Political folly comes around, again and again, like a puncture in a rapidly deflating tire as you drive down the freeway. The end is never good.
President Obama and congressional Democrats pushed a tariff hike on China-made tires, up to 35 percent — and the WTO okayed it. They excuse their action because they wish to “retaliate” against China for its alleged monetary “manipulations” — manipulations that bear remarkable resemblance to our own Federal Reserve’s policies, by the way — which they say cause our current trade imbalance.
And, like non-economists everywhere, these buffoons judge the trade deficit a horrible thing. The fact that U.S. consumer’s get great benefit from lower-priced goods coming from China, and can — as a result of less expensive, Chinese-made tires – afford to replace their tires more often, thereby saving lives and health-care costs, doesn’t appear in politicians’ protectionist arguments.
It’s the economy that’s making our representatives stupid, of course. Blaming foreign competition is an easy out, when times get tough. It helps you avoid blaming your own country’s regulations, taxes, and (ahem) monetary policy.
This blame game is nothing new. The Smoot-Hawley Tariff was pushed through early in the Great Depression, and it made a lot of sense to . . . politicians.
But the the trade wars the infamous tariff engendered became a major factor in making the Great Depression so Great.
Our politicians, reviving tired old policies — regarding tires, no less — merely make matters worse. Greatly worse.
This is Common Sense. I’m Paul Jacob.