Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

The Destructive Path of U.S. Protectionism

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

The Destructive Path of U.S. Protectionism

Article excerpt

Two companies that make solar panels are asking the government to protect them from foreign competition. They want the government to put taxes and a price floor on imports. Other companies are warning that these policies would raise prices and shrink the market, eliminating jobs for solar-panel installers, manufacturers of mounting equipment and other parts of the larger solar industry. They say as many as 88,000 jobs are at risk.

Solar protectionism would thus fit in a long tradition of America shooting itself in the foot by restricting trade. In a new paper for the libertarian Cato Institute, trade lawyer Scott Lincicome reviews the dismal history.

He admits that the evidence about the effects of protectionism in the earliest years of the country is mixed: Studies differ on whether it helped or hurt the economy, while unambiguously pointing to its facilitation of corruption. The later the period he examines, though, the stronger is the case that trade barriers have harmed Americans, both because there is just more data available and because global economic development raises the costs of those barriers.

Whether the trade restrictions concern steel, textiles, semiconductors or automobiles, the common themes are that they cost an enormous amount of money per job saved in the protected industry, place especially large burdens on people with low incomes, and destroy so many jobs in other industries that they often lead to net reductions in employment.

That's true even when it comes to relative success stories. Tariffs on Japanese motorcycles are often credited with bringing back Harley-Davidson in the 1980s. Mr. Lincicome cites research that suggests the tariffs explain only 6 percent of the company's recovery in sales and cost consumers about $350,000 per job saved (using today's dollars).

In 1986, the government placed restrictions on Japanese semiconductors, a decision that seems to have hurt the American computer industry as much as it helped semiconductor manufacturers - and helped them only temporarily. …

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