18
May
11

Protectionism, again

By way of this example of markets in everything we come across this (rather old) protectionist gem:

(Layers of editorial oversight!)

The article begins with a general hypothesis:

Luxury goods have very low tariffs, while cheap clothes, underwear, shoes and household products have much higher rates

…and backs it up with examples:

[T]he tariff rate on a cashmere sweater is 4 percent; the rate for one made of much cheaper acrylic is 32 percent. A silk brassiere has a tariff rate of less than 3 percent, but the rate on a polyester one is slightly less than 17 percent. The tariff rate on a snakeskin handbag is just over 5 percent but climbs to 16 percent for one made of canvas. Similar variations occur when it comes to household goods. Drinking glasses that cost more than $5 each have a tariff of 3 percent, while those that cost less than 30 cents each have a rate of 28.5 percent. A silk pillowcase has a rate of 4.5 percent; this goes up to nearly 15 percent for one made of polyester.

Overall, clothes and shoes contributed nearly $10 billion in tariff revenue in 2009, while higher-cost items including audiovisual equipment, computers and even cars added less than $2 billion. […] What’s more, when customers pay sales tax on these products, that amount is also higher than it would otherwise be thanks to the tariff that drives up the retail price.

Once again, a straightforward case of regulatory capture:

Trade groups and politicians don’t want to lower a bar to foreign importers without getting some kind of concession in return. From their perspective, dropping a tariff that adds 32 percent to the price of a cheap men’s shirt amounts to giving away a valuable bargaining chip. Other groups — including, it should be noted, some prominent left-leaning think tanks — say dropping tariffs will cost jobs we can ill afford to lose in this economy.

Notably absent from the article are the foreign workers who make the products imported under tariff.  Artificial barriers to trade can only reduce their opportunities and outcomes.

Just another sample of the status quo.

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