Sunday, September 06, 2009

Correcting Unfairness With Govt. Policy Increases It

In a previous CD post, I suggested that the words "fair" (or "unfair" or "unfairly") and "fairness" are two of the most dangerous words in the English language, for reasons including:

As surely as night follows day, people who insist on using those words (e.g. "fair trade," "fair wages") almost always follow with some proposal for government intervention, government regulation, or government force of some kind to correct some perceived "unfairness" and impose their notion of "fairness." And Thomas Sowell has pointed out another danger - "fair" and "fairness" are two words that can mean virtually anything to anybody.

Here's a case in point from today's Parade Magazine:

Billions of dollars in textiles are legally imported each year. But some rogue producers are smuggling their goods into the market, thereby avoiding the tariffs and quotas designed to keep foreign-made goods from unfairly competing against U.S. products.

Notice how the assumption of "unfair foreign competition" has been followed by protectionist trade policy to correct the "unfairness" by favoring domestic producers with tariffs and quotas on foreign textiles. But what about the inevitable unfairness now for domestic consumers, who are forced to pay higher prices because of the protectionism?

Here's an alternative version of the last sentence:

But some rogue producers are smuggling their goods into the market, thereby avoiding the tariffs and quotas designed to unfairly protect domestic textile producers from more efficient foreign competitors, and unfairly force Americans (millions of consumers and hundreds of clothing-producing companies) to pay higher prices for textiles and clothing.

By using government force to correct the "unfairness" suffered by domestic producers, we have created an even greater level of "unfairness" for domestic consumers, since economic theory and empirical evidence show that the cost of trade protection are almost always greater than the benefits, leaving the country worse off. That's why "fair" and "unfair" are dangerous - the public policies designed to correct the "unfairness" actually increase the overall amount of "unfairness" and lower our standard of living. How can that be "fair?"

9 Comments:

At 9/06/2009 4:08 PM, Anonymous Anonymous said...

Welcome to the argument between Thomas Jefferson and Alexander Hamilton! It started in the Washington administration and has not since stopped. In 1832 South Carolina was prepared to nullify a tarrif until Andrew Jackson threatened them with the military. The problem is that the winners from free trade are diffuse while the looses are a smaller well defined group. It is interesting that the 2 parties have switched sides since 1800 with the democrats becoming Hamiltonians and the republicans becoming Jeffersonians. Could the location of the parties strength play some cause?

 
At 9/06/2009 4:14 PM, Blogger sethstorm said...


Billions of dollars in textiles are legally imported each year. But some rogue producers are smuggling their goods into the market, thereby avoiding the tariffs and quotas designed to keep foreign-made goods from unfairly competing against U.S. products.

The correct version, thankfully. The other version signifies an economist with a chip on his shoulder.

Increase the enforcement budget(cut some tax somewhere) and disallow any prosecution of any crimes committed against the smugglers and their enablers. That is, make them open season for about anything one can physically and electronically do to them and those who aid/abet them.


By using government force to correct the "unfairness" suffered by domestic producers, we have created an even greater level of "unfairness" for domestic consumers, since economic theory and empirical evidence show that the cost of trade protection are almost always greater than the benefits, leaving the country worse off.

Hardly, they're smuggling in cut-quality, cut-rate junk. They can't go through honest channels(which have their own proliferation of dangerous goods), thus there is indeed something wrong (in terms of the product's physical attributes as well as their financial ones) with their products that the tariff rightfully addresses.

 
At 9/06/2009 4:37 PM, Blogger juandos said...

"The correct version, thankfully. The other version signifies an economist with a chip on his shoulder"...

Hmmm, more of that gibbering Anon chided you about in the Top 4 Lessons Learned in Business School posting, eh sethstorm?

"Hardly, they're smuggling in cut-quality, cut-rate junk"...

Smuggling?!?! You of course have something credible and substantial to back up that charge, right sethstorm?

