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Friday, March 08, 2002
Jacob Sullum :: Townhall.com Columnist
Trading positions
by Jacob Sullum
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Will the Dems' health care Christmas Present to America be an improvement or detriment to our health care system?


Despite its contributions to George W. Bush's campaigns, Enron went bankrupt, its desperate pleas for government intervention unheeded. The Democrats nevertheless have turned Enron into a symbol of the GOP's cozy relationship with corporate fat cats and Exhibit A of the case for campaign finance regulation. So you would expect that if President Bush actually decided to bail out some big companies and stick taxpayers with the bill, the Democrats would be quick to criticize. And they were: They complained that the president had not gone far enough. When Bush announced new tariffs of up to 30 percent on imported steel the other day, House Minority Leader Richard Gephardt said he was disappointed. "Last week the steel companies and the steel worker unions agreed that 40 percent was the minimum average tariff needed to stabilize the industry," he said. Both parties are united, then, in believing that Americans should be forced to pay higher prices for cars, appliances and other products so domestic steel companies can avoid Enron's fate. The only question, so far as they're concerned, is how much higher. Not long ago, the difference seemed starker. Bush declared his commitment to free trade, and his trade representative, Robert Zoellick, rightly called tariffs "nothing more than taxes that hurt low- and moderate-income people." Trying to reconcile the contradiction, the president said, "In order to remain a free-trading nation, we must enforce (the) law." He was presumably referring to Section 201 of the 1974 Trade Act, which allows temporary tariffs to help industries threatened by a surge in imports -- although steel imports actually have been dropping in recent years. If free trade requires tariffs and a decrease is an increase, Bush's position makes perfect sense. Zoellick, for his part, was reduced to promising that the tariffs would not have "any significant effect on the economic recovery and growth." Manufacturers who use steel have a different opinion. So does Brookings Institution economist Robert W. Crandall, who said the tariffs would be "a damaging economic blow that could delay the U.S. economy's recovery." But the movement of economic statistics is not really the issue. Although the theft of your wallet has no measurable impact on GDP, that doesn't mean we should condone pocket-picking, which is what steel producers are doing by seeking to improve their bottom lines at the expense of other companies and consumers. Protectionists try to disguise this reality by claiming they're stealing in the name of justice. In a recent New York Times op-ed piece, Sen. Barbara Mikulski, D-Md., says tariffs simply "level the playing field," which has been tilted by "years of unfair trade." Among the dirty tricks she cites are making too much steel and selling it at too low a price. It's easy to understand why steel companies and their employees might be upset about such "unfair" practices, but the rest of us can only welcome them. When was the last time you complained that your supermarket was too well-stocked and the prices weren't high enough? Perhaps sensing that most Americans do not share her outrage about competition that benefits them, Mikulski tries wrapping the steel industry's money grab in the flag. "The industry is critical to our nation's defense," she writes. "When steel is threatened, our economy and our national security are both threatened." It's not clear how raising the cost of equipping our military enhances national security. In any event, America's armed forces depend on a wide variety of products, ranging from food and clothing to oil and computer chips. Will Mikulski, who insists she is "not a fan of trade barriers," be pushing tariffs for those industries as well? The sad thing is, Mikulski's lame arguments are now Bush's excuses. To be charitable, one could say he is abandoning his principles to keep a promise. In 2000 Bush won West Virginia -- and the presidency -- largely by pledging to help the steel industry. The tariffs he has announced will be of particular help to West Virginia's Weirton Steel. Bush also has an eye on the steel-producing states of Ohio and Pennsylvania, which may be crucial to his re-election and to Republican control of Congress. The motivation for the steel tariffs, then, is the same as the motivation for doing the bidding of campaign contributors such as Enron: getting and keeping power. Yet one is corruption, while the other is simply democracy at work.
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About The Author
Jacob Sullum is a senior editor at Reason magazine and a contributing columnist on Townhall.com.
 
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