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What's a Protectionist? September 30, 2013 11:59 AM | Tagged as plywood, steel

WSJ September 16, 2013, Page A19: “Protectionists Pick Your Pocket Again” By Greg Simon and C. Richard Titus

The Biz Bucks Guy, as a product of the business school environment, is a free trader.  As a starting point for policy formulation, free traders believe in the free flow of goods and services, capital, and labor across national borders. Since the days of David Ricardo [an early 19th century British economist], many economists have known that free trade benefits both nations economically and keeps armies from cross those borders. 

Unfortunately, many industries lobby for protectionist laws to limit free trade. History is replete with examples of Congress passing laws (for sizable campaign donations) to protect a small group of people (the owners of large businesses who can afford lobbying) at the expense of the general citizens of the USA (who are the true middle class).

A good example of protectionism was the 2002 30% tariff (a tax on imports) imposed by Bush on imported steel. The disruption of supply raised steel prices. US manufacturers for which steel was the input were harmed. After only 18 months, the tariff was removed. Roughly 200,000 American jobs, along with about $4 billion in wages, had been lost. But Bush carried Ohio in 2004…maybe that was the reason for the tariff in the first place.

Recently, the plywood industry got into the protectionism act. The feds have investigated so-called unfair trade actions by the Chinese who export plywood to the USA. The Obama Commerce Department had now levied a tariff on Chinese plywood. Now watch the resultant loss of jobs in the remodeling and other industries as prices go up. This is crony capitalism. Better said, crony socialism.

A Fox News story showed the most Return on Investment any company can make is lobbying. It brings a whopping 220% ROI!! No wonder we are a sick economy. Protectionist laws from the Great Depression (insert: Smoot Hawley) made the depression longer and deeper.

Do you ever learn anything, Washington?

[The Biz Bucks Blog is primarily written to former students of Biz Bucks training courses to encourage their daily reading of the three opinion pages of the WSJ. This refreshes principles of Biz Bucks courses and improves business acumen on topics not discussed in Biz Bucks training.]


Posted By The Biz Bucks Guy
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