Online:
Visits:
Stories:
Profile image
By Cafe Hayek (Reporter)
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

Primitive Minds

Wednesday, February 22, 2017 16:27
% of readers think this story is Fact. Add your two cents.

(Before It's News)

(Don Boudreaux)

Tweet

Here’s a letter to a new and intrepid correspondent:

Mr. Nolan McKinney

Mr. McKinney:

You point to Harley-Davidson’s resurgence after Ronald Reagan drastically raised tariffs on imported large motorcycles as “evidence of protectionism strengthening our economy.”

Harley’s resurgence is evidence of no such thing.  The argument against protectionism is not that it doesn’t help the particular firms that are shielded from the competition of foreign rivals.  Of course protectionism helps such firms.  The chief economic argument against protectionism is, instead, that the gains that it creates for protected producers come at the greater expense of consumers and of other domestic producers.  Reagan’s tariffs diverted resources artificially to Harley-Davidson.  Those resources came from somewhere.  What goods and services were consumers thereby unable to purchase?  What firms were thereby unable to get the resources they needed to expand or to be launched?  What new jobs weren’t created?  What workers failed to get raises?  And how many motorcyclists were killed because, given the tariff-induced higher price of new motorcycles, these motorcyclists put off buying new bikes while they kept their older and more-rickety bikes longer than otherwise?  Harley’s post-tariff success unlikely compensates for these losses.

But even if, by some weird chance, that specific 1983 tariff did improve Americans’ overall economic welfare, it still does not constitute a case for protectionism.  As the great trade economist Harry Johnson wrote, “To the primitive mind, one case of magic’s working (or seeming to work) is sufficiently impressive to confirm faith in magic against a long series of experienced failures.”*  In other words, to embrace protectionism because of one or two successes (or apparent successes) is primitive.  America’s public policies should not be primitive.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* Harry G. Johnson, “Mercantilism: Past, Present, and Future” (1973), reprinted in H.G. Johnson On Economics and Society (Chicago: University of Chicago Press, 1975), page 274.

A still-excellent read on the 1983 Harley tariff is this 1984 paper by my now-colleague Dan Klein.



Source: http://cafehayek.com/2017/02/42285.html

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories
 

Featured

 

Top Global

 

Top Alternative

 

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.