Op-Ed on Our China Petition
As Congress contemplates protectionist policies against China, led by Senators Chuck Schumer and Lindsey Graham, Club President Pat Toomey has an op-ed ($) in today's Wall Street Journal about our petition. Excerpt:
While the signatories on this petition will certainly disagree on a host of other issues -- at least 20 signed a 2003 petition against the Bush tax cuts -- they all agree that, in the words of the petition, "there is no foundation in economics that supports punitive tariffs."
Adam Smith long ago observed that "It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy." As members of Congress should know -- but unfortunately don't -- the maxim of the family applies equally to a nation. This simple truth explains the irresistible logic of free trade.
Free trade among and between people of various nations is the mechanism that allows producers to maximize their comparative advantage while consumers maximize the value they receive for their dollar. Free trade allows American producers to sell jets and software to the Chinese, while American consumers buy toys and apparel from China -- a win-win proposition for both buyer and seller.
Protectionists attempt to disrupt the market's natural tendency to seek efficiency by imposing tariffs in order to artificially increase the price of foreign goods relative to domestic competition. Thus, tariffs are simply a tax on American consumers, and it would be Americans, more than the Chinese, who pay the price. The very people Sens. Schumer and Graham claim to help will suffer from the higher prices, fewer jobs and potential trade war that will result from their legislation.
Posted at Andrew Roth at 8:18 AM | TrackBack
