Wednesday , November 14 2018
Home / Cafe Hayek / Tariffs are Welfare

Tariffs are Welfare

Summary:
Here’s a letter to Cafe Hayek reader Roland de Groote: Mr. de Groote : In your first e-mail to me you argued that “protection is necessary to make sure innocent workers’ incomes don’t fall with higher imports.” I replied by offering two reasons why I disagree. The first is that every day witnesses incomes earned at some particular jobs being reduced by a variety of economic forces, only some of which are imports. I see no cause for government to give special protection to workers who lose jobs to imports and not to workers who lose jobs to the likes of changing demographics, changing consumer tastes, and the introduction of labor-saving machinery. (In response you might argue that government should ensure that no job is ever destroyed for any reason. I would reply that any attempt to

Topics:
Don Boudreaux considers the following as important: , , ,

This could be interesting, too:

Wolf Richter writes “Outlook Deteriorated Even More for the Eurozone than for Germany” (Despite NIRP?)

Don Boudreaux writes Not that Pierre Lemieux Needs Me to Defend Him….

Don Boudreaux writes Some Links

Don Boudreaux writes In Fact I Don’t Complain of Being Wronged When Students Enroll at Universities Other than GMU

Here’s a letter to Cafe Hayek reader Roland de Groote:

Mr. de Groote :

In your first e-mail to me you argued that “protection is necessary to make sure innocent workers’ incomes don’t fall with higher imports.” I replied by offering two reasons why I disagree.

The first is that every day witnesses incomes earned at some particular jobs being reduced by a variety of economic forces, only some of which are imports. I see no cause for government to give special protection to workers who lose jobs to imports and not to workers who lose jobs to the likes of changing demographics, changing consumer tastes, and the introduction of labor-saving machinery. (In response you might argue that government should ensure that no job is ever destroyed for any reason. I would reply that any attempt to carry out such a policy, by utterly destroying the market economy, would return us quickly to dark ages.)

My second reason is that, if you insist that society owes a duty to workers whose incomes fall because of imports, then a far better means than protective tariffs of fulfilling this alleged duty is for government to give cash handouts to those workers. At least this way, this ‘duty’s’ cost would be shared by all taxpayers rather than concentrated on consumers who purchase the protected outputs.

You object to my cash-handout point by arguing that such handouts “aren’t dignified…. People need meaningful work not welfare.”

I object to your objection. Where is the dignity in keeping workers in jobs artificially? There is nothing at all dignified about working at jobs that exist only because government agents coercively prevent consumers from buying imports that compete with goods and services produced by protected workers. Jobs and businesses that exist only because of protectionism are parasitical on wealth produced by those who follow the rules of competitive markets.

Protective tariffs protect, not meaningful work, but wasteful – meaningless – work. Protective tariffs enrich a handful of people at the greater expense of their fellow citizens. Protective tariffs are welfare – and welfare that, because the coerced income transfers are less obvious than government cash grants, is far more insidious and worse than are cash handouts.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

……

Note that I do not support such a policy of cash handouts. I note only that such a policy would be superior to a policy of protectionism.

Comments

Don Boudreaux
He is a professor of economics at George Mason University in Fairfax, Virginia. Previously, he was president of the Foundation for Economic Education.

Leave a Reply

Your email address will not be published. Required fields are marked *