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Posted by: thepinetree on 03/08/2018 01:19 PM Updated by: thepinetree on 03/08/2018 01:31 PM
Expires: 01/01/2023 12:00 AM

Tariffs: Turning Abundance Into Scarcity By Rep. Tom McClintock, CA-04

Roseville, CA...Frederic Bastiat, the great 19th Century economist, posed a simple question we need to think about carefully as we consider tariffs and trade wars. What is better: abundance or scarcity? The answer might seem self-evident, yet protectionists throughout history can’t seem to grasp it.

If a dollar can only buy one widget from Pittsburg, but two from Ontario, the path to abundant widgets for America is obviously through Canada. If we slapped a dollar tariff on Canadian widgets to “level the playing field,” then we have just cut our own country’s available supply per dollar by half. It’s a perfect way to create scarcity from abundance.

Similarly, by imposing a tariff on Canadian steel (by far our biggest foreign supplier), the price of steel for Americans rises, and with it, the price of everything from cans to cars.

To the protectionists, this is a small price to pay for “saving” American steel jobs. Yet, as Bastiat reminds us, the unseen is just as important as the seen. We see the American steel jobs preserved by ridding them of international competition. What we don’t see as clearly are the jobs soon to disappear in every American industry that uses steel, as demand for their products declines in response to higher prices. Every producer in a society is also a consumer. No consumer benefits from higher prices and no producer benefits from scarcer materials.

This has been the consistent experience of every nation that has succumbed to the sophistries of protectionism. Thomas Jefferson thought that high tariffs could fund the government and promote domestic manufacturing. The result was a devastating recession that nearly destroyed our fledgling economy. Herbert Hoover responded to the recession of 1929 with the Smoot-Hawley Tariff Act. It didn’t end well.

All trade is the exchange of goods, and both parties must benefit if the trade is to happen. If I pay you a dollar for a cup of coffee, I’m telling you that your coffee is worth more to me than my dollar, and you’re telling me that my dollar is worth more to you than your coffee. We both take away something of greater value than we had.

Now suppose someone slaps a dollar tariff on that cup of coffee. I end up buying less coffee, or less of other products to afford the higher price, or switching to tea.

True, some governments subsidize their exports, undercutting their unsubsidized domestic competitors. But how does it harm our overall economy if other countries are willing to help pay for the stuff we buy? As Milton Friedman observed, that’s simply foreign aid to American factories and consumers, paid for by the unfortunate taxpayers in the exporting countries. Thank you.

We will lose some of the 140,000 American jobs that produce steel. But the other 6.5 million Americans who manufacture products using steel can make more of their products, causing their producers to hire more workers and to pay them more. Jobs disappear in the steel mills, but reappear as better jobs in industries that can now obtain more steel at lower prices.

Writing 150 years ago, Bastiat asked the question we still hear today: “What shall we do in case of war, if we have placed ourselves at the mercy of Great Britain for iron and coal?” He answered, “This sort of dependence which results from exchange…is a reciprocal dependence. We cannot depend on the foreigner unless the foreigner depends on us.” If war clouds should gather between Canada and the United States, we may face the prospect of losing cheap Canadian steel, but Canada would face the loss of cheap American resources and products that their steel exports buy. Trade reduces the risk of war because it increases the value of peace.

Bastiat noted how much we invest in ports and harbors, railroads and highways, all for the sole purpose of surmounting the obstacles that nature has placed in our ability to trade. What sense does it make to erect artificial barriers to replace the natural barriers we have overcome?

By that same token, President Trump has set the stage for rapid economic expansion by reducing the tax and regulatory burdens that were crushing our economy, and the economy is responding. What sense does it make to replace the taxes and regulations we have shed with new ones?

Comments - Make a comment
The comments are owned by the poster. We are not responsible for its content. We value free speech but remember this is a public forum and we hope that people would use common sense and decency. If you see an offensive comment please email us at
Posted on: 2018-03-08 13:34:35   By: Anonymous

[Reply ]

    Posted on: 2018-03-08 14:07:41   By: Anonymous
    Thank you! Best post on here, perhaps EVER in the history of posts!!!

    [Reply ]

      Posted on: 2018-03-08 15:08:38   By: Anonymous
      Even better than...

      HA HA HA HA HA HA?

      [Reply ]

      Posted on: 2018-03-08 16:09:43   By: Anonymous

      [Reply ]

I Think Tom is Right, Again
Posted on: 2018-03-08 13:37:14   By: Anonymous
Tom McClintock is sounding more and more like a moderate and less and less like an extremist. I agree that we may gain 150,000 high paying steel mill jobs but we will lose much more in the manufacturing sector. While many of use look for that "Made in the USA" label, the vast majority of American consumers are looking for the lowest price.

[Reply ]

    Re: I Think Tom is Right, Again
    Posted on: 2018-03-08 13:39:36   By: Anonymous
    No their not.

    [Reply ]

      Re: I Think Tom is Right, Again
      Posted on: 2018-03-08 13:42:54   By: Anonymous
      Walmart is the prime example of price versus production location.

      [Reply ]

      Re: I Think Tom is Right, Again
      Posted on: 2018-03-08 13:45:43   By: Anonymous
      Product of taxpayer coerced, compulsive dis-education?

      [Reply ]

    Re: I Think Tom is Right, Again
    Posted on: 2018-03-08 16:41:14   By: Anonymous
    Porn Star President = Porn Star Ecomomic Theory

    [Reply ]

No Subject
Posted on: 2018-03-08 13:44:28   By: Anonymous
The argument above runs just as well about the disaster income taxes
are to labor.

Income taxes and tariffs need be relegated to the unenlightened past.

[Reply ]

    Re: Cohn's Resignation Bears This Out
    Posted on: 2018-03-08 14:14:15   By: Anonymous
    The resignation of Trump's chief financial adviser, Gary Cohn, corroborates this. This ex-Goldman Sachs executive is no dummy. He knows that the Titanic is starting to sink and when the gettin' is good.

    [Reply ]

No Subject
Posted on: 2018-03-08 13:58:43   By: Anonymous
Well, McClintock gets this one right, so I suppose it just means the steel and aluminum users give him more money than the steel and aluminum makers.

Hopefully Congress takes some action to keep the idiot Trump from keeping this campaign promise. Like all the other Trump promises it came straight out of his ass and was put in his mouth to be spoken. No thinking involved. No understanding involved.

There are 6th graders who know more about world trade and economics than Trump does. Trump makes W seem like a genius.

[Reply ]

    Posted on: 2018-03-08 14:14:03   By: Anonymous
    In the picture, snapped in the darkness of a Wilton vineyard, Jack Kautz crouches behind a dead buck, smiling broadly as he holds up the animal’s head by its freakishly large set of antlers.

    It was a buck for the record books – with sprawling antlers about an arm’s width apart. If Kautz, 52, had been able to claim it as an official trophy, he could have added it to his long list of accomplishments detailed on the website of his family’s Lodi grape growing business, Ironstone Vineyards.

    [Reply ]

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