Posted on 03/19/2002 5:46:41 PM PST by oursacredhonor
The administration’s recent decision to impose a 30 percent tariff on steel imports was disappointing to free trade advocates. This measure will hurt far more Americans than it will help, and it takes a step backwards toward the protectionist thinking that dominated Washington in decades past. These steel tariffs also make it quite clear that the rhetoric about free trade in Washington is abandoned and replaced with talk of "fair trade" when special interests make demands. What most Washington politicians really believe in is government-managed trade, not free trade. Government-managed trade means government, rather than competence in the marketplace, determines what industries and companies succeed or fail.
It’s easy for some lawmakers to make emotional arguments that tariffs are needed to protect the jobs of American steelworkers, but we never hear about the jobs that will be lost or never created when the cost of steel rises 30 percent. Tariffs are taxes, and imposing new tariffs means raising taxes. Apparently no one in the administration has read Henry Hazlitt’s classic economics text, Economics in one Lesson. Professor Hazlitt’s fundamental lesson was simple: We must examine economic policy by considering the long-term effects of any proposal on all groups. The administration instead chose to focus only on the immediate effects of steel tariffs on one group, the domestic steel industry. This has nothing to do with fairness, and everything to do with political favors. The free market is fair; it alone justly rewards the worthiest competitors. Tariffs reward the strongest Washington lobbies.
We should recognize that the cost of these tariffs will be borne by nearly all Americans, because steel is widely used in the cars we drive and the buildings in which we live and work. The tariffs will especially affect Texas, where building trades use large amounts of imported steel. We will all pay, but the cost will be spread out and hidden, so no one complains. The domestic steel industry, however, has complained- and it has the corporate and union power that scares politicians in Washington. We hear a great deal of criticism of special interests and their stranglehold on Washington, but somehow when we prop up an entire industry that has failed to stay competitive, we’re "protecting American workers." What we’re really doing is taxing all Americans to keep some politically-favored corporations afloat.
If we’re going to protect the steel industry with tariffs, why not other industries? Does every industry that competes with imported goods have the same claim for protection? We’ve propped up the auto industry in the past, now we’re doing it for steel, so who should be next in line? Virtually every American industry competes with at least some imports.
What happened to the wonderful harmony that the World Trade Organization was supposed to bring to global trade? The European Union and other steel-producing nations are preparing to impose retaliatory sanctions to protect their own steel industries, setting the stage for a potential global trade war. Wasn’t the WTO supposed to prevent all this squabbling? Those of us who opposed U.S. membership in the WTO were scolded as being out of touch, unwilling to see the promise of a new global prosperity. What we’re seeing instead is increased hostility from our trading partners and threats of economic sanctions from our WTO masters. This is what happens when we let government-managed trade schemes pick winners and losers in the global trading game. The truly deplorable thing about all of this is that the WTO is touted as promoting free trade!
It’s always amazing to me that Washington gives so much lip service to free trade while never adhering to true free trade principles. Free trade really means freedom- the freedom to buy and sell goods and services free from government interference. Time and time again, history proves that tariffs don’t work. I sincerely hope that the administration’s position on steel does not signal a willingness to resort to protectionism whenever special interests make demands in the future.
He couldn't be more right.
Combining this overcapacity with subsidies by their governments makes the playing field off-level for our workers, who are also facing the fact that their multinational corporate owners prefer to move their jobs overseas. Once overseas, then these same companies sell the product that Americans used to make here in America. Imposing tariffs on things like this will serve to keep those jobs here in the US.
Rep Paul is pandering to the Libertarians and the 'Rats on this one, and his reaction is for the press - typically knee jerk in fashion IMHO. What was once an "America First" and "Constitution First" type of representative is turning into a "me first" one. Too bad he doesn't bother to research what he says before saying it.
Until the rest of the world plays fairly - by removing their subsidies, removing the tariffs imposed upon American goods, and truly trading freely and fairly, tariffs are in our national interest. Mr Bush was RIGHT, Rep Paul is WRONG.
I agree:
Bush's action's are a step in the right direction, but still inadequate due to inconsistancy.
The optimal solution is a relatively low, across-the-board revenue tariff of 10-20% on ALL imported goods from ALL foreign countries.
"Targeted" tariffs have the disadvantage of providing loopholes and, as others will be quick to point out, the potential to hurt other domestic industries.
A prime example is our failed embargo on the importation of Cuban goods. Cuban sugar has been routinely imported to the U.S. through the back door: Canada. Cuban sugar is shipped to Canada where it is dissolved in molasass. "Canadian" molasass is then legally imported to the U.S. where the sugar is easily refined back out. The leftover molasass is then exported back to Canada where the cycle is repeated. Large sugar-users (such as candy makers) are also closing their domestic factories and moving to Canada where they can legally use Cuban sugar, then import it as candy to the U.S.
An across-the-board revenue tariff of 10-20% would circumvent this type of abuse. Additionally, the revenue could be used to offset a major reduction or elimination of the corporate income tax, providing domestic producers a more "level playing field". (A Proposal to Abolish the Corporate Income Tax)
From a historical perspective, a revenue tariff of 10-20% is NOT excessive:
I doubt it. Developing nations are exempt from the tariff. We'll see their exports to us increase. This tariff is helping developing countries more than the USA in fact. Our mills have raised prices already so now foreign manufacturers have a decided edge over Americans. UAW and other jobs will be lost.
I merely quoted the only statement worth repeating.
Ron Paul is capable of making his own perversions.
You quoted a retorical question posed by Congressman Paul. Your methods of debate are almost as despicable as your intelligence level on matters of international trade.
Now I want everyone that thinks our current foreign steel suppliers (Russia, China, Europe, Japan, et al.) will still be our good buds 10, 20, 50 years from now, willing to sell us their steel at bargain basement prices, to raise their hands. Come on all you crystal ball gazers.
I think taking the pure libertarian position on this issue is shortsighted and dangerous to our long term national security. I'll bet China and Brazil can build lots of our military hardware cheaper than we can build it here, but everyone would agree that would be crazy. I think the steel industry is important enough that we can't afford to let it die.
You shouldn't allow envy to make you so hateful.
Are you really that ignorant? Do you really believe that we would go barefoot just because one country decides to stop selling us shoes? Personally, I pray the Chinese stop selling us shoes. I've got some capital I'm itching to plow into scarce commodities with high demand. Aren't you?
This is the iron law of economics that the corrupt, unionized, inefficient U.S. steel industry has been breaking itself against for the last 50 years.
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