Skip to comments.Economic stupidity
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 ...
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!
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.
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.
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.
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.
Great piece by Williams and so appropriate. Thanks for posting.
Damn, I was all set for Gram and pulling the wagon!!
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..
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.
Washington reigns supreme over the 50 states, and insanity reigns over Washington.
God help us all. The inmates are running the asylum.
Nope, we’re in the boat and Pelosi is dressed up like Curley with a water-letter-outer in her hand. /ObscureStoogesReference
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.
And a nuclear world war will not do for Obama what WWII did for Roosevelt in 1941.
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.
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.
Congress approves spending. The Democrats have been in charge for 2 years.
Looks like we’re close to the ‘30 level. Hopefully it won’t take another 10-11 years to get back to “normal”.
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 thats 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.
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.
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.
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.
“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!
“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.
There is NO reason for this to be a full time job...
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.
His archive: http://townhall.com/columnists/WalterEWilliams
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