Friday, March 11, 2016

Unseen Costs

Well I do my best to understand dear
But you still mystify
And I want to know why
--Nick Lowe

Prof Williams applies Bastiat's seen and unseen rule to the Bush administration's 2002 steel tariffs. What is seen are the beneficiaries, including steel industry workers and shareholders who benefit directly from the protectionist practice.

What is unseen are the costs. Williams cites studies estimating that each steel industry job 'saved' by the tariffs cost American consumers $800,000, and that tariffs caused the loss of about 50,000 jobs across 16 states in supply chains that had to cope with higher steel prices.

As Williams observes, taxing ourselves and giving each steel worker a $100,000 check would have been far cheaper than the ultimate cost of the tariffs.

When the federal government creates a special privilege for some Americans, it must necessarily come at the expense of other Americans.

To hone your skills, apply Bastiat's rule to various policies and programs. Consider, for example, some issues favored by the Obama administration, including:

Higher minimum wages
Zero interest rate policy/quantitative easing
Stricter gun control

Identifying who benefits is relatively easy. This is what the administration wants you to see.

Identifying who bears the cost is harder. The administration hopes that you remain blind to the costs.

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