since taking office Biden has tended to follow his predecessor’s protectionist bent, even while polls show that a majority of Americans still support free trade, though it has suffered a sharp decline of late. While there are several factors to be considered when measuring the benefits of free trade versus protectionism, on the whole, free trade comes out ahead.

First, protectionism always creates one clear loser: consumers. Whether as individuals or as firms, they pay more than a free market would dictate. Consider the results of the four principal tools of protectionism as experienced by consumers. Tariffs, by taxing the incoming import, raise the price paid by consumers for that good. Import quotas cap the amount of a given good that can be imported, protecting the ability of domestic firms to charge higher prices, again, paid by consumers. Export subsidies are tax dollars given to private firms so they can afford to sell their products more cheaply abroad than they do domestically. Lastly, individual or industry subsidies are devoted to encouraging the production of a good or service the government deems desirable—that is, of course, when they aren’t simply being doled out as favors to politically connected favorites.

Indeed, in virtually every instance the motivating impetus for the adoption of protectionist legislation is to be found in a core group of constituents who benefit from it. They are an example of what happens when the benefits of a policy are concentrated while the costs are diffused. A dollar here and a dollar there from every single citizen in the country over the course of years or even decades likely goes unnoticed by them, even though it adds up quickly, making the recipients eager to see the policy continued, whatever its public cost. Concentrating their focus and resources, small groups of wealthy beneficiaries effectively capture billions to split between themselves in this way.

It is a pernicious problem, and no industry is immune to the moral hazard of profitability by government welfare, through protection or subsidy rather than by working to improve products, methods, or management. Once entrenched, these policies are difficult to reverse. Consider the decades-long subsidy of mohair. Passed in 1954 in the name of national security, mohair being the key ingredient in US military fabrics, it was rendered irrelevant a decade later by the adoption of synthetic fibers. Still on the books in 1998, the subsidy was costing nearly $200 million dollars each year, over half of which went to the top 1 percent of producers. It continues in modified form to the present day.

The inefficiencies of protectionism are well known, and are part of why free trade results in greater economic growth than alternative protectionist regimes. If it can be gotten for less elsewhere, competing US producers should shift capital toward increasing productivity in order to compete or else steer their capital into other profitable ventures; labor will follow, acquiring any new or necessary skills required to continue their employment should they choose. This is to say that the cost of free market efficiency and its higher standard of living is the occasional temporary dislocation of both capital and labor. If these processes are not artificially hindered by government policy, however, they will not come as sudden shocks, but will rather take place gradually over time. Firms seeking survival and profit maximization will take steps as necessary to adapt to changing conditions. Subsidies, tariffs, and quotas offer domestic firms an easy alternative to the work of proper management. And though they lead to an overall lower economic outcome, for the firm or industry in question the difference is irrelevant.

The Buy American campaigns of Presidents Biden and Trump have grabbed headlines over the past five years, but behind the scenes the US has been moving steadily away from free trade since the early 2000s. Part of this was a reaction to the North American Free Trade Agreement. Despite its impacts having been a net positive in terms of trade, it was rosily oversold and seriously disappointed and angered many, particularly those employed in certain manufacturing industries where job losses were concentrated. All told, it is estimated that NAFTA cost the US about six hundred thousand manufacturing jobs, but a far bigger contributor to American manufacturing job losses was China’s accession to the World Trade Organization in 2001, which cost an estimated 3.7 million manufacturing jobs over roughly the same period.

The personal costs imposed on those dislocated by the competitive pressures of free trade are worthy of our personal sympathies, but the costs of protectionism far outweigh the narrow benefits it provides recipients. Free trade reduces inefficiency by forcing firms to constantly compete to the benefit of consumers; it reduces moral hazard, results in higher economic output, lower prices, a smaller state, lower taxes, and higher standards of living. No free trade deal will ever be perfect, and there will always be winners and losers, but good free trade deals result in winners and losers dictated by market forces rather than government favoritism. Author:

Joseph Solis-Mullen

A graduate of Spring Arbor University and the University of Illinois, Joseph Solis-Mullen is a political scientist and graduate student in the economics department at the University of Missouri. A writer and blogger, his work can be found at the Ludwig Von Mises Institute, Eurasian Review, Libertarian Institute, and Sage Advance. You can contact him through his website http://www.jsmwritings.com or find him on Twitter.

