Thursday, February 4, 2010

Tariffs Cost Jobs, Not Save Them!

It is the time of year when I am teaching my Eco classes the mantra "TRADE IS GOOD!". One of the few things that most economists agree upon is that free trade is beneficial to all economies, and that "protectionism" (tariffs, quotas, etc.) are evil. Some people don't believe this. They think if we put a tariff on imported steel, we will save steelworkers jobs. Perhaps, but at the cost of more jobs throughout the rest of the economy, particularly in industries that use a lot of steel.

Don't believe me? Then read Prof. Mark Perry's Carpe Diem blog about sugar tariffs. A quick summary: It costs the US $826k for every sugar growing job "saved" in this country, and for every sugar growing job "saved" by tariffs, there are 3 jobs lost in industries that use sugar. Oh, and the price of sugar in the US is twice the world price.

So, in fact the tariff LOSES jobs! And, it makes your Hostess Cupcakes more expensive.

1 comment:

Budd Bailey said...

Does that apply to Twinkies too? If so, I'm writing Congress.