Tag: protectionism

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free trade & free markets ideological culture national politics & policies

China Syndrome, 2012

The two major presidential candidates, incumbent Obama and challenger Romney, must spend their final weeks of the campaign appealing to

  1. Members of their respective parties disappointed enough to stay home on election day — or vote the dreaded “Third Party” ticket;
  2. Independent voters apt to find something distasteful about both candidates;
  3. The apathetic and the uninformed.

How to appeal to all three groups simultaneously? Well, go for the old standby: fear and hatred of foreigners.

This year, it’s the Chinese.

Romney started the China-​bashing by calling our Chinese trading partners “cheaters.” Apparently he is much vexed about how the Chinese don’t respect established intellectual property rights, “stealing” our technology, “everything from computers to fighter jets.” Of course, this mainly happens after “we” set up manufacturing plants for that technology there. He charged that President Obama has not deigned to “stand up to China.”

Earlier, he had accused China of manipulating its money in its favor. He seems to have dropped that, perhaps out of embarrassment — our own Fed’s monetary manipulations, after all, dwarf China’s.

The Obama campaign responded by avoiding the intellectual property issue just as Romney now avoids the monetary one, calling Romney himself a “cheater.” You see, in his Bain Capital days, Romney invested in firms that relocated jobs to “low wage countries like China.” Romney, we are told, has “never stood up to China.”

By which is meant: Romney engaged in globalism and opposed protectionism.

Is Mr. Obama really suggesting that prosperity will come if we shrink from global competition and enact barriers to international trade in goods and services?

The biggest problem the U.S. economy faces isn’t Beijing; it’s Washington.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

Stark Protectionism

The markets of the ancient world were often sewn up by kings and courts and priesthoods. In Egypt or Assyria or Rome, you had to pay off a guild to practice a trade, at least if yours was a common craft, and even ask permission of the sovereign.

Closed entry was the norm, and it certainly contributed to the age’s forbidding pyramid of wealth (which overshadows present One Percenter concerns): Vast hordes of the very poor and the “just scraping by”; tradesmen; slaves to the landed and wealthy; and then the very few rich and powerful. In Europe, this system opened up, in fits and starts, after the fall of Rome, but the basic idea was retained in the policy of mercantilism, against which Anders Chydenius, Adam Smith, and the exponents of laissez faire argued so persuasively. The social advantages of competition for customers and laborers and capital became widely recognized.

And yet free trade never won full sway anywhere.

Cut to today. Dateline: St. Louis, Missouri.

Michael Munie

Michael Munie wanted to go into the moving business, but needed the permission of … his competitors.

This, the very opposite of “free enterprise,” is the living embodiment of mercantilist “public-​private” collusion, where the state secures existing businesses from “upstart” competitors in what Timothy Sandefur calls “an especially stark example of legislative protectionism.”

So, best wishes to Mr. Munie’s lawsuit, Munie v. Skouby, and the Pacific Legal Foundation, which has helped him bring it. Freedom requires the breaking down of barriers to business entry. Always has. Always will.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies

Blame China

The Great Depression was made “great” by government mismanagement. 

Political action, first under Hoover and then under FDR, made things a whole lot worse. And it wasn’t just the Democrats’ misguided New Deal barrage of regulation, cartelization, and general anti-​business central planning. The Hoover Era Smoot-​Hawley Tariff, a huge Republican reassertion of high-​barrier protectionism, crippled international markets and devastated the one industry it was meant, especially, to help: agriculture. 

Protectionism is the idea that government should outrageously harm domestic consumers to “protect” domestic producers. And politicians, often thinking they must “do something” (i.e., “anything”) often feel the push to “save us all” by erecting barriers to trade. Since the crash of 2008, I’ve kept an eye on our Washington insiders, to see if they’d try to revive Thirties-​style self-​destructive nostrums.

Well, we’ve got a sighting. 

Congress is gearing up for some anti-​Chinese protectionism. An unfortunately bipartisan movement is festering there, saying China’s yuan is too valuable, making trade “unfair” for American producers. The Senate seems bent on passing the Currency Exchange Rate Oversight Reform Act.

But, according to Daniel Ikenson, what’s really going on is politics: Faced with “public approval ratings hovering in the low-​to-​mid teens, an embattled Congress is looking for plausible scapegoats for the dismal state of U.S. economic affairs.”

This is not sophisticated economic theory. It’s not conscientiously developed public policy.

It’s grasp-​at-​anything grandstanding.

And it could do a whole lot of harm.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

Tire Trade War, Tiring

Political folly comes around, again and again, like a puncture in a rapidly deflating tire as you drive down the freeway. The end is never good.

President Obama and congressional Democrats pushed a tariff hike on China-​made tires, up to 35 percent — and the WTO okayed it. They excuse their action because they wish to “retaliate” against China for its alleged monetary “manipulations” — manipulations that bear remarkable resemblance to our own Federal Reserve’s policies, by the way — which they say cause our current trade imbalance.

And, like non-​economists everywhere, these buffoons judge the trade deficit a horrible thing. The fact that U.S. consumer’s get great benefit from lower-​priced goods coming from China, and can — as a result of less expensive, Chinese-​made tires – afford to replace their tires more often, thereby saving lives and health-​care costs, doesn’t appear in politicians’ protectionist arguments.

It’s the economy that’s making our representatives stupid, of course. Blaming foreign competition is an easy out, when times get tough. It helps you avoid blaming your own country’s regulations, taxes, and (ahem) monetary policy.

This blame game is nothing new. The Smoot-​Hawley Tariff was pushed through early in the Great Depression, and it made a lot of sense to … politicians.

But the the trade wars the infamous tariff engendered became a major factor in making the Great Depression so Great.

Our politicians, reviving tired old policies — regarding tires, no less — merely make matters worse. Greatly worse.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets Ninth Amendment rights too much government

Farm at Your Own Risk

Some of the most vicious threats to individual rights and liberty occur not on the federal but on the local level. Clint Bolick, an attorney who has combated many local governmental assaults on citizens around the country, once wrote a book to make the point entitled Leviathan: The Growth of Local Government and the Erosion of Liberty.

Example? Consider the zany local edict issued in the little town of Lake Elmo, Minnesota. The Institute for Justice — Bolick’s old stomping ground — informs us that the city council there has begun “enforcing a law that makes it illegal for farmers to sell products from their own land unless they were grown within Lake Elmo.”

Two of the farmers being threatened with fines and 90 days in jail are Richard and Eileen Bergman, who have tilled the land in Lake Elmo for almost four decades. They grow pumpkins. But part of their farm extends beyond the city limits, and most of their pumpkins grow on that out-​of-​Elmo part.

The Institute for Justice has filed a federal lawsuit to overturn the town’s ban on out of-​of-​town pumpkins. Council members who support the ban must have some ludicrous theory about how such totalitarian edicts goose the local economy. But the ban is certainly no good for folks stopped from buying and selling what they want to buy and sell. 

And how, pray tell, do you promote local farming by throwing local farmers in jail?

This is Common Sense. I’m Paul Jacob.