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Economic stupidity
Townhall.com ^ | May 1, 2003 | Walter E Williams

Posted on 02/08/2009 10:56:27 AM PST by NonValueAdded

Imagine that you and I are in a rowboat. I commit the stupid act of shooting a hole in my end of the boat. Would it be intelligent for you to respond by shooting a hole in your end of the boat?

[snip to fit the excerpt rule; read the full article. NVA]

Both of these scenarios are applicable to the Bush administration's 30 percent steel tariffs imposed last year. Those tariffs caused the domestic price for some steel products, such as hot-rolled steel, to rise by as much as 40 percent. The clear beneficiaries of the Bush steel tariffs were steel industry executives, stockholders and the approximately 1,700 steelworker jobs that were saved.

Tariff policy beneficiaries are always visible, but its victims are mostly invisible. Politicians love this. The reason is simple: The beneficiaries know for whom to cast their ballots, and the victims don't know whom to blame for their calamity.

According to a study by the Institute for International Economics, saving those 1,700 jobs in the steel industry cost American consumers $800,000 in the form of higher prices for each steelworker job saved. That's just the monetary side of the picture. According to a study commissioned by the Consuming Industries Trade Action Association, higher steel prices have caused at least 4,500 job losses in no fewer than 16 states -- over 19,000 jobs in California, 16,000 in Texas, and 10,000 in Ohio, Michigan and Illinois.

(Excerpt) Read more at townhall.com ...


TOPICS: Business/Economy; Extended News; Politics/Elections
KEYWORDS: economy; protectionism; tariffs; walterwilliams
[emphasis added] above

Please note the article is from 2003 but Mike McConnell highlighted it in yesterday's program as one of the many fine segments in that show. If you can find a podcast, I'm sure it is worth a listen.

Obviously the Bush blunder was a "teachable moment" that doesn't require going all the way back to Smoot-Hawley. Look at the brilliant observation by Mr. Williams in the article that we'd be better off paying those steel workers $100k each than using tariffs. The unintended consequences of Bush's action are astonishing. Talk about a Keynesian multiplier!!!

Definitely worth a read and a spreading of the word. WTG, Mr. Williams!

1 posted on 02/08/2009 10:56:27 AM PST by NonValueAdded
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To: Tolik

Dear FRiend, for your consideration. The article is from 2003 but is very applicable to current thinking in Washington. IMHO Walter E Williams nailed it and this is worth everyone giving it another read.


2 posted on 02/08/2009 11:01:57 AM PST by NonValueAdded (Play the new "rehab" card: apologize for cheating on your taxes)
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To: NonValueAdded

Excellent.


3 posted on 02/08/2009 11:03:18 AM PST by kenavi (Cherchez de midi a deux heures. Drill now.)
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To: NonValueAdded

My business felt the impact of the Bush steel tariff in a major and immediate way.

I was in the sheet metal business, and had to absorb the increased cost of materials, which essentially came right out of profits and off my family’s table.

That tariff turned what had been a very good paying business into a pauper’s trade for my wife and I.


4 posted on 02/08/2009 11:03:22 AM PST by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: NonValueAdded
Dr. Williams, my apologies for using the lesser title.

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.

5 posted on 02/08/2009 11:07:16 AM PST by NonValueAdded (Play the new "rehab" card: apologize for cheating on your taxes)
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To: Windflier

Thanks for adding your testimony. We’d be so much better off with Congress out of session and the Executive Order pen in a lock box.


6 posted on 02/08/2009 11:08:20 AM PST by NonValueAdded (Play the new "rehab" card: apologize for cheating on your taxes)
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To: NonValueAdded

Great piece by Williams and so appropriate. Thanks for posting.


7 posted on 02/08/2009 11:09:26 AM PST by jazusamo (But there really is no free lunch, except in the world of political rhetoric,.: Thomas Sowell)
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To: NonValueAdded
Walter Williams is a genius. Period.
I would PROUDLY cast my vote for POTUS for him.... (anti-Obama, racist-hater that I am) < /sarcasm >
8 posted on 02/08/2009 11:11:41 AM PST by MamaLucci (Let's ALL "forget" to pay our taxes.....hey, nobody's perfect....)
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To: NonValueAdded
Imagine that you and I are in a rowboat.

Damn, I was all set for Gram and pulling the wagon!!

9 posted on 02/08/2009 11:14:37 AM PST by org.whodat (Conservatives don't vote for Bailouts for Super-Rich Bankers! Republicans do!)
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To: Windflier

Why would you have to absorb the cost??? If the price of steel went up for you, it went up for your competitors as well..


