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.
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. "U.S. are diverted away from producing goods and services that they would otherwise have produced. "

    A typical libertardian assumption. Just like we supposedly automatically get cheaper products to buy when they are made overseas. I'm doubtful this is the case every single time.

    I'm not sure what DJ is trying to accomplish with the tariff war, but I know libertardians dream of a society where everyone works gig jobs for $5/hour and we have unlimited open border turd trash infiltrating each day by the thousands.

    1. You're either not smart enough to understand the statement, or you're too tainted with bias.
      Right now, we have people with jobs doing X, AND buy washing machines from elsewhere. But the alternative is giving-up those jobs doing X and being diverted to making washing machines. Which means we will then have washing machines, but no jobs doing X (which presumably, those workers were more suited to doing, otherwise those washing machine jobs would never have "left" our country).
      Keep inhaling the Agent Orange, which clouds your reasoning on economics.

    2. We don't live in a free market economy. There may not be an X, a something else for people to do because government has cut off the ability of people to create those new businesses. In a free market economy there will always be a new thing, a something else, an X but in this preserve-the-top-on-top economy where the only relief are in those areas so very new that government and big players haven't yet grabbed and those where new technology opens a loophole.

      Remember government "fixes" their previous interventions through more intervention. The tariffs are more intervention. So we get those big corporate jobs making washing machines and such. That's how the corporatist economy works. Bring in approved companies for approved jobs. That natural do something else isn't allowed to happen because then those on top may fall.

    3. And neither of you have the brains to understand the point I'm making.

    4. Apparently you (LM) lack the brains to grasp that I wasn't addressing your points but rather Unknown's. In fact if you had some brains you'd note that my comment helps your so-called point. We are indeed made poorer by government's interventions which are aided by "libertarians" who can't understand that adopting libertarian principles piecemeal on top of the existing state apparatus often will not help and act to discredit libertarianism more than supporting Trump will. Such conditions can supercharge the state's interventions.

      Crony trade deals plus domestic regulation has significantly hurt manufacturing in the USA. Without using those deals to get China to agree to environmental protections and more domestic manufacturing was often not going to survive.

  2. @Jimmy Joe Meeker

    I strongly disagree (other than LM lacking brains.) If freedom is ever achieved, it will necessarily be done in a piecemeal fashion. Intervention should be pushed back on all fronts, in whatever order presents itself.

    It's erroneous to believe that one can use the means of statism and central planning to achieve freedom, just as it was wrong for GW Bush to assert that he was "abandoning the free market to save the free market." This view misunderstands that freedom is not only and end, but also the most critical of means.

    One can certainly argue that the crony trade deals are on net bad. That's an empirical (and extremely complex) question. But to the extent that they prevent states from erecting tariffs, they're unquestionably good.