Bernie Sanders thinks that free trade has been disastrous for the American worker. During an interview on Meet the Press, Senator Sanders bemoaned that American workers had to compete against the Vietnamese and said that he disagreed with all of the previously negotiated trade deals. In his opposition to free trade, Senator Sanders may think he is helping workers, but he is hurting consumers — which means everyone.
Whenever someone claims that foreigners are taking American jobs through trade, that person is implicitly arguing that those same foreign goods are either cheaper or of a higher quality than their American-made counterparts. If this were not the case, consumers would keep buying the American products.
If I wanted to enter the beverage business and start selling lemonade, I couldn’t get away with selling yellow water for $10 a glass with twigs and dead bugs floating in it. The only way I can poach customers from Lil’ Sally’s Juice Emporium is if I either offer a better value or a higher quality product. Well, that’s not actually the only way. I could get the local city council to shut her down with zoning permits, building inspections, licensing, etc. Customers then have a new choice set: they can buy my product at my prices or they can go without. As a business owner, I would greatly benefit from restricting my potential customers’ options because I would be removing the competitive pressures of price and quality.
What works on the municipal level also works when expanded to an international sphere. Americans imported $328 billion of automobiles in 2014.General Motors had worldwide net sales of automobiles of $156 billion in 2014. If the government could slam shut the ports and prevent these imports, General Motors (and all other US auto manufacturers) would undoubtedly see a substantial increase in sales because, after many Americans no longer had the option to buy their first choice, they would have to settle for their second, third, or fourth choice.
Those who push for such trade barriers are examples of what philosopher Jason Brennan calls “Leftists Bad at Leftism.” No respectable progressive would dare to stand on a platform of taking money from the poor and middle class and giving it to the shareholders of a private corporation, yet this is the very effect of the policy they endorse. Trade restrictions are no less corporate welfare than are billion-dollar bailouts or industrial subsidies and should be recognized as such.
Protectionist policies attempt to feed the sparrows by first feeding the horses. Make no mistake, something will pass through the system and trickle into the hands of the privileged autoworker, but the grain is not free. It is not the taxpayer but every single car-buying American who pays the price. Those who get net benefits and refund checks from the government will receive no such payment from Detroit.
The justification for all trade is that it benefits the hardworking consumer. Trade restrictions benefit the few at the expense of the many, which is the exact opposite of what politicians like Sanders claim to represent. Protectionism is an insidious tax because it doesn’t show up on a paystub like federal withholding or Social Security. Instead, it manifests in higher prices and lower quality for the consumer. We should resist it in all its forms.
Stewart Dompe is an instructor of economics at Johnson & Wales University.
This article was originally published on Fee.org. Read the article here. The views expressed by the author are not necessarily endorsed by this organization and are simply provided as food for thought from Intellectual Takeout.
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Stewart Dompe is an instructor of economics at Johnson & Wales University. He has published articles in Econ Journal Watch and is a contributor to Homer Economicus: Using The Simpsons to Teach Economics.