A reader asks about my
recent post on Trump's tariffs:
"I don't get everyone's blathering about Trump
issuing tariffs to help our domestic steel industry. The President of the United States has an obligation to the steel
workers in the US
My response:
Even if we ignore the
central point of what I wrote - that Americans themselves are better off
without the tariffs (and heaven knows why we'd ignore it, but let's do it
anyway for the moment) - one of the rules of thumbs I find generally reliable is that if you transplant a proposition to analogous real life examples and find it doesn't fly analogically, there is a
good chance that your proposition doesn't fly in the case you want it to either.
I will offer some examples. So remember the
proposition here is that Trump should compensate domestic workers from the
threat of foreign competition. So I ask you to think of one other instance in real
life where we would countenance such an idea as a moral or rational equivalent.
When Tesco opens a
superstore in a nearby town, we don't have an obligation to compensation the
local high street businesses. When Amazon can deliver CDs and books to your
door at the cheapest rate, we have no obligation to compensate HMV and
Waterstones. When average looking Dave loses out to handsome Mike in the
pursuit of Kerry's affections, we don't think they have an obligation to
compensate Dave for remaining single. When more and more women began to enter the
labour market, no one thinks that the government should have compensated
men for the increased competition for their jobs. The list goes on.
Similarly, when Americans
are made better off by foreign competition in the form of lower consumer costs,
the fact that no analogous compensatory situation exists
anywhere else in society speaks volumes about its absurdity. Foreign
competition should no more be punished for entering the US economy and making
Americans better off than increased competition from women, online traders and
large supermarkets should be punished for making people better off.
Finally, as I said in a
Facebook post in March, when Trump was first tweeting threats about tariffs
against the EU:
"Trade is not like a
race where you try to untie the laces of fellow competitors in order to make it
harder for them to cross the line. In trade deals, the best situation for all
the runners is everyone crossing the line together with their laces intact:
that is, by all participants removing tariffs and subsidies. Trying to partake
in a trade war with other countries by imposing tariffs is like trying to slow
them down in a race by tying your own laces to theirs - you both become
inhibited in trying to run."
And here is what so many
don't understand about trade that they would understand with absolute clarity
if it were a running race: even if others wish to run with their laces untied,
you are still better off if you run with yours tied up, and encourage others to
tie up their own laces and join you over the finish line.
