Wednesday, November 28, 2012

Shoe Prices Are Going Up...

...but don't blame the retailers or manufacturers.

from Protectionism is a Rip-Off:
The Obama administration, without warning, announced that it opposes prolonging a suspension of tariff walls on the materials that go into making these specialty products. To put it plainly, there is going to be a new tax on imports on your shoes. And it begins on Jan. 1, 2013.


Why would the Obama administration do this? I have no inside knowledge. But if this action fits most such actions, it comes down to a political payoff for some industrial competitor somewhere. It has nothing to do with saving jobs. It is saving some friends of the government at the expense of everyone else. Another possibility is that this action helps give more work and power to the U.S. Customs agency and its public-sector union.


I’m particularly intrigued by these kinds of actions because they suggest the real way that government undertakes its dirty work. Mostly, it is out of public view. It consists of petty bureaucrats working with various industry groups to rig the system in favor of whoever has the political power and muscle to pull it off. The public debates and the elections have very little at all to do with it. In fact, there is no debate about most of what government does.

It’s not so much that it takes place in secret. Most all information is publicly available. The problem is that no one but the most affected have the incentive to watch what is happening in any particular sector on a day-by-day basis. That’s why, if you really want to know what government is doing to business, you have to ask an industry expert. Only they get the communique. Only they have a strong incentive to act.

People think of protectionist policy as a benefit to domestic businesses. This is not true. This is a clear case in which most of the harm of the protectionist policy is done to American business. The reason is that economic production takes place over many stages of production, and these are ever more spread throughout the world. A tax on imports ends up affecting domestic manufacturers and sellers, imposing artificially high costs of doing business.

The cause of free trade has always been about the common man. It is about the right of average people to trade with whomever they want. Protectionism, in contrast, is another way for powerful people to extract money from our pockets and reward their political friends with legal favors. In other words, it’s a rip-off.

You and I might be reminded of this in the dead of winter 2013, when that pair of hiking boots we had our eyes on suddenly soars in price and, instead of buying, we decide to stay home in our slippers and contemplate the fate of liberty in our time.

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