… is from page 156 of Robert Frank’s 2007 book, The Economic Naturalist :
Producers gain less than half the cost imposed on American consumers, yet political support for tariff repeal remains elusive because the benefits of the tariff are concentrated and its costs highly diffuse.
DBx: Frank here refers to a study of the consequences for us Americans of Uncle Sam’s punitive taxes on our purchases of sugar. Yet a core point – which is that the benefits of such special privileges are outweighed by their costs – is perfectly general (even if the specific proportion of always-smaller benefits to always-larger costs varies from tariff to tariff, from time to time, and from country to country*).
* Pedants, as well as rent-seekers, will point out that economists have discovered theoretically possible conditions under which the benefits to the nation of a tariff might exceed the costs to the nation of that tariff. Indeed so. A great many things are possible. Sitting here at my desk I can easily describe a scenario in which burglary or arson are socially productive. But public policy is not a laboratory to test the theoretical quirks revealed in papers presented in graduate seminars or in academic journals. Public policy, which is, or ought to be, about rules – must take the world as it is likely to be .