Friday, February 20, 2004

Protectionism Hurts Michigan Workers

An interesting article by GR Spring & Stamping Inc. CEO Jim Zawacki shows how economic protectionism hurts American - and Michigan - jobs. He clearly states the case that the steel tariffs that (thankfully) the World Trade Organization forced the US to repeal, increased steel prices domestically and internationally. The results of protectionist tariffs were higher costs for domestic steel-consuming industries, such as GR Spring & Stamping. When their costs increased, so did their prices to customers, making them less competitive internationally.

Interestingly, he also points out that protecting inefficient domestic steel foundries made the US less competitive on the international market. China's steel consumption continues to increase, but due to higher US prices of steel, caused by protectionist tariffs that prevent the industry from becoming more efficient, less of China's comsumption is of American steel.

One of Mr. Zawacki's quotes hits the nail on the head: "Here in the U.S., 190,000-200,000 people make steel. More than 12 million people work for companies that use steel, and those companies are being forced out of business because they simply can’t purchase their raw materials. "

Protectionism hurts America in the long run and makes us less competitive on the global market. All of this was dealt with very effectively by Frederic Bastiat, who wrote a book called Economic Sophisms. It amazes me that free trade is still such an enormous issue with so many people opposed when all those anti-trade arguments were laid to rest 150 years ago. This isn't a new debate - just one where the old arguments are recycled over and over.

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