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The New Mercantilism

Former student Sam Wecker writes in the American Thinker:

While the banner of good intentions or “job protection” is raised by the special interest groups when championing such mercantilist trade policies as increased taxes on Chinese tires, rarely are the results of these “good intentions” placed under close scrutiny.  Questions tend to arise, like “What about all the industries heavily invested in tire purchases?”  “How would this affect their employment rates?”  “What about all the jobs lost or never created because of the increase in the price of tires due to the shift of the tax burden?”  “Do tire corporations have the right to raise the price of tires for all Americans simply because they can’t survive without their big brother taking care of the big, mean, competition-driven bullies when the latter come to town?”  “And what about domestic competition?”  “Perhaps the U.S. should tax other successful American companies who are ‘too successful’ if they outperform others in the same sector, causing a decrease in employment and productivity.  On what principle(s) are these preferentially selected actions justified?”

Great point Sam. Often opponents of good economics castigate us for using reductios, but in the realm of trade, the reductios do apply. We ought to tax technology too by the same mercantilist arguments. One thing I wished Sam would have done was to show his readers just how many “jobs were saved” by these tariffs (static, short-term savings, because the long run is a different story) and at what cost. I recall calculating the number being in the hundreds of thousands of dollars spent per job saved.

Sam was an extremely thoughtful student of mine back when I taught at Centre College in Kentucky.

2 Responses to “The New Mercantilism”

  1. chuck martel says:

    Wow! You were at Centre College! When just a child one of my favorite books was the story of the early 20s Centre College football team with Bo McMillan that ended Yale’s long unbeaten streak and defeated other national powers. A very inspiring story about an exceptional group of young men that stressed sportsmanship and fair play that seems to be absent from college athletics today.

  2. Speedmaster says:

    Fantastic points and question.

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