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Protectionism Is Immoral, Unjust, and Corrupt | Mises Wire

Posted by M. C. on November 4, 2021

All trade barriers rest upon the moral premise that it is fairer for the US government to effectively force an American citizen to buy from an American company than to allow him to voluntarily make a purchase from a foreign company. US trade policy assumes that the moral difference between an American company and a foreign company is greater than the difference between coercion and voluntary agreement. The choice of fair trade versus free trade is largely one of When is coercion fairer than voluntary agreement?

https://mises.org/wire/protectionism-immoral-unjust-and-corrupt

James Bovard

Protectionism is reviving in Washington on both sides of the political aisle. Democrats are cheering proposals to restrict trade to benefit labor unions and save the environment while some Republicans are reviving Smoot-Hawley style salvation schemes. Protectionist advocates routinely seize the moral high ground—at least as it is scored in Washington—by promising that restricting imports will magically produce fair trade.

Thirty years ago, in my book The Fair Trade Fraud (St. Martin’s Press), I sought to drive a wooden stake into both the intellectual and moral pretenses of American protectionism. Obviously, that wooden stake “didn’t take.” So here’s a recap of why government cannot make trade more fair by making it less free.

Protectionism produces political corruption, economic stagnation, and international conflict. Yet many people will insist that even though protectionism hinders a nation’s ability to feed, clothe, and house itself, the moral gains from protectionism are greater than the economic losses. But what is the moral core of protectionism? What is the ethical basis for fair trade as it is practiced?

American trade law is dedicated to the pursuit of the just price—but only for imports. Medieval theologian Duns Scotus declared that a price was just when “the owners of things…. preserve equality of value in the things exchanged, according to right reason judging of the nature of the thing exchanged in relation to its human use.” US trade law assumes that imported goods have an objective value in themselves which can be determined in a bureaucratic vacuum thousands of miles from the market where the product is exchanged. The soul of American trade law is that bureaucrats and politicians, not buyers and sellers, are the proper judges of fair value. All the absurdities, biases, and scholastic methods of the US dumping law follow from this principle.

See the rest here

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Protectionism Is Immoral, Unjust, and Corrupt | Mises Wire

Posted by M. C. on October 29, 2021

Either the government has a valid moral reason for restricting one citizen’s freedom to boost another citizen’s profits, or a trade barrier is unjust. Protectionism means robbing Peter to pay Paul—or, more accurately, robbing a thousand Peters to pay one Paul.

https://mises.org/wire/protectionism-immoral-unjust-and-corrupt

James Bovard

Protectionism is reviving in Washington on both sides of the political aisle. Democrats are cheering proposals to restrict trade to benefit labor unions and save the environment while some Republicans are reviving Smoot-Hawley style salvation schemes. Protectionist advocates routinely seize the moral high ground—at least as it is scored in Washington—by promising that restricting imports will magically produce fair trade.

Thirty years ago, in my book The Fair Trade Fraud (St. Martin’s Press), I sought to drive a wooden stake into both the intellectual and moral pretenses of American protectionism. Obviously, that wooden stake “didn’t take.” So here’s a recap of why government cannot make trade more fair by making it less free.

Protectionism produces political corruption, economic stagnation, and international conflict. Yet many people will insist that even though protectionism hinders a nation’s ability to feed, clothe, and house itself, the moral gains from protectionism are greater than the economic losses. But what is the moral core of protectionism? What is the ethical basis for fair trade as it is practiced?

