this post from marginal revolution makes clear the problem with protectionism as a way of protecting jobs:

In Indiana, Governor Joe Kernan canceled a $15.2 million dollar contract with a subsidiary of a Bombay headquartered company. The next lowest bid was $8.2 million dollars higher. Even if we accept (incorrectly!) the notion that trade restrictions create jobs the governor's action will at best create some 50 jobs at an additional cost to Indiana taxpayers of $162,000 per job. Consider, both Indiana taxpayers and workers would be better off if the state government hired the Indians and gave 50 randomly chosen workers $100,000 to spend at their leisure.

similarly with protectionism on imports. when we put a tariff on a foreign imports in order to protect local industries, what are we doing? we're raising the price of the import so that the domestic producer can get away with charging more. so another dollar per widget or whatever goes to the domestic producer, which is good for him. but where do you think that dollar comes from? you, of course. the consumer and taxpayer. and remember a couple years ago when the government passed a $100 billion farm subsidy? that was $300 from you. remember those steel tariffs? congratulations, you paid for our steel industry to limp along for a few more years.

February 24, 2004 11:34 PM
Categories: politics
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