10 posted on 02/08/2009 11:15:30 AM PST by Iscool (I don't understand all that I know...)
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To: Windflier

People who support tariffs only look at the immediate effect. What’s lost is who gets hurt through the higher costs the tariffs impose. I’m not opposed to minimal tariffs for revenue (although in this day and age they’re not nearly as important), but I don’t support them for the purposes of trade isolation and protectionism.


11 posted on 02/08/2009 11:15:32 AM PST by djsherin (The federal government:: Because someone has to f*** things up!)
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To: NonValueAdded

Washington reigns supreme over the 50 states, and insanity reigns over Washington.

God help us all. The inmates are running the asylum.


12 posted on 02/08/2009 11:17:12 AM PST by StatenIsland
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To: org.whodat

Nope, we’re in the boat and Pelosi is dressed up like Curley with a water-letter-outer in her hand. /ObscureStoogesReference


13 posted on 02/08/2009 11:17:46 AM PST by NonValueAdded (Play the new "rehab" card: apologize for cheating on your taxes)
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To: NonValueAdded
LOL, I was wondering how many remembered that story of Gramms and pulling the wagon!!!
14 posted on 02/08/2009 11:23:26 AM PST by org.whodat (Conservatives don't vote for Bailouts for Super-Rich Bankers! Republicans do!)
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To: NonValueAdded
"Those tariffs caused the domestic price for some steel products, such as hot-rolled steel, to rise by as much as 40 percent."

Yeah, just like it caused oil and copper to go up.


15 posted on 02/08/2009 11:24:50 AM PST by familyop (combat engineer (combat), National Guard, '89-'96, Duncan Hunter or no-vote, http://falconparty.com/)
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To: NonValueAdded

Gross Domestic Product (ref. 1929 dollars in millions)

Year    GDP

1929   101,444
1930    91,513
1931    84,300
1932    70,682
1933    68,337
1934    74,609
1935    85,806
1936    95,798
1937   103,917
1938    96,670
1939   103,736
1940   112,961
1941   126,237

Source: National Bureau of Economic Research, NBER Series 08166.




16 posted on 02/08/2009 11:28:45 AM PST by familyop (combat engineer (combat), National Guard, '89-'96, Duncan Hunter or no-vote, http://falconparty.com/)
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To: NonValueAdded
"Obviously the Bush blunder was a "teachable moment" that doesn't require going all the way back to Smoot-Hawley."

President Hoover signed the Smoot-Hawley Bill in June of 1930, BTW.

Compensation from before World War I through the Great Depression

by Robert VanGiezen and Albert E. Schwenk
Bureau of Labor Statistics

John T. Dunlop and Walter Galenson, eds., Labor in the Twentieth Century (New York, Academic Press, 1978), p. 30.

Dunlop and Galenson, p. 27.

Year Unemployment rate

1923-29

3.3

1930

8.9

1931

15.9

1932

23.6

1933

24.9

1934

21.7

1935

20.1

1936

17.0

1937

14.3

1938

19.0

1939

17.2

1940

14.6

1941

9.9

1942

4.7



17 posted on 02/08/2009 11:36:21 AM PST by familyop (combat engineer (combat), National Guard, '89-'96, Duncan Hunter or no-vote, http://falconparty.com/)
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To: familyop

And a nuclear world war will not do for Obama what WWII did for Roosevelt in 1941.


18 posted on 02/08/2009 11:38:48 AM PST by NonValueAdded (Play the new "rehab" card: apologize for cheating on your taxes)
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To: Iscool
Why would you have to absorb the cost??? If the price of steel went up for you, it went up for your competitors as well..

My friend, my competitors and I all got poorer, overnight. Our increased costs were too much for the consumer market to bear, so our retail prices moved little, if at all.

19 posted on 02/08/2009 11:38:59 AM PST by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: NonValueAdded
We’d be so much better off with Congress out of session and the Executive Order pen in a lock box.

Ain't that the truth.

Matter of fact, there's no mandate in the Constitution for our legislature to spend as much time legislating, as they do.

Obviously, the Congress only spends so much time in Washington because they're up to their own business - not The People's.

Heck, they could get our business out of the way in a couple of sessions a year.

20 posted on 02/08/2009 11:45:35 AM PST by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: NonValueAdded
The beneficiaries know for whom to cast their ballots, and the victims don't know whom to blame for their calamity.

