Filed Under: Anything Peaceful
Tags: Chinese tires • free trade • protectionism
Let Them Eat Cake
This administration, which claims to champion working families struggling to make ends meet during hard times, has decided to impose a 35 percent tariff on low-end Chinese tires. The tire workers’ representative, the United Steel Workers, petitioned the government for relief under a provision that protects domestic industries from import “surges.” President Obama, who has been meticulously ambivalent about trade issues till now, has come down squarely on the side of protectionism — which means against consumers as well as domestic manufacturers who use the bargain imported tires as inputs. Who will get hurt first? People who depend on low-cost tires. They will have to pay more, but some won’t be able to and so will continue riding on worn tires, with all the risk that entails. The deaths and injuries will be on Mr. Obama’s head.But they won’t be the only victims. If Americans buy fewer Chinese tires, the Chinese will have fewer dollars with which to buy American products or to invest here. (I thought the government needs the Chinese to buy its bonds.) And if a trade war erupts with China, the damage will be far and wide. There is never a good time for a trade war. But this is a particularly inopportune time. With a big inflation pending due to expansionary monetary policy, do we really need another reason for prices to go up?Thanks for the change and hope, Mr. President.
Comment by Jacob Steelman on 13 September 2009:
This is the same tactic taken by the government in the 1929 Great Depression by the Hoover administration and followed by the Roosevelt administration. In a depression or recession consumers need cheaper prices not expensive prices. Government is the enemy of the consumer and agent for the ruling elites. Protectionism raises prices. Cash for clunkers raises prices by removing used cars from marketplace and reducing supplies of used cars available for sale. Printing fiat currency raises prices (depreciates the value of the currency) of commodities which are used as factors of production in the manufacture of various products. Printing fiat currency, changing accounting rules and spending trillions of dollars keeps bankrupt financial institutions afloat by keeping asset values (of otherwise worthless assets) higher than they would otherwise be absent government intervention. Minimum wage laws keep labor prices higher than they would otherwise be absent the government’s intervention and results in unemployment among the less skilled workers. Licensing laws for doctors, dentists, lawyers, and other professionals keeps costs of these services higher than they would otherwise be absent the government’s intervention. Government sponsored cartels providing natural gas and electricity keeps energy prices high. Government is not the solution government is the problem.
Pingback by Baker’s dozen links dump on 13 September 2009:
[...] Richman of the Foundation for Economic Education discusses some of the problems with raising tariffs on cheap Chinese tires. I liked this quick synopsis a little bit better than [...]