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Jewish World Review
Oct. 18, 2006
/ 26 Tishrei, 5767
Trade restrictions stick it to consumers
The Washington Post wants us to think that Anita Dungey won a heroic small-business victory over big business. But all she really did was stick it to American consumers and punish workers in some poor country.
Dungey's family owns Auburn Leathercrafters in upstate New York, a company that makes dog collars and leashes, some as expensive as $100. Thanks to a tariff on its foreign competitors, Leathercrafters can charge more for its products than it could charge in a free and competitive market.
Recently Dungey discovered that Congress, exercising a little-known power and urged on by Wal-Mart, was about to suspend the tariff for three years. She panicked. Loss of the restriction on her competitors would have been "devastating" for her, she said. "The suspension is . . . just about long enough to put most of the small guys out of business."
So, in the words of the Post, she "launched a one-woman campaign against four bills" that would have suspended the tariff. Her campaign succeeded. The suspension was cancelled.
The Post reported the story as a David-versus-Goliath tale." [T]ax breaks delivered to corporations in the form of tariff suspensions have gone largely without public notice," said the Post.
What? How can the removal of a tariff from a foreign company be a tax break for an American company? A tariff taxes foreign goods and helps domestic manufactures charge higher prices than they could in a free market. By any definition, that's a special-interest privilege. Government interferes with free trade to help favored businesses. But if a tariff is a privilege, how can suspension of a tariff also be a privilege? I guess in the topsy-turvy world of Washington, everything government does or doesn't do is a privilege for someone.
Thanks to the tariff Dungey's company enjoys, you and I are forbidden to buy cheaper dog collars from foreigners eager to sell them to us through Wal-Mart. Those foreign collars are probably made by workers with very low incomes. Selling their products in the big American market gives them a chance to climb out of poverty. The tariff is a blow against them in favor of the tony items sold by Leathercrafters. How is that fair?
The Post also claimed that Congress's power to suspend tariffs "cost taxpayers hundreds of millions of dollars in lost revenue." But anyone who thinks tariffs are good for taxpayers needs to wake up and smell the money. The only way a tariff can produce tax revenue is by forcing consumers to pay more for things they want. So whatever taxpayers seem to gain through tariffs is cancelled out by what consumers lose in higher prices. Defenders of tariffs look at only one side of the ledger while pretending that a dollar in your pocket is equivalent to a dollar in a government account. I'd rather have the dollar in my pocket.
I am sympathetic with those who dislike the influence-peddling involved in selective tariff suspensions. But there's an easy answer to that: Get rid of all tariffs permanently!
A free and competitive economy meaning free trade and no tariffs is the best deal for consumers. So let's get the politicians out of the way. If they have no privileges to dispense, no special interests will be lining up to influence them.
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