The victims are of course the immediate casualties of the wrongheaded economic policies, but the beneficiaries are also victims, except not in the near term.

As long as the beneficiaries don't understand the long term effect of bad policy, then they'll believe themselves to be the winners. But, in the long term, they too will lose when other products and services have to increase their prices to make up for the increased cost of the beneficiaries' products. With higher costs for their products (and services), the market for those products decreases and there will be the need to cut the number of jobs in the industry of the perceived "beneficiaries". The consequences will have been longer term, but they always will occur.

However, there will always be those that, even when they understand the consequences of bad economic policy, they will only care about "getting theirs".

The one group that cares the least about consequences and long term harm are, of course, the politicians who only care about the immediate gains they can make with an economic policy which gains them favor with a particular constituency or industry. Eventually, the stupidity of bad economic policy catches up with the economy and the people within that economy. Politicians will, in the proverbial sense, cross that bridge when they get to it. But, when the bridge has to be crossed, we get more bridges that need to be crossed at a later dates.

When the consequences to politicians are negligible or none, like with the mortgage and financing crisis in the last year, then we'll be getting more idiotic economic decisions along the way. It took a long time for the mortgage crisis to build up, and most people out there are not capable of understanding how we got to the current economic mess. The wrong people get blamed or the people aren't smart enough to understand. And now, the politicians who gave us the economic mess are in the position of spinning their way out of blame and are well placed to give us more of the same.

When the people are so dumbed-down that they wouldn't understand the consequences of bad policy, then we're well positioned to be put into much deeper doo-doo by the politicians who only care about gaining votes or voters.
21 posted on 02/08/2009 11:48:00 AM PST by adorno
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To: NonValueAdded
"And a nuclear world war will not do for Obama what WWII did for Roosevelt in 1941."

Did you notice that the GDP started going up in 1934? That's true, though, about nuclear exchanges not being likely to help the economy, unless those are followed by forced production (as during WWII) for more conventional warfare. But then with the policies that our leaders have practiced over the past couple of decades (fears of high freight fuel in certain favored constituents and their pocket politicians), they're just appeasing and waiting for the enemy to further build his nuclear arsenals and start launching.

As for the Democrats, it would be funny, if they were cornered into drafting a few million fatherless brats for a real war.


22 posted on 02/08/2009 11:52:05 AM PST by familyop (combat engineer (combat), National Guard, '89-'96, Duncan Hunter or no-vote, http://falconparty.com/)
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To: NonValueAdded

Congress approves spending. The Democrats have been in charge for 2 years.


23 posted on 02/08/2009 12:34:00 PM PST by FreedBird (BB)
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To: familyop

Looks like we’re close to the ‘30 level. Hopefully it won’t take another 10-11 years to get back to “normal”.


24 posted on 02/08/2009 12:53:32 PM PST by Oatka ("A society of sheep must in time beget a government of wolves." –Bertrand de Jouvenel)
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To: familyop

The actual unemployment rate at present is 13.9%, as measured by the U-6, Bureau of Labor statistics—this was the measure used during the Depression. It includes everyone in the official unemployment rate plus ‘marginally attached workers,’ who are neither working nor looking for work but say they want a job and have looked for work recently, and people who are employed part-time for economic reasons — they want and are available for full-time work but took a part-time schedule because that’s all they could get. We could get to 33% unemployment under this definition in a hurry. I just pray that the unintended consequences of the pig trough spendulus package won’t be as severe as they look to be.


25 posted on 02/08/2009 1:11:43 PM PST by richardtavor (Pray for the peace of Jerusalem in the name of the G-d of Jacob)
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To: richardtavor
"I just pray that the unintended consequences of the pig trough spendulus package won’t be as severe as they look to be."

I agree. Most of it is being spent to keep the same unproductive government and other special private interest employees of the various states on payrolls.


26 posted on 02/08/2009 1:28:10 PM PST by familyop (combat engineer (combat), National Guard, '89-'96, Duncan Hunter or no-vote, http://falconparty.com/)
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To: Oatka
"Looks like we’re close to the ‘30 level. Hopefully it won’t take another 10-11 years to get back to 'normal'."

It will, if we don't get to manufacturing useful products. The vanities of most of our current special government and business leaders appear to be boundless, so that's probably the way that it will be.


27 posted on 02/08/2009 1:31:46 PM PST by familyop (combat engineer (combat), National Guard, '89-'96, Duncan Hunter or no-vote, http://falconparty.com/)
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To: org.whodat

I remember Gramm’s analogy very well. He spent a lot of time in Iowa when he was campaigning for president. I was a Gramm supporter.


