Sun, 27 Jun 2004

Protectionism

New Jersey State Senator Shirley Turner has done it again. Oh, I don't mean that she's ever done it before, although she probably has. She's proposed Yet Another short-sighted law. She's "protecting jobs in this country."

Bullshit. Pure, unmitigated bullshit. Sorry, Shirley, dear, but I gotta call it the way I see it. And you are full of it. You aren't "protecting jobs in this country." You're protecting visible jobs and destroying invisible jobs.

Here's the problem: it's visible when an employer shifts a job performing the same task from one place to another. The people of the first place tend to get resentful of the people of the second place. Don't matter if it's a Potsdam job that moved to Canton (e.g. the County Health Services), or a New England job that moved to the South (e.g. garments -- incidentally the cause of northern support for minimum wage laws), or a New Jersey job that moved to India.

What they fail to see is the new job "taken away" from the people of the second place. Inevitably, when there is free trade, trade balances. It MUST balance. If the state of New Jersey pays Indians dollars to do something for it, those Indians now have dollars. They're going to spend those dollars somewhere. Maybe they'll spend them buying tiny Japanese cars? But now the Japanese have dollars. Eventually, somehow, those dollars that New Jersey spent are going to come back to the US, and create a job for somebody.

Generally speaking, everyone is best off if they do what creates the most value, and trade for everything else. This isn't news. Adam Smith wrote it as our country was being formed. It seems very strange that our elected representatives -- who in theory are wiser than the common rabble and better able to take a wider and longer-term view -- don't know that.

Fortunately, there are a limited number of economic ignoramuses like Sen. Turner in the New Jersey legislator, and the bill hasn't made it out of the committee yet. Let us hope that it never does!

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