More Tired Protectionism

by Don Boudreaux on September 15, 2009

in Trade

Cato’s Dan Ikenson flattens many of the recently retreaded, yet ever-tired, arguments for protectionism.

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Anonymous September 15, 2009 at 8:04 pm

Haha – “retreaded” and “tired”Everyone loves a good tire pun :)

Robert P. Smith September 15, 2009 at 8:42 pm

I think this might be slightly disingenuous. I wrote earlier today about the element of political theater here – Obama may be engaging in protectionist rhetoric for political points, but it’s not as if China is playing on fair ground with us. The manipulated RMB, the hefty protectionist tariffs in China, the manipulation of GDP and growth figures – the normal arguments about free trade don’t apply to China because they are essentially a neo-mercantilist nation.

Are we competing freely with China? Of course not! You can argue about the reasons and the benefits of making such a stand at such a time, but it’s absurd to think Obama is slamming some kind of unilateral anti-free-trade barrier down on China. It is just the latest in a series of political exercises. Remember Bush’s steel tariffs in 2002? What conceivable reason for those, other than Ohioan votes…

Anonymous September 16, 2009 at 2:52 pm

The comparison with Bush is obvious (I’ve heard that the revenues from that were much greater actually), but one thing I’ve wondered – why do it so early in the term if it’s political purposes? Is it because the vast majority of pro-free trade Americans will forget it by 2012 (2004 in Bush’s case), but unions will remember that “courageous stand”?

I’m sure it’s posturing of some sort – but I’ve always wondered why it came so early if it’s electoral posturing specifically.

Jake S. September 17, 2009 at 2:19 pm

“Obama may be engaging in protectionist rhetoric for political points, but it’s not as if China is playing on fair ground with us.”That’s kind of the point of the whole “protectionism vs. free trade” debate. See the book “Fifty Economic Fallacies Exposed” (Geoffrey Wood, 2002, IEA). entire e-book can be downloaded for free at the above link)Specifically, see Section 2 (International Trade), pg.33, with the fallacy known as “One country should not cut its tariffs unless others do.” This speaks precisely to this issue (that is, the argument for why tariffs should be cut unilaterally also directly applies to why they should not be erected in the first place).

Mitch Oliver September 15, 2009 at 9:19 pm

I must confess: when I first read that I thought it said “… many of the recently retarded, yet ever-tried, arguments…”

SymbolicalHead September 16, 2009 at 12:12 am

This is a stellar article by Mr Ikenson. It highlights something I hadn’t realized but makes perfect sense. The Chinese and the US tyre producers are in reality the same companies. That is why no companies are signed on to this petition, only the trade unions.

This isn’t protectionism in any normal sense, this is a labor dispute where the unions are looking to punish and prevent outsourcing and have found a way to use USG trade regs. to exert the pressure for them on their management.

Forget about free trade/protectionism for a second and even forget about China. Unions have managed to get the USG to do what they could not do on their own, and punish the management for outsourcing production. I can guarantee other large companies thinking of outsourcing production are taking note. If you do it now, and all that has to happen is for your employees to petition the government. If you have union employees the odds of that happening have to be nearly 100% as of today. They’ve done that all the while using China as a smokescreen. It is absolutely genius on the part of the unions. Evil genius, but genius.

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