by Sam Selikoff March 13, 2010

This protectionist nonsense coming out of Congress is killing me. If China subsidizes sectors of its manufacturing industry, and sells those goods to us at the reduced price, we are better off. That is, so long as we allow US firms using these goods as inputs to purchase them tariff-free from China. This would be undeniably clear if the situation were taken to absudity. If China decided to give us valuable goods in exhange for nothing in return, we should surely be willing to accept this deal. We would be able to produce the same amount of goods and services with fewer resources, which is the definition of an increase in productivity. The US manufacturing workers would have new opportunities for work in the US as a result of the free Chinese inputs.

Instead, some in Congress (Gene Taylor, for one) seem keen on “leveling the playing field for US manufacturing firms” – by which they really mean punishing US firms that use these goods as inputs, US consumers that buy goods made of these inputs, and Chinese laborers working in plants that produce these goods. The only group that benefits is – suprise! – a small group of US producers highly interested in getting a bureaucrat or two to champion our “public interest” and warn people of “issues of national security” all while effectively funneling hundreds of millions of taxpayer dollars into their hands.

I guess my point is, if we want to discourage increases in the productivity of Americans, and penalize US taxpayers, I can think of many simpler ways. For example, we could get rid of cell phones & modern communications equipment and pay people to operate switchboards. Or, better yet, why not just break the windows of every large building in all the country’s major cities, and pay people to put them back together?

How basic economic truths continue to remain enshrouded in darkness on Capitol Hill amazes me.


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