Saturday, November 03, 2007

Protectionism

First let’s see what protectionism is. According to Mr. John Webster it is the advocacy, system, or theory of protecting domestic manufacturers by impeding or limiting, as by duties or quotas, the importing of foreign commodity and services.

That sounds pretty good. It is something that volition protect the occupations of our workers from commodity that tin be produced elsewhere and undercut the terms of our local goods. How? There are a couple of ways. The wares or trade goods itself is in very large supply in another country and is mined or grown there very cheaply. Not much you can make about that. Or the labour costs of production are vastly less than our ain workers and the merchandise can be manufactured for less.

The average worker in the U.S. do about $12.00 per hr while the workers in United Mexican States get $2.00 and the people in People'S Republic Of China average 60 cents per hour. How make you vie with them? Answer - you can’t. Sol what make you do? If you are a shoe maker in the U.S. you inquire the federal authorities to impose a duty (tax) on all imported place (or maybe just the sort you make). This certain assists that peculiar cobbler who might have got 300 employees making sneakers. Now the gym shoe shaper can maintain his terms up and his workers working. That’s good.

But wait a minute. There are billions of feet that need gym shoes and that agency billions of consumers are paying more than for comparable quality sneakers. Are it just to give particular consideration to a very small grouping that automatically punishes the mass of consumers?

Examine the definition of duty again and believe it through to the end. A duty is a tax on consumers.

You are paying more than for certain commodity (and there are about 13,000 separate tariffs) than you should just for the benefit of a few makers who cannot vie in the human race market. Every country is not just a unit of measurement unto itself any more. We now have got a planetary economic system that allows specialisation of products. If a company cannot vie it should not be in business and should not punish the bulk of its citizens for the benefit of a few. You, the consumer, should not have got to pay more than for tomatoes, bandeaus and steel just so our politicians can get reelected. That is what is furuncles down to. Unions will assure to endorse certain campaigners if they will vote for duties (tax increases) that protect incompetent manufacturers. The steel duty is an first-class example. Shrub set on a duty when he could have got given a tax interruption to assist overhaul that industry. In the long tally our steel production will vanish because of continuing inefficiency. If we get into a trade warfare where one country trump cards another with more than than and more duties it is a guaranteed also-ran for everyone. Visualize this as edifice a house of cards. You stop up with a game of 52-pickup. It could travel to the ultimate of deflation and depressions for all the states of the world.

Protectionism in all of history have never worked.

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