Wednesday, January 16, 2008

Protectionism = Bullying = Extortion

Mitt Romney and John McCain battled over what the government owes to workers who lose their jobs because of the foreign competition unleashed by free trade. Surely we have fellow citizens who are hurt by free trade agreements, at least in the limited sense that they’d be better off in a world where trade flourishes, except in this one instance. What do we owe those fellow citizens?

One way to think about that is to ask what your moral instincts tell you in analogous situations.

Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web. Do you have an obligation to compensate your pharmacist? If you move to a cheaper apartment, should you compensate your landlord? When you eat at McDonald’s, should you compensate the owners of the diner next door? Public policy (protectionism) should not be designed to advance moral instincts that we all reject every day of our lives.

Bullying and protectionism have a lot in common. They both use force (either directly or through the power of the law) to enrich someone else at your involuntary expense. If you’re forced to pay $20 an hour to an American for goods you could have bought from a Mexican for $5 an hour, you’re being extorted. When a free trade agreement allows you to buy from the Mexican after all, rejoice in your liberation — even if Mr. McCain, Mr. Romney and the rest of the presidential candidates don’t want you to.

~From Steven Landsburg's excellent article in today's NY Times


At 1/16/2008 9:57 AM, Anonymous Anonymous said...

If you’re forced to pay $20 an hour to an American for goods you could have bought from a Mexican for $5 an hour, you’re being extorted.

Is this really just support of those who would avoid, bypass or circumvent immigration laws?

At 1/16/2008 10:29 AM, Anonymous Anonymous said...

Ok, I will say it (once) "maybe free trade is bad" - but ONLY when the crushing regulations of the federal government make it almost impossible for companies to compete in the free market.

The feds CAN help Detroit - by getting out of the way! Get rid of the CAFE standards and crush the unions - all you need to do is overturn the Sherman Act (the Labor Monopoly Act) - for starters. The U.S. could make good cars if it wasn't for the unions. Ack.

At 1/16/2008 10:54 AM, Anonymous Anonymous said...

marko said:
"The U.S. could make good cars if it wasn't for the unions. Ack."

Do you have any current and specific data that show cars/trucks, union-made or not, are 'bad"? Here are mine: Have you seen the news that the Chevrolet Malibu is the Car of the Year and Cadillac’s CTS is winning all types of awards year, and last year’s Chevrolet Silverado was Truck of the Year? In addition, Buick’s 2004 LeSabre model (since discontinued) tied the Lexus in three-year dependability ratings last year.

Other than rehashing old news, marko: What do you have? I’m willing to listen.

At 1/17/2008 4:36 PM, Blogger Marko said...

Ok, how about the U.S. auto industry could be more competative it was not for unions. I did not mean to say, and I don't think I said, that U.S. cars are bad. I just stopped buying them because the interiors are - to me - crappy compared to my Acura.

At 1/17/2008 6:52 PM, Anonymous Anonymous said...


The logical opposite of “good” cars is “not good” cars. I made an assumption that "not good" cars meant bad cars. And, I see a lot of difference between your statement about bad cars and an unprofitable/competitive company.

When the perceived quality of car matches the actual quality of cars, sales will go up, and profitability will return. All the automotive quality rating companies agree (J.D. Powers etc.) that a fine line separates the quality of cars manufactured in the U.S. today. The worst of today is better than the best were just a few years ago. The customer is winning the quality contest.

As you noted, sales are increasingly determined by styling (such as your “crappy” interior). It’s sad to say that is out of the reach of unions. Unions can make them better if they are allowed to. In 35 years, I’ve never had a union person tell me to pull rejected material and ship it to customers, but management has. Finger pointing, though, won’t solve the problems.

Nicer, prettier, or more fuel-efficient cars? That’s a management decision that unions have little say about.

At 1/18/2008 3:03 PM, Anonymous Anonymous said...

You allexcept for Marko missed the point of the article. Free Trade gives the consumer a choice and is the most effecient way to produce and deliver a product--less interference and restrictions from governments and more choices for consumers.

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