Diary

Leveling the playing field?

With the plight of the Big Three Automakers front and center in the news for the past few months, much has been made about the so called “leveling” of the playing field for American automakers.  In this case, “leveling” the playing field, means imposing tariffs and trade restrictions on foreign automakers commensurate with those imposed on American automakers in overseas markets.

Imposing import quotas and high tariffs on American automobiles drives up the price of American automobiles in the particular market and makes them less attractive to consumers.  Conversely, imposing equal trade restrictions on foreign automakers, no doubt, would benefit domestic automakers.  Imports, supply and competition would be reduced and American automakers would have their home market protected.

A forgotten consequence of “leveling” the playing field via tariffs and trade restrictions is that it imposes higher prices on consumers.  The American consumer would be forced to pay more for automobiles leaving them with less money to spend on other products.  The American consumer would, in effect, be subsidizing the American automobile industry.  Further, the “level” playing field would be diverting American labor and resources away from what it can do efficiently to what it does less efficiently.  The net result of the “leveling” is the impairment of the free market to the detriment of the consumer.

To paraphrase the great economist Walter E. Williams, just because other countries are ripping off their people doesn’t mean I want our government to rip us off.  The only thing I would add to that is “any more than they already do”.

God help us!

Crippy