Friday, February 29, 2008

Smoot – Obama – Hawley – Clinton

A to the point editorial from the NY Sun:

“What a sad showing from candidates who are going around promising to repair the Bush administration's supposed alienation of our friends around the world. Is this how they plan to do it? By dealing with our neighbors and trading partners in Canada and Mexico with threats and ultimatums? If the ploy backfires, American consumers could wind up paying more for everything from Mexican avocados to Canadian lumber and maple syrup.”
It’s certainly interesting to note that the leading candidates for ‘restoring America’s moral authority’ in the world want to start with offending our trading partners, implementing isolationism, and impoverishing all of us.

Equally interesting is that this will likely make the illegal immigration problem worse, to the extent that by refusing to trade with Mexico, or by making Mexican goods prohibitively expensive, we’ll be throwing Mexicans out of work. Which, of course, adds to the incentives to come here illegally.

NAFTA is a convenient whipping boy for Ohio’s problems, but restricting trade with Canada and Mexico is unlikely to solve any of them. Or, for that matter, bring back the ‘lost’ jobs. Are there cases where jobs have moved out of state or out of country? Sure, and it’s not much consolation to people who have lost their jobs to observe that on balance, we are better off with lower tariffs and more trade.

Preventing trade by increasing tariffs, regulations, and protectionism doesn’t grow the economy; it just locks the old and inefficient into place. It also threatens exports. If your job or business depends on selling products to Canada or Mexico, your income is at risk, since they won’t be selling to us, and their governments will likely feel the need to retaliate against American products.

We can’t make ourselves rich by increasing the costs associated with making, buying, and selling things. All trade barriers to is to increase costs and reduce incomes and wealth.

Assuming that we’re still either still teetering on the edge of recession around January of next year, there’s nothing like a good round of trade warfare to make things worse.