28 posted on 02/08/2009 1:50:02 PM PST by Conservativegreatgrandma (When the righteous rule, the people rejoice; when the wicked rule the people mourn. Proverbs 29;2)
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To: NonValueAdded; TigerLikesRooster; M. Espinola; All
Rising Jobless Rates Hit 98% of Metro Areas

High jobless rates are hitting all across the nation. Some regions have been hit harder than others. I still believe government is playing games with unemployment statistics.

Excerpt:

Indiana's Elkhart-Goshen region saw its unemployment rate soar to 15.3 percent in December, up a whopping 10.6 percentage points from December 2007. The region has been bruised by layoffs in the recreational vehicle industry. Hundreds of workers have lost their jobs at RV makers such as Monaco Coach Corp., Keystone RV Co. and Pilgrim International. * * *

Dalton, Ga. — home to many flooring manufacturers and nicknamed the carpet capital of the world — racked up the second-largest increase. The region's unemployment rate jumped to 11.2 percent, up 6.2 percentage points from a year earlier, as fallout from the housing market's collapse has cut demand for carpets and other household goods. * * *

Danville, Va., which saw its jobless rate bolt to 11.5 percent, had the third-biggest increase of 5.6 percentage points. The area's economy once relied primarily on the tobacco and textile industries and has not yet recovered, interim City Manager M. Lyle Lacy III said Wednesday. * * *

Many of the highest jobless rates were concentrated in California, which got walloped after the booming housing market went bust. * * * El Centro, Calif., continued to lay claim to the nation's highest unemployment rate — 22.6 percent. The jobless rate is notoriously high in the area, where many unemployed are seasonal agriculture workers, including some who live in Mexico.


29 posted on 02/08/2009 2:01:14 PM PST by ex-Texan (Ecclesiastes 5:10 - 20)
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To: Windflier

“Matter of fact, there’s no mandate in the Constitution for our legislature to spend as much time legislating, as they do.”

Heck in Texas our legislature only meets every two years - or in an emergency. They create budgets that are good for two years and adjust as needed.

There is NO reason for this to be a full time job unless of course you are having hearings on whether there should be a college football playoff system or the all important did Clemens use steroids!!???!?!?!?!!

Our elected officials put the A$$ in asinine!


30 posted on 02/08/2009 6:17:55 PM PST by ExTxMarine (For whatsoe'ver their sufferings were before; that change they covet makes them suffer more. -Dryden)
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To: NonValueAdded

“Imagine that you and I are in a rowboat. I commit the stupid act of shooting a hole in my end of the boat. Would it be intelligent for you to respond by shooting a hole in your end of the boat?”

Not if the goal is to sink the boat.


31 posted on 02/08/2009 6:23:55 PM PST by ViLaLuz (2 Chronicles 7:14)
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To: ExTxMarine
Heck in Texas our legislature only meets every two years - or in an emergency. They create budgets that are good for two years and adjust as needed.

There is NO reason for this to be a full time job...

Absolutely.

The US Congress could probably get all of their work for the year completed in a month or two.

All of the rest of the time they're in Washington is spent picking our pockets, meddling in our lives and our economy, and figuring out new ways to subvert the Constitution.

32 posted on 02/08/2009 10:50:35 PM PST by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: NonValueAdded; Lando Lincoln; neverdem; quidnunc; .cnI redruM; Valin; King Prout; SJackson; ...

Dr. Walter E. Williams Nails It every time !

His archive: http://townhall.com/columnists/WalterEWilliams

This ping list is not author-specific for articles I'd like to share. Some for the perfect moral clarity, some for provocative thoughts; or simply interesting articles I'd hate to miss myself. (I don't have to agree with the author all 100% to feel the need to share an article.) I will try not to abuse the ping list and not to annoy you too much, but on some days there is more of the good stuff that is worthy of attention. You can see the list of articles I pinged to lately  on  my page.
You are welcome in or out, just freepmail me (and note which PING list you are talking about). Besides this one, I keep 2 separate PING lists for my favorite authors Victor Davis Hanson and Orson Scott Card.  

33 posted on 02/09/2009 5:35:10 AM PST by Tolik
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To: Tolik

Bookmark


34 posted on 07/09/2012 1:20:32 PM PDT by publius911 (Formerly Publius 6961, formerly jennsdad)
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