Trade policy is one of those areas of economics where Bastiat’s observation that bad economists only look at the immediate and apparent results is proven true day in and day out. In the letter below, economics professor Don Boudreaux replies to an ignorant editorial in the W-S Journal:
11 October 2012
Editor, Winston-Salem Journal
Under Secretary of Commerce for International Trade Francisco Sanchez brags that the Obama administration’s closing of a “loophole” in the Central American Free Trade Agreement will save American jobs (“U.S. trade official says new law will save textile jobs in the state,” Oct. 10). Closing this “loophole” effectively obliges garment makers in Central America and the Dominican Republic to use American-made thread – rather than less-costly thread from Asian producers – when producing the likes of jeans and t-shirts for sale in the U.S.
This administration policy will win votes for the President from some textile workers in the Carolinas. And Mr. Sanchez and his boss can now bask self-righteously in their imagined humanity.
But will Mr. Sanchez pose for pictures with poor families whose living standards fall because clothing is now made more costly? Will the administration stage press events to highlight the jobs LOST because American consumers, obliged to spend more on clothing, will have less to spend on restaurant meals, evenings at the movies, and other goods and services? Will the President post photos on his website of Americans whose jobs are destroyed because foreigners will now have fewer dollars to spend and invest in the U.S.? Will Mr. Obama boast that his re-election strategy includes a policy that, by dulling the creative forces of competition, diminishes America’s economic dynamism and, hence, reduces its economic growth?
Donald J. Boudreaux
Professor of Economics
George Mason University