On Sept. 11, 2009 — unable to cope with a rapidly changing domestic economy — the United States of America declared war on the People’s Republic of China.Before you pack your loved ones into a bomb shelter, perhaps I should be more accurate.The war President Barack Obama started isn’t a nuclear war, only a trade war.Although less destructive and morally reprehensible than the assured destruction of all humankind, trade wars inhibit economic progress while violating basic tenets of morality.Two weeks ago, Obama dramatically increased the punitive tariff on tires imported from China.At the moment, Chinese producers had to pay a 4 percent duty to bring their wares into the United States. That number will increase to 39 percent starting Saturday.Although Obama has previously spoken against protectionism — using government force to hurt foreign producers — his about-face is likely fueled by a desire to win support for healthcare reform.According to United Steelworkers — the largest industrial labor union in North America — an increase in Chinese exports has led to the loss of 5,100 U.S. jobs.Some American consumers are freely choosing to buy Chinese tires instead of American tires. This choice is against United Steelworkers’ interests, so they convinced the government to increase the price of Chinese tires.Like all government action, the increased tariffs are enforced with the threat of violence. Importers pay the new duty or are forced into jail at gunpoint. Without commenting on the morality of using force to limit your customers’ choices, we can unequivocally say the new tariff limits prosperity.To put an illustrative number on the cost of the imposition, let’s assume each lost job — counting lost wages, depression and alcoholism — is $100,000. Assuming trade restrictions would have allowed all 5,100 Americans to keep their job, trading with China costs $510 million — a cost weighed against the benefits of free trade.According to United Steelworkers, those jobs were lost because tire imports tripled from 15 million in 2004 to 46 million in 2008. Chinese tires are often low-priced models, which sell for less than half of American-made brand names — which often carry a $100 price tag.Let’s generously assume American consumers only saved $20 per tire. Do the benefits of free trade outweigh the costs?Don’t reach for your calculator too quickly, because this is a trick question. The case is already numerically made for free trade, but this quick analysis also ignores additional benefits.At no point does this consider the jobs created to ship foreign tires here, the increased demand for goods created by money not spent overseas or — most importantly of all — Chinese jobs created to produce foreign tires.When Americans lose jobs, they get depressed. When Chinese lose jobs, they struggle to survive.If you have ever supported Bono-style plans to increase aid to third-world countries, then supporting free trade should be a logical extension. If it’s good to tax American corporations to give money to aid oppressive governments, wouldn’t it be even better to allow Americans to voluntarily give money to industrious members of third-world nations who are doing their best to lift themselves out of poverty?Free trade saved the economies of Singapore, Hong Kong and New Zealand. Foreign aid is still failing across Africa.To support foreign aid but deny free trade is to support giving heroin as an anesthetic to a child whose legs you broke.Unfortunately, the case for protectionism in the real world is even worse than this comparison.Violating free-trade principles also squanders good will. In the short-term, this means the Chinese close their borders to American goods — specifically chicken meat. To again be dramatic, nothing decreases the chances of war more than trade between rival powers. No one wants to attack their customers.European powers were constantly at each other’s throats for hundreds of years. Peace wasn’t economically worth it until the relatively free trade of post-WWII Europe.If we want to avoid nuclear war, we would be wise to avoid trade wars.Too many protectionist measures, and there’ll be an increase in demand for another good — bomb shelters. Daniel Morgan is a 21-year-old economics senior from Baton Rouge. Follow him on Twitter @TDR_dmorgan.————Contact Daniel Morgan at [email protected]
The Devil’s Advocate: Protectionism breeds poverty, division, nuclear war
September 23, 2009