Tuesday, December 6, 2016

Open Letter to “Dilbert’s” Scott Adams: You Are Wrong

Mr. Scott Adams
Mr. Adams:
Commenting on Pres.-elect Trump’s threats to punitively tax American consumers who purchase imports from U.S. companies that offshore some or all of their production, Rep. Justin Amash (R-MI) Tweeted “American consumers are taxed even if no companies move.  Tariff increases production costs & limits competition.  This is basic economics.”
In response to Rep. Amash, you disagree, Tweeting “No, the whole point is that no company would move with that risk hanging over them.  So no tax is triggered.”*
Rep. Amash is right and you are wrong.  Although no formal tax collection is triggered if Mr. Trump’s threats prevent all offshoring, Trump’s tariff – by restricting competition – would artificially reduce outputs and raise prices.  American consumers would pay unnecessarily higher prices, an outcome inseparable from the very purpose of the tariff.  That consumers pay these extra, unnecessary amounts to domestic producers rather than to domestic customs agents is irrelevant: the tariff forces all consumers of these products to pay extra, unnecessary amounts to some small group of fellow Americans who, rather than earn these higher payments, extract them using threats of state coercion.
Donald J. Boudreaux
Professor of Economics
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.


  1. Wrong! This open letter moved the goalposts and thus set up a strawman 'proving' Scott Adams wrong. Justin Amash wrote that it would be a "35% tax on all Americans", meaning that Americans would have to pay 35% more for air conditioners. That is objectively untrue, and thus Amash is wrong and Adams is right.

  2. Professor Boudreaux and Justin Amish are missing Adams' point just to be more "intellectual", just like the libertarians who argue that Fed-generated inflation is not a "tax".

    Sometimes there are reasons to be hypertechnical if you're working with a team to solve a problem, or publishing an academic paper. However, Adams is making a point in a more interesting way that might get more people to understand the bottom line of what is going on with Trump's proposals. There is value in that even if it is not technically correct just like Ron Paul's invocation of the term "inflation tax" was useful.

  3. All is OK. Those people that lose their jobs because of managed trade will get on welfare and will be able to keep the economy afloat.