Here’s a letter to Yahoo!Finance.
Editor:
Your SmartAsset Team writes that “protective tariffs can help emerging industries and preserve jobs within a country” (“What Do Governments Typically Place Tariffs On?” January 5). This description of tariffs’ effects could be more exact.
First, tariffs do not preserve employment within a country. Because the resources that protection directs to favored industries are drawn away from other industries, for every particular domestic job preserved by tariffs there is another domestic job destroyed by tariffs.
Second, protective tariffs can help – by directing resources to them – established (or even dying) industries no less than emerging ones. And in practice, the chief recipients of tariff protection are established industries. Think tariffs on steel, aluminum, and agricultural products – none of which are produced by industries that are “emerging.” Unlike with established industries, most of the workers, suppliers, investors, and owners of emerging industries don’t yet exist as such. Hence, these persons don’t do what is done by workers, suppliers, investors, and owners of many established industries, namely, from interest groups that lobby for protection.
It’s true that protectionists frequently portray themselves as visionary champions of the “industries of the future,” but this portrait is false. Not only is there no reason to suppose that protectionists have keener insight into what the future holds than do entrepreneurs and investors spending their own money, most of the “industries of the future” that are championed by protectionists are revealed, upon inspection, to be established industries lavished and gussied-up with resources forcibly directed away from unprotected industries – some of which would likely have proven truly to be industries of the future.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
