Tuesday, July 17, 2018

The Spinning Washing Machine Production Question



Another Don Boudreaux letter to arch-protectionist correspondent Nolan McKinney:
Like you, I read in the Wall Street Journal that Trump’s tariffs on washing machines are prompting Samsung and LG to consider opening factories here in the U.S. Unlike you, I do not regard the jobs that will be created in those factories as a “benefit” of Trump’s tariffs. These jobs, in fact, are among the tariffs’ costs.
The reason begins with the fact that workers diverted by the tariffs into the production of washing machines in the U.S. are diverted away from producing goods and services that they would otherwise have produced. The reason concludes with the reality that without the tariffs we Americans would have been able to acquire the same number of washing machines by expending less labor and fewer resources. Therefore, any and all washing machines produced in America only because of those tariffs will be produced wastefully. The costs of producing them will be artificially and unnecessarily high.
To count as benefits the jobs that are created only in response to tariffs is akin to counting as benefits the extra work and expense that homeowners, seeking to protect their homes from being robbed, put forward in response to an increase in neighborhood burglaries.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
…..

The above originally appeared at Cafe Hayek.