Beware The Village Idiots

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If the Chinese lower their prices, it is to our benefit.

Anyone who’s anyone knows that economics is the name of the game this voting season. Our issues of sustained military action in the Middle East, unemployment, currency devaluation, inflated prices, reduced production and a dozen other problems are all directly related. If the powers that be refuse to correct our economy with wise and educated direction, our Nation will be lost.

Unfortunately, we’re faced with a significant dilemma when it comes to bad economic policies, which have become the United States’ drug of choice. We were warned by economists like Frédéric Bastiat, Ludwig von Mises, Friedrich Hayek, Henry Hazlitt and many others.

“It’s addictive,” they shouted, though the naysayers told us it would be harmless. “You won’t be able to quit once you start,” they warned. It started off feeling good. One might say that it even made us feel invincible. Later, it became a habit. Now, it has become a necessity. It has cost us our jobs. It has made us unproductive. It is on the verge of reducing us to poverty, yet still we continue. We are addicted, and there is no way out of this mess without a lot of pain and discontentment.

Our task in the coming election is to ensure that we select a candidate who will push a wise economic policy. If sound economics are practiced, jobs will be created, wars will be resolved, the money supply will be corrected, inflation will be arrested, etc.

In direct regard to this primary concern of our 2012 election, I want to address Mitt Romney, because we have two conflicting statements from him that leave me wondering, and the truth of the issue makes or breaks Romney as a viable candidate.

In his book No Apology, The Case for American Greatness (pg. 119), Romney writes that defending “American… companies from foreign competition may make good politics…, but it is decidedly bad for the nation and our workers. Protectionism stifles productivity.” Yet, in the November debate he said, concerning an answer to the problem with China, that we should “go before the WTO and bring an action against them…, and that will allow us to apply, selectively, tariffs, where we believe they are … artificially lowering their prices and killing American jobs.”

Which of his assertions does he believe and which is mere pandering? Frankly, not knowing the answer to that bothers me a great deal. The popular opinion of the country, which is the ultimate driving force of our policies, is that we should put taxes on imported goods; i.e. tariffs, also known as protectionism.

Without detailing the erroneous fallacy that money is wealth, or the monopolistic motives behind many tariffs, I’d like to consider a nation of three people for the sake of simplicity. If you have three men — one with apples, the second with oranges and the third with pears — you have the means for simple barter. The apple can be traded for an orange. The orange can be traded for a pear. The pear can be traded for an apple. Money is introduced to facilitate more complicated trades. Say, for example, that the orange grower didn’t want an apple, but the apple grower wanted an orange. The orange grower could use money to acquire a pear. Money provides the means to make the trade, but the products are still in plentiful supply.

In the case of imported goods, you have one of two cases. Either someone from another town comes bearing strawberries, or someone with a much more plentiful supply of apples comes and makes competition for the local apple grower.

The argument is that if the more plentiful supply of apples demands a lower price, then it will put the local apple grower out of business. It is necessary, then, to demand that the law protect the local apple grower by taxing the apples coming from the next town. Then each apple will trade for one orange or one pear.

But if the imported apples can be had at a rate of two apples for one pear or one orange, then each resident of the town is wealthier by one apple. That gives him an extra orange or pear to trade for a grapefruit the former apple grower now produces. So it is to the advantage of the community of three to purchase the less-expensive apples and increase the town’s physical wealth through the pursuance of another crop.

The same applies to Chinese goods. If the Chinese lower their prices, it is to our benefit. If people see the low prices and say, “it’s taking away our jobs,” they are looking at it wrong. What low Chinese prices do is give us products at a lower cost and leave more money in our pockets to spend on other goods. If we produce flatware in the United States for $20, and we can get flatware from China for $5, then buying the Chinese product leaves us $15 for a book and perhaps lunch at McDonald’s. When the tariff is introduced that makes Chinese flatware $20, the government has effectively deprived the book industry and the McDonald’s Corp. of our patronage and reduced their bottom line. Our national industry is stifled, because we waste time and money producing $20 sets of flatware instead of investing our capital and energy into new innovations and buying the Chinese flatware at $5.

Ultimately, the consumer is robbed of a new book and lunch at McDonald’s; because instead of spending $20 for a set of flatware, a new book and lunch, he instead spends the same $20 and walks away with nothing more than the flatware.

Tariffs are destructive. If Romney supports them, then he lacks the economics education our Nation so desperately needs. Think carefully before you go with the herd to the polls.

–Alexander Frazier

Editor’s note: This article was submitted through our You Sound Off!  feature, which normally appears the last Wednesday of each month. If you would like to submit an article for consideration, please email it to yousoundoff@personalliberty.com. We ask that you try to limit them to 750 or fewer words. You must include your name, telephone number and address. — B.L.

 

Alex Frazier

is an average citizen who propelled himself from poverty to furthered education and success. He is married with four children and works as a full time independent photographer and entrepreneur in South Carolina. He is also a writer with several works in process. His politics are Libertarian, and he values wisdom and education above all things save God himself.

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