More Trade Barriers Means More Corruption

US politicians tell us that we need to impose tariffs to stop foreign nations from ripping us off. Many economists disagree, arguing that it is not foreign nations but US businesses that rip off the American consumer by advocating for tariffs and import quotas. American consumers benefit when they are allowed to purchase the products they need at the cheapest cost, whether those products come from China, Brazil, California, or Florida. Walter E. Williams asked “Who can be against less expensive trade goods? You’ve got it. The businessmen and unions, and the congressmen who represent them” (1987, p. 74). Thomas Sowell writes that tariffs are taxes that benefit US businesses by making imports more expensive, “…and thus enable domestic producers to charge higher prices for competing products…” (2015, p. 495). Jobs in the protected industry are saved, but jobs in other industries disappear since consumers have less money to spend on other goods and services. We are led to believe that politicians restrict trade for the public good, but Left-leaning economist Paul Krugman argues that US trade policy has historically been a deeply corrupt process which primarily benefitted the politically connected. The disastrous Smoot-Hawley Tariffs of the 1930s, that many argue exacerbated the Great Depression, were passed because “…enough members of Congress were bought off, one way or another, to enact legislation that almost everyone knew was bad for the nation as a whole” (2021, p. 246). Douglas Irwin uses the US sugar industry as an example of how corruption can plague trade deals at the expense of consumers. Wealthy US sugar plantation owners spend thousands on lobbying and are rewarded with legislation that restricts the supply of imported sugar. These restrictions increase the profits of a small number of large plantation owners and increase prices for consumers. The result is that American food producers and consumers are charged around two or three times more for sugar than the rest of the world. Irwin observes that “The rationale for rewarding a few wealthy sugar producers with hundreds of millions of dollars every year at the expense of consumers has never been made clear” (2020, p. 91).  

— Colin Braman

References

Douglas Irwin (2020). Free Trade Under Fire (5th ed.). Princeton University Press.

Paul Krugman (2021). Arguing with Zombies: Economics, Politics, and the Fight for a Better Future. W. W. Norton & Company.

Thomas Sowell (2015). Basic Economics: A Common Sense Guide to the Economy (5th Ed.). Basic Books.

Walter E. Williams (1987). All it Takes is Guts: A Minority View. Regnery Books.