Here’s a letter to a regular e-mail correspondent:
Mr. Roger Wilson
You accuse me of being “blind to reality” when I suggest – as I do in a recent Café Hayek post – that government has no business imposing tariffs even on imports that are produced by industries that receive subsidies from foreign governments.
There’s much in your note that I believe is mistaken, yet I’ve no time now to address each point. But I will ask the following question: if it’s true that Uncle Sam should punitively tax American consumers who buy outputs from foreign industries that are subsidized by foreign governments, isn’t it also true that Uncle Sam should punitively tax American consumers who buy outputs from American industries that are subsidized by the American government?
For example, shouldn’t punitive taxes be levied on Americans who purchase flights on jetliners manufactured by Boeing, which receives government subsidies through the U.S. Export-Import Bank? Shouldn’t Americans who buy automobiles from General Motors and Chrysler be punitively taxed given that these firms recently received massive U.S. government handouts? Shouldn’t punitive taxes be imposed on Americans who purchase American-produced corn, sugar, wheat, dairy products, and other foods the producers of which have for decades been grotesquely subsidized by Washington?
If, as you believe, Uncle Sam is duty-bound to protect the economy by punitively taxing consumers who patronize subsidized industries, then you must agree that Uncle Sam is duty-bound to punitively tax, not only Americans’ purchases of subsidized imports, but also Americans’ purchases of those many goods and services made domestically by American firms that receive – and that lobby for – American-government subsidies. Don’t you agree?
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercator Center
George Mason University
Fairfax, VA 22030