Open Letter to U.S. Senator Kay Hagan

by Don Boudreaux on February 5, 2011

in Seen and Unseen, Subsidies, The Economy, Trade

Sen. Kay Hagan (D-NC)
United States Senate
Capitol Hill
Washington, DC

Dear Sen. Hagan:

You are leading a Congressional effort to renew the Trade Adjustment Assistance (TAA) program, under which Uncle Sam gives cash assistance to workers judged to lose their jobs whenever American consumers start buying more imports.  I have a few questions for you.

First, what’s so special about job loss due to increased competition from imports?  Is a worker who loses his or her job to another American worker, or to advances in technology – or simply to a change in consumer preferences – any less unemployed or distressed than is an American worker who loses his or her job to a foreign worker?  If, for example, Americans follow Uncle Sam’s advice to eat less salt, why not give adjustment assistance to the many workers at Frito-Lay and Nabisco (maker of Planters Peanuts) who will lose their jobs as a result of this change in the pattern of consumer spending?

Second, why not impose a Trade Adjustment Tax on workers who get jobs as a result of increased foreign demand for U.S. exports?  As the Democratic Leadership Council’s Edward Gresser wrote this past October, “Since World War II American exports have doubled about every 10 years, growing at about 8.3 percent each year.”  If the premise of the TAA is valid – namely, that workers who lose their jobs to import competition are so wronged that they deserve taxpayer assistance – are not workers who gain jobs by supplying export markets unjustly benefitted by this change in consumer spending and patterns of production?  What right have Americans who work in export markets to the incomes they earn from jobs made possible only because, by exporting more to America, foreigners are able to buy more from America?

Finally, one often-heard political justification for the TAA is that it dampens opposition to free trade.  Yet members of your party have been especially hostile to free trade.  You yourself have co-sponsored legislation to raise barriers to American imports of textiles.  If you succeed at extending the TAA program, will you pledge to oppose any and all attempts to prevent American consumers from buying from foreigners?  Will you pledge to support free trade without condition and unilaterally?

I look forward to your response.

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030

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