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Wednesday, October 25, 2006
Walter E. Williams :: Townhall.com Columnist
Should we trade at all
by Walter E. Williams
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Will Congress pass Obamacare by the end of the year?

There are only a handful of products that Americans import that cannot be produced at home and therefore create jobs for Americans. Let's look at a few of them.

We import cocoa from Ghana and coffee from African and Latin American countries. We import saffron from Spain and India and cinnamon from Sri Lanka. In fact, India produces 86 percent of the world tonnage of spices. There's absolutely no reason these products cannot be produced by Americans, and we could be cocoa, coffee and spices independent.

You say, "Williams, that's crazy! We don't have the climate and soil conditions to produce those products. Many spices, for example, require a moist tropical environment." No problem. We have the technology whereby we can simulate both the soil and weather conditions. We could build greenhouses in which to grow cinnamon trees and get our scientists to create the same soil conditions that exist in Sri Lanka. Greenhouses could also be built to simulate the climate conditions in Africa and Latin America to grow cocoa and coffee. In the case of cocoa, the greenhouses would have to be Superdome size to accommodate trees as high as 50 feet.

You say, "Williams, that's still crazy! Imagine the high costs and the higher product prices of your crazy scheme." I say, "Aha, you're getting the picture."

There are several nearly self-evident factors about our being cocoa, coffee and spices independent. Without a doubt, there would be job creation in our cocoa, coffee and spices industries, but consumers would pay a much higher price than they currently do. Therefore, nearly 300 million American consumers would be worse off, having to pay those higher prices or doing without, but those with the new jobs would be better off.

So let's be honest with ourselves. Why do we choose to import cocoa, coffee and spices rather than produce them ourselves? The answer is that it is cheaper to do so. That means we enjoy a higher standard of living than if we tried to produce them ourselves. If we can enjoy, say, coffee, at a cheaper price than producing it ourselves, we have more money left over to buy other goods. That principle not only applies to cocoa, coffee and spices. It's a general principle: If a good can be purchased more cheaply abroad, we enjoy a higher standard of living by trading than we would by producing it ourselves.

No one denies that international trade has unpleasant consequences for some workers. They have to find other jobs that might not pay as much, but should we protect those jobs through trade restrictions? The Washington-based Institute for International Economics has assembled data that might help with the answer. Tariffs and quotas on imported sugar saved 2,261 jobs during the 1990s. As a result of those restrictions, the average household pays $21 more per year for sugar. The total cost, nationally, sums to $826,000 for each job saved. Trade restrictions on luggage saved 226 jobs and cost consumers $1.2 million in higher prices for each job saved. Restrictions on apparel and textiles saved 168,786 jobs at a cost of nearly $200,000 for each job saved.

You might wonder how it is possible for, say, the sugar industry to rip off consumers. After all, consumers are far more numerous than sugar workers and sugar bosses. It's easy. A lot is at stake for those in the sugar industry, workers and bosses. They dedicate huge resources to pressure Congress into enacting trade restrictions. But how many of us consumers will devote the same resources to unseat a congressman who voted for sugar restrictions that forced us to pay $21 more for the sugar our family uses? It's the problem of visible beneficiaries of trade restrictions, sugar workers and bosses, gaining at the expense of invisible victims -- sugar consumers. We might think of it as congressional price-gouging.

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About The Author
Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.
 
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Cheap goods and free trade
I have 86 year old grandma who doesn't have Nobel prizes, IQ or smarts of best economists. What she is, though, is what we lack most these days. She's wise.

I remember hearing her saying more than once since I was a kid "I'm not rich enough to buy cheap goods."

She still has no clue as to what "unintended consequences" might be, but she's wise old woman.

I don't want politicians regulating anything. The more they stay out, the better. I just wish huge majority of end consumers would think before buying cheap as "in their best interest". It is definitely in somebody's best interest - I have no doubt about that. Hardly ever in theirs.

And since I myself don't have resources to make a choice of buying a congressman instead of a yacht, I made sure Honda salesman knew they lost a sale because of the politicians and their decisions to ban most existing diesel engines from US market comes January 1st 2007. So Honda didn't even bother to bring here what was elected as Engine Of The Year 2004 in Europe - a diesel, of course. It costed me $7,000 more to buy a diesel - but I think I should put my wallet where my mouth is and spend more for what I believe in. Hoping that huge company like Honda, if they get enough complaints and lost sales to force them to act - a company like that might make a much bigger difference than my vote.

Why did I do that insane and un-american thing of spending more for the same goods? I can't care less of protecting environment - it's been around for better than 3 billion years and it hardly needs help from somebody who's been around for 40 years. I did it because I want choices as a consumer. And there's nothing worse than not having a choice of what to buy because some idiot politician wants a page in the newspaper. Or, even worse, believes in "what's right". For him, of course. Strangely, I have fading memories of consumers being shortened on choices because of political decisions - it was called comunism.

UncaAlby
Thanks, you are 100% correct! I may have used the word stupid inappropriately. Your analysis is correct. My Pastor was telling me today about the difference in ablities with the students in his Confirmation class between our church school student's and the public school student's. The public school students can't write, refuse to memorize important information and are aghast at his teaching methods and expectations. Guess which school spends more money per pupil?
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