Economist Walter Williams points out the following:
In his 2012 State of the Union address, President Barack Obama boasted that "over 1,000 Americans are working today because we stopped a surge in Chinese tires." According to a study done by the Peterson Institute for International Economics (http://tinyurl.com/jdtbktu), those trade restrictions forced Americans to pay $1.1 billion in higher prices for tires. So though 1,200 jobs were saved in the U.S. tire industry, the cost per job saved was at least $900,000 in that year. According to the Bureau of Labor Statistics, the average annual salary of tire builders in 2011 was $40,070.Here's a question for those of us who support trade restrictions in the name of saving jobs: In whose pockets did most of the $1.1 billion that Americans paid in higher prices go? It surely did not reach tire workers in the form of higher wages. According to the Peterson Institute study, "most of the money extracted by protection from household budgets goes to corporate coffers, at home or abroad, not paychecks of American workers. In the case of tire protection, our estimates indicate that fewer than 5 percent of the consumer costs per job saved reached the pockets of American workers." There is another side to this. When households have to pay higher prices for tires, they have less money to spend on other items -- such as food, clothing and entertainment -- thereby reducing employment in those industries.
Those corporate officers who line their pockets with millions of extra dollars extracted from consumers by means of the violence imposed by the state never mention this. They want the public to believe that the tariff is a benefit to workers. There is some marginal benefit to specific workers in protected industries. But if we're talking about who really profits from tariffs, we should not focus on workers. We should focus on the employers of a tiny handful of workers who are benefited by the tariffs.
The ability to look beyond the immediate is a truly remarkable ability. The great economist Henry Hazlitt discussed this in his book, Economics in One Lesson (1946). He quoted from a French economist a century earlier: Frédéric Bastiat. Bastiat spoke about the thing seen and the thing not seen. In this case, President Obama, or at least his speech writer, saw 1,000 jobs that were saved as a result of tariffs on tires. But he did not see the jobs lost in those industries that did not get orders from American consumers, because consumers paid money that they would not have paid, had there been no tariff on tire manufacturers.
There are naïve people who believe that the imposition of a sales tax on imported goods is a good thing for them and for the economy generally. They oppose taxes in every other area, but when the sales tax on imported goods is called a tariff, they support the imposition of this tax. Tariffs are a favorite tax within what is sometimes called the Tea Party movement. Members of the Tea Party think of themselves as opponents of taxation, but they are not opponents when it comes to tariffs.
Whenever you read that a politician is in favor of saving American jobs by imposing a sales tax on imported goods, keep your hand upon your wallet and your back against the wall. If this politician persuades other politicians to join with him, they will soon be coming after your money. They are not coming after your money in the name of making fat-cat corporate managers richer. They are coming after your money in the name of benefiting workers who will lose their jobs if the politicians don't steal your money. They think you will be supportive if they tell you this. In other words, they regard you as a mark.
Are you a mark? You are if you believe that the imposition of sales taxes on imported goods will save American jobs or even create American jobs. They will do so only at the expense of customers who are forced to pay more, and also at the expense of workers in the export industry. Exports will fall, because foreigners will not be able to get access to dollars by selling goods to Americans. They need dollars to buy the goods, and they won't have the dollars.
Do you really want higher sales taxes? You do if you vote for any politician who says that this nation needs tariffs in order to protect workers. What he is really saying is that the workers to be protected are senior managers in large manufacturing firms. You, as a consumer, will be required to pay these senior managers extra money because you will not be allowed to buy higher-quality goods that have been exported from a foreign country. You are going to have to pay more for lower-quality goods that are produced by manufacturers who do not have to pay the sales tax.
We should not be surprised that senior corporate managers want tariffs imposed on competitors outside the country. Everybody likes subsidies from the federal government.
We should also not be surprised that senior corporate managers do not publish statistics on where the extra money goes after it is extracted from consumers who would not otherwise have purchased the overpriced products that the firms run by the senior managers have sold to them.
If consumers want to pay more for foreign goods, that is their prerogative in a free society. If consumers want to line the pockets of senior managers of manufacturing companies, that is certainly their right as free people. But I don't think consumers really want to do this. I think consumers are looking out for their own interests, not the interests of senior managers of American manufacturing firms. Call me cynical if you like. That's my view.
If consumers really do want to subsidize corporate senior managers, there would be no need for the government to impose tariffs. But consumers are not willing to do this. They must be forced by the state to pay this extra money to line the pockets of senior managers in American manufacturing firms. The government does this in the name of protecting workers on assembly lines. But it is not these workers who are the main beneficiaries of tariffs. Tariffs provide gravy trains for senior managers.
I suggest that you refuse to vote for people who want to create gravy trains for senior managers at the expense of consumers. You are a consumer. You are not a senior manager. I suggest that you vote in your own self-interest.
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