Monday, October 3, 2011

Where Left and Right Merge (white board lesson)

Plain and simply, the imposition of what the consumer will be fooled to believe are punitive (U.S. job saving) tariffs on foreign imports - per the coming proposal from a bipartisan (left and right merge on this one) band of manipulators (lead by Democrat Shumer and Republican Graham), at the behest of Presidential-wannabes Mit Romney and Michele Bachman - would, if passed, only serve to hurt Americans employed by American exporters, Americans who work for American businesses that benefit from our discretionary spending - and virtually every other American consumer through higher prices of everyday items. I.e., the net result of protectionism is forever the taking of money from the consumer-at-large and the handing it to a select (politically powerful) few.

Thus, the mere suggestion that this politically-inspired proposal, were it to pass, would do anything other than severely hurt our already limping economy, is an utter insult to our intelligence. Shumer, Graham and the candidates are either profoundly ignorant or assume so of us.

Of course non-competitive U.S. industries lose jobs to trade, but other (competitive) industries benefit mightily. Here's my rendition of a story Don Boudreaux tells in his book Globalization (a great read):

Imagine there are only two countries in the world, China and the U.S... And China wants absolutely nothing from the U.S.. Therefore, being that U.S. dollars offer them no value, the Chinese refuse to sell U.S. citizens a single item. That's a bummer, cause we really want their tires. However, when a third country, Australia, enters the story, opportunity presents itself. Australians desire U.S. software, while China wants Australian wool. So then:

1. China sells tires to the U.S....
2. China now has U.S. dollars to buy wool from Australia..
3. Australia now has U.S. dollars to buy software from the U.S....

Now I'll add the manipulation: The United Steelworkers Union cries foul (actually happened in '09 by the way), buys favor with a U.S. President (Obama) - who points to the trade deficit with the surely-cheating China - and VoilĂ ! we tariff Tianjin Tires. And, alleluia, we save American (tire manufacturing) jobs. And, alas, we destroy American (tech industry, etc.) jobs.

Here's me illustrating the above:

2 comments:

  1. I have long wondered, which candidate, regardless of party affiliation, and regardless of other political agendas, even approaches YOUR views on the economy?

    Would you care to answer that one? Or is it a conflict in ethics?

    ReplyDelete
  2. At the moment, I'd have to say the one who "even approaches" would be Ron Paul... Now that's without having given fair attention to all of the candidates... Ask me again in 6 months...

    ReplyDelete