Richard Morrison, Jeremy Lott and the American Spectator’s Joseph Lawler assemble to bring you Episode 77 of the LibertyWeek podcast. We explore the Massachusetts Senate race, Google vs. China on web censorship, the debate over global warming in Detroit, the cost of doing business in Venezuela and the inspiring philanthropic response to the humanitarian crisis in Haiti.
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Regulation begets rent-seeking. When government assumes the power to regulate imports, domestic firms will lobby to use that fact to their advantage.
Case in point: Home Products International (HPI), an American company, makes ironing tables. So does Hardware, a Chinese company. I personally have no idea which firm makes the better ironing table. That’s for consumers to decide.
Or at least it should be for consumers to decide. But it doesn’t always work that way in practice. HPI seems to have already made that decision for us.
At HPI’s request, the International Trade Administration will continue to add anti-dumping duties to the price of the Chinese-made ironing tables. That way HPI doesn’t have to worry as much about competing. Sorry, consumers.
Is this fair? Of course not. But all too often, it is how regulation works.
Consumers have been buying a lot of tires made in China lately. Naturally, U.S.-based tire manufacturers are upset at their competitors’ success. Fortunately, there are two ways for the aggrieved American firms to ease their troubled minds:
1: Make better tires for less money. Give consumers a reason to buy American tires rather than Chinese. Compete, in other words.
2: Don’t compete. Too much hard work. Instead, persuade some politicians to place a 35 percent protective tariff on competitors’ tires. Price them out of the market. Then keep making the same old tires that people don’t want. If the tariff is large enough, you may even be able to raise your prices, even without raising quality.
This is a choice between raising the bar and lowering it. Unfortunately, U.S. tire firms and allied politicians have chosen to lower it. China, by putting up its own barriers to retaliate, is lowering the bar even further.
The really audacious part is that tire tariff supporters think they are really helping the economy. Raising that bar. Saving American jobs!
There is something very unsettling about the notion that an American job is intrinsically more valuable than a Chinese job. We are all human beings, are we not?
This is an ugly, ugly mindset. And it is one that politicians and tire companies have explicitly adopted. The burden is on them to explain why they think people who live in one country are more deserving of economic opportunity than people who live in another.
India and China talk the Al Gore talk of climate Armageddon and the necessity for urgent action — yet their emissions keep going up and they refuse to adopt emission caps or carbon taxes. The world’s two most populous countries with the biggest “emerging” economies act on the premise that global warming policies are more dangerous than global warming itself. It’s time for their words to match their deeds, as I explain today on MasterResource.Org.
In Washington, beware any proposal that attempts to “level the playing field.” What is usually meant is hobbling competition with restrictive rules and regulations that often raise costs for consumers. On the international playing field, such “leveling” can have broader disastrous consequences.
That’s likely to be the case with the House Ways and Means’ misguided proposals to impose carbon taxes on imports from countries that haven’t taken stringent measures to control greenhouse gas emissions.
It turns out that the huge and complex energy bill – the Waxman-Markey bill – is scheduled to be voted on Friday. It sets up a “cap and trade” system by setting a limit on carbon emissions and issuing tradable allowances. The bill got some carbon-intensive industries realizing the high costs they would have to pay under the program and then pass on to their customers. They and environmental groups eager to suppress energy use talked about “leakage,” that is, firms in countries that didn’t have strict emission standards would be able to offer lower prices, and other firms might move to those countries as well. Their solution? Hit those foreign imports with a hefty tax too, and Ways and Means is figuring out a way to do that.
China, India, and other powerhouse developing countries are the main bugbears. Yet going down that road to protect domestic industries could put our fragile economy in a tailspin. CEI and others have written about the increased costs to consumers from suppressing the use of fossil fuels that supply more than 80 percent of U.S. energy. At a time when many families are struggling with bills, adding these new costs will be a hefty burden. Assessing carbon taxes on imports from certain countries would mean that consumers would get no relief from those increased costs.
Perhaps the main threat, however, is to the whole economy of the U.S. Countries like China and India won’t sit back and take this blow to their exports. They will likely retaliate with trade measures against the U.S. possibly affecting a broader range of products. In fact, China’s top climate change official Li Gao had suggested that countries importing goods from China might themselves pay for the emissions created in their production. Those large developing countries point out that they have only recently been experiencing rapid industrialization and economic growth, in contrast to the developed world, and do not want to be penalized and have their growth curtailed, as millions of their people are still living at a subsistence level.
The U.S. border measures – and perhaps the free allowances offered under cap-and-trade –will undoubtedly face challenges in the World Trade Organization, which can go on for years and further disrupt the world trading system.
Also, the threat is real that retaliation might be initiated outside the trading system. Currently, China holds almost one-quarter of all U.S. debt held by foreign countries. Suppose China threatened to dump some of its holdings?
Let’s hope policymakers have more sense than to vote “yea” for this economically destructive bill.
Your faithful host Richard Morrison welcomes back special guest co-hosts William Yeatman and Michelle Minton for Episode 46 (listen HERE!). We start with the investors that are getting worked over by the politically-distorted bankruptcy of Chrysler, the ascension of the Swedish Pirate Party to the European Parliament and the Great Porn Wall of China. We then move on to proof that beer is better for you than water, a sign that airline travel may get more expensive, and an example of how voters deal with corrupt politicians. Finally, we wind things up with some very educational Olympic News.
Richard Morrison and Cord Blomquist team up with special guest co-host Jeremy Lott to bring you Episode 41. We begin with a farewell to famed quarterback, Republican Congressman and former CEI Distinguished Fellow Jack Kemp. We then move on to China’s flu-related roundup of Mexican nationals, the race to replace Justice Souter and the new opportunity to SuperPoke the President of the United States. We round out the show with Andrew Cuomo’s allegations of scandal and a modest helping of Olympic News.
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