Tuesday, October 16, 2012

Political favor comes at a very high cost...

Do you agree with President Obama and Mitt Romney that China is cheating and that it's time we put an end to it? I'm thinking you might want to consider the cost.

From this morning's NY Times on the 2009 tariff on Chinese Tires (the example I use in my white board illustration):

"Gary Hufbauer, a trade expert with the Peterson Institute, said the action protected at most 1,200 American jobs but last year alone cost American consumers $1.1 billion in higher-priced tires. China responded with tariffs on imports of American chicken parts that cost American poultry producers an estimated $1 billion in lost sales."

If we take Mr. Hufbauer's statement at face value, and accept his estimate of 1,200 jobs saved, the math says the President's gift to the United Steel Workers Union came at an astounding cost—to the American consumer—of $1,750,000 per job, last year alone. We can only imagine what the true cost is when we consider the jobs lost and/or jobs not gained as a result of all that redirection (and loss) of capital—all for political favor.

That would be a redistribution that ought to have the 99.999999614% (everyone but the 1,200 tire workers) up in arms.

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