All Pain, No Gain

In a Facebook response to this cartoon, a Tim Moyers argues for protectionism because:

[H]e [will] get on a new bike. One that doesn’t need supplies from china. Sure there will be short term injury, but there will be long term gain.

Mr. Moyers has the situation exactly backwards.  Tariffs do not cause short-term pain and long-term gain.  They cause long-term pain for (maybe) short-term gain.  The gain are whoever keep their jobs for a little while longer and whatever company remains in business for a little longer (however, by the very virtue they need protecting, we can conclude their time will likely not be long).  In the long run, however, many more resources are poured into keeping these non-preferred firms operating: higher taxes, less resources used in more productive/valuable means, all of which in turn leads to a lower standard-of-living than what would otherwise occur.  To block or slow these innovations would lead to long-term pain in the economy.  Perhaps not enough to crash an economy (although the Smoot-Hawley Tariff didn’t do anyone any favors), but certainly enough to lower the trajectory.

2 thoughts on “All Pain, No Gain

  1. The essential missing element in most of the tariff-pushers’ analysis is opportunity cost. The beneficiaries of a tariff might gain “X”, but what gains would that X produce if they were deployed in more economically efficient activities?

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  2. Mr. Moyers failed to mention that the new bike “he” will be getting on will cost twice as much as the one he just destroyed.

    Who, again, are the winners here? Certainly not consumers.

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