American trade law is dedicated to the pursuit of the just price—but only for imports. Medieval theologian Duns Scotus declared that a price was just when “the owners of things…. preserve equality of value in the things exchanged, according to right reason judging of the nature of the thing exchanged in relation to its human use.” US trade law assumes that imported goods have an objective value in themselves which can be determined in a bureaucratic vacuum thousands of miles from the market where the product is exchanged. The soul of American trade law is that bureaucrats and politicians, not buyers and sellers, are the proper judges of fair value. All the absurdities, biases, and scholastic methods of the US dumping law follow from this principle.

See the rest here

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Economically Farcical and Ethically Foul – Cafe Hayek

Posted by M. C. on January 26, 2019

https://cafehayek.com/2019/01/economically-farcical-ethically-foul.html

by DON BOUDREAUX

Here’s a letter to the editor of the Wall Street Journal:

Editor:

The GOP effort to allow Pres. Trump, as you describe it, “to raise U.S. tariffs, as he pleases, in retaliation for another country’s tariffs and nontariff barriers” is deeply disturbing (“An ‘Old Testament Approach’ to Trade,” Jan. 24). This antediluvian move not only threatens destruction of the post-war system that has made trade freer, it also would make the world – including America – poorer.

But this move does have one advantage: it reveals protectionism’s immorality. Listening to Reps. Sean Duffy’s and Matt Gaetz’s excuses for this move makes clear that protectionism is a philosophy of predatory self-destruction. Protectionism holds that if Dick impoverishes his neighbor Jane by blocking her access to the grocery store owned by Sam, then Sam is ethically entitled to impoverish his neighbor Sally by blocking her access to the clothing store owned by Dick.

That is, protectionism is a doctrine in which Sam is assumed to be ethically more deserving than are Jane and Sally. It treats Jane and Sally – insofar as protectionism even takes notice of their existence – as pawns whose choices and actions are to be obstructed, and whose well-being is to be worsened, if a tale can be spun about how doing so will improve the well-being of Sam. Sam counts for everything; Jane and Sally for nothing.

Protectionism’s economic farcicality is exceeded only by its ethical foulness.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

 

 

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Trade Myths – LewRockwell

Posted by M. C. on July 10, 2018

https://www.lewrockwell.com/2018/07/laurence-m-vance/trade-myths-die-hard/

By 

I received several comments and questions regarding trade after the publication of my recent article, “Stupid Countries Restrict Trade.” Here is a summary of some questions that a few people had:

What should the government of the United States do if other countries impose tariffs on U.S. goods exported to their countries?

What should the government of the United States do if a country subsidizes its exports to the United States?

What should the government of the United States do if it had no tariffs on foreign imports but other countries imposed tariffs on U.S. exports?

Trade myths die hard. Here are three of them I want to refute based on the comments and questions I recently received. Read the rest of this entry »

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George F. Will: Who will protect Americans from the protectors? | New Hampshire

Posted by M. C. on February 12, 2017

http://www.unionleader.com/article/20170212/OPINION02/170219827/0/NEWS21

The American Enterprise Institute’s James Pethokoukis notes that parts come from South Korea, Japan, Italy, Taiwan, Germany and the United States. Components of Boeing airliners’ wings come from Japan, South Korea and Australia; horizontal stabilizers and center fuselages from Italy; cargo access doors from Sweden; passenger entry doors from France; landing gear doors from Canada; engines and landing gear from Britain.

Navarro’s “unwinding and repatriating” is, to say no more, part of an improbable project: making America greater by making Apple, Boeing and many other corporations much less efficient and less competitive.

This is where I part company with tariff and protectionism advocates like Pat Buchanan (who is otherwise pretty much right on). American companies source world wide. Tariffs raise prices and put a ball and chain on competitiveness. Not to mention foreign retaliation. Expect your cost of living to go up.

It is the consumer that dictates how the market does, not companies. If no one buys, your company is toast. Consumers don’t care about where it’s made or whether it is union made.

It is all about price. Don’t believe me? Go to Walmart.

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