Well sethstorm maybe you should consider William L. Anderson's The Economics of Outsourcing and see if that might change your mind...

Just a thought...

 
At 9/06/2009 6:34 PM, Anonymous Six Ounces said...

Cut-quality textiles? LOL!

As usual you don't know what you're talking about. The old American textile factories didn't produce anything appreciably better than we get overseas. American servicemen have known for decades to get low price, ultra high quality custom made garments in Korea, Thailand, and the Philippines.

The SAME factories which produce $1000 Coach and Juicy bags produce "cheap" knock-offs which are nearly if not actually identical. The real "crooks" are the US retailers who price discriminate. And their victims are the WEALTHY.

I have $200 shirts which are demonstrably better quality than any off the rack shirts, but for daily casual business attire I wear cheap shirts from Ross that cost $10. I volunteer helping underprivileged kids get interview and work attire. It's absolutely amazing how much nice clothing you can get for $200. That simply would not be possible with overpaid, underworked American union textile workers. To hell with unions. I want my shirts made in Indonesia. I don't help kids get business suits so they can work in front of a sewing machine all day!

Tarriffs and quotas are a criminal conspiracy against the consumers.

 
At 9/07/2009 6:31 AM, Blogger Steve Sutton said...

One of my favorite quotes: "Fairness is a concept that was invented so that children and idiots could participate in arguments"
- Scott Adams, Dilbert cartoonist

 
At 9/07/2009 10:36 AM, Anonymous gettingrational said...

Another word that is absued is free when used in the context of free trade with non free trade counries. The great inbalance on U.S. trade relations is a drag on our recovery and can only be overcome by more consumer and gov't borrowing -- which is not free (duh)!

 
At 9/07/2009 6:52 PM, Blogger sethstorm said...

I did read that dry document; it seemed to be an apology for the practice mixed in with a Jedi Hand Wave.

As for textiles made in some foreign countries, it was the only thing available. Secondly, you perpetuate a lack of choice. By the time there are few First World manufacturers left, Congress has been bought lock, stock, and barrel by the 'out of jurisdiction, unaccountable' entities; they can just force that path against the developed nation's will.

Further, explain the flight to non-quality that products take when these countries have no fear of legal reprocussions. Whether it be textiles that fall apart faster than their domestic equivalent, automotive products that fail sooner than some 'evil overpaid union' made product, offshored labor that makes a larger mess with their nonexistent credentials, and/or electronics that are shoddily stated built, a lack of direct and visible accountability is what maintains the flight from quality.

What is missing is from those arguments on offshoring is that it never is brought openly or honestly. The same force that is attributed to unions and non-union US citizens that wish to halt it is the same force that is used to defend offshoring. The only difference is that offshoring tries to pass a cat in a bag off for a pig with regards to quality.

To bring in the union argument is to ignore the multitudes for whom are not union(and may hate them) and are affected by offshoring just as much as the prototypical 'evil union worker'.

Offshoring is just a weapon that was used on unions early on, with the unintentional consequence of harming all types of developed nation citizens that share a few common traits.

 
At 9/07/2009 9:50 PM, Blogger juandos said...

"Secondly, you perpetuate a lack of choice"...

Well then sethstorm here's your chance to step in with your money and fill a niche you think needs filling...

More slander sethstorm or do you have something credible to back up the following statement?

"By the time there are few First World manufacturers left, Congress has been bought lock, stock, and barrel by the 'out of jurisdiction, unaccountable' entities; they can just force that path against the developed nation's will"...

You know sethstorm that's what the ballot box is all about, to vote the bums out...

"What is missing is from those arguments on offshoring is that it never is brought openly or honestly"...

So why don't YOU make the honest argument with some facts to back up your beliefs?

 
At 9/08/2009 12:42 PM, Blogger ExtremeHobo said...

Sethstorm makes the argument that price equates to quality which is a very ignorant statement.

 

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