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.”

The Small-Time Landlord vs. Big-Time Tenants’ Rights - The Bay Citizen

The Small-Time Landlord vs. Big-Time Tenants’ Rights - The Bay Citizen

The Cost of Meth Prohibition - The Atlantic

Must reading - another illustration of the costs of intervention by the state. Just like other wars fought by the state, the War on Drugs has provided a myriad of examples that confirm that, in the area of choice over consumer goods (pharmacuticals being a key consumer product) the costs of government intervention far outweight the benefits and this state action makes society worse off by any metric one would use to evaluate economic welfare.

The persistence of state action in this arena also confirms Ronald Reagan's observation that the closest thing to immortality is a government program.

I fear our great grandchildren will confront this same issue - with a far smaller and inferior set of pharmacuticals.

McArdle's example:


My husband is suffering from a pretty nasty cold. Last night he had to duck out before dinner with my family to purchase some Sudafed, because he was miserably congested. Alas, not being aware of the difference, he decided it wasn't worth waiting in line to buy cold medicine from behind the counter, and instead bought the stuff on the shelf. He took some, and then suffered through dinner until we could get home to my box of 24-hour Sudafed. This morning he came down and said, "It's amazing how much better you feel when you take medicine that actually does something." Then after a pause, he said, "So why do they sell you cold medicine that doesn't do anything?"

If you've been following drug laws at all, you'll know that you can no longer buy cold medicine with pseudoephedrine without getting a clerk to get it for you from behind the counter, and signing for it. That's because pseudoephedrine is an ingredient in the most popular amateur syntheses of methamphetamine. By making it hard to get, authorities hoped that they could fatally damage the meth trade.

The Cost of Meth Prohibition - The Atlantic

Is Regulation for Sale

Pratt asks "Is Regulation for Sale?" The question should be is there any regulation that does not provide benefits to special groups. As long as democracy enables diffused costs and concentrated benefits to guide legislation, regulation is nothing but a saleable service; that is why it is referred to as rent seeking and rent providing. Moreover, the larger the size of government, the greater the returns to rent seeking. Allocating resources to non-productive activities -- rent seeking -- becomes increasingly a better policy for firms than allocating resources to productive activities.

A case in point is the Dodd-Frank financial regulation bill just enacted. It is a full package of benefits to special interests. We should have a look at the bill. In a future post we will.