Friday, 7 June 2013

Boudreaux on fair trade

Don Boudreaux has written a letter, as only Don Boudreaux can, to the Washington Post:
Harold Meyerson dislikes foreign trade, in part because it destroys some American jobs (“Go slower on free trade,” June 4). And so Mr. Meyerson favorably quotes one of Congress’s staunchest protectionists, Sen. Sherrod Brown (D-OH): “A trade deal, says Brown, ‘should both protect workers and small businesses and better prepare them for globalization.’”

Let’s make a deal. Government will agree to protect only those American workers and small-business owners who in return agree to stop buying foreign-made products.

For example, American steel workers will get protection from steel imports only if they, in exchange, agree to stop buying the likes of Toyota cars, Samsung televisions, Ryobi hand tools, Ikea furniture, Shell gasoline, Amstel beer, vacations to Cancun, and musical recordings by foreign artists such as the Beatles, Elton John, and k.d. Lang. They must also promise to stop buying the likes of bananas, cinnamon, and vanilla and, indeed, even American-made food items if these are shipped to their favorite restaurants and supermarkets in foreign-made trucks – or in trucks equipped with tires made by Michelin, Bridgestone, or some other job-destroying foreign company. These workers would be permitted to drink only Hawaiian coffee; they must quit drinking the Colombian, Guatemalan, and Ethiopian coffees that they’ve become accustomed to drink. Oh, and absolutely no diamond jewelry, as those gems come from Africa. (Sorry, ladies.)

Small-business owners likewise will get such protection, but only in return for their agreement not only to stop consuming foreign-made products, but also to never sell their outputs to non-Americans. These businesses must, in addition, promise to use in their operations only American-made inputs – such as aluminum, wood, chemicals, and insurance services – even when foreign-made substitutes are available at lower prices or in higher qualities.

One wonders just what this "deal" would do to the living standards of Americans and if those backing protectionism even realise the effect it would have. Its the seen and unseen. Protectionists see that some group or industry would benefit from protection but don't see the costs of that protection throughout the rest of the economy. Just how would the cost of living rise and the quality of goods and services fall. Doing things that you don't have a comparative advantage in only reduces the average income of the country. America could produce all the goods it wants to consume, it just would mean producing things that those overseas are better at doing and not doing things the US is good at. And foregoing the gains from trade.

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