Saturday, June 11, 2011

Do tariffs actually reduce imports?

This is not the question that should be asked, rather what is the effect of protectionism on economic welfare and growth. Moreover, a secondary effect of protectionism is to shape attitudes and activity toward rent seeking from the state. i would argue that this leads to a set of actions that are immoral and, more importantly, an expansion of this immorality into the public consciousness.

"Rather depressingly, the article reveals a problem that often occurs with government intervention.... “The only Americans getting more work as a result of the tariffs are Washington lawyers, who have been hired by both U.S. and Chinese companies. Their work includes haggling each year over private “settlement” payments that Chinese manufacturers denounce as a “protection racket.”

Fearful of having their tariff rates jacked up, many Chinese furniture makers pay cash to their American competitors, who have the right to ask the Commerce Department to review the duties of individual companies. Those who cough up get dropped from the review list.”

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