Tag Archives: protectionism

Department of Redundancy Department

Fun fact: the federal government has both an International Trade Administration and an International Trade Commission.


Regulation of the Day 112: Importing Pork Rinds

The federal government is loosening its restrictions on importing pork rinds from Brazil. Rudolph Foods, Inc., an Ohio company, owns a factory in Brazil, and stands to benefit from the ruling.

Competitors are up in arms. Citing exotic illnesses like foot-and-mouth disease, one competitor told The Wall Street Journal, “It just takes one pig” that is infected to spread a disease… “The risk is low, but the consequences are really high.”

If that is his strongest argument, then the case against liberalization is as weak as it gets. Instead of using the power of government to hobble its rivals, this company should go out and improve its product. Make its pork rind recipe even tastier. And cheaper. Use the import liberalization to its own advantage if possible.

Regulation of the Day 89: Purple Dye

Ancient Roman consuls – equivalent to our presidents – wore togas edged in purple to mark their high status. As Republic became Empire, new emperors were said to “ascend to the purple.”

Purple clothing was a status symbol for most of human history. It was the ancient equivalent of the Mercedes-Benz. Originally discovered in the glands of shellfish (reputedly by Heracles’s dog!), it took 12,000 of the creatures to get just 1.5 grams of dye. Purple garments could be as rare and costly as gold in some places.

Modern innovations such as inexpensive synthetic dyes, the Minnesota Vikings, and purple M&Ms have taken away the color’s exotic reputation. But no worry. Federal regulators are doing what they can to bring it back.

Alpinil Industries, a dye manufacturer in India, sells its carbazole violet pigment 23 cheaply. Too cheaply, it seems. Even commoners can afford to buy products colored with their purple hues!

Irate American competitors convinced the government in 2004 to put an anti-dumping duty on Alpinil’s purple dye. That raised the price to match pricey American-made dyes. Purple would once again be reserved for the rich.

Now that the tax has been in place for five years, the Department of Commerce is wrapping up an investigation to see if it has been working as intended. A repeal would be best for consumers. Don’t expect to see it happen, though.

The benefits are concentrated to a few dye manufacturers, who have a strong incentive to lobby to keep the status quo. Meanwhile, the costs are diffused onto millions of consumers, none of whom have much incentive to spend thousands of dollars in an effort to save themselves a few pennies.

What Does Protectionism Protect?

Classic reductio ad absurdum.

Modern technology could easily grow oranges and grapes in hothouses in the arctic and subarctic countries. Everybody would call such a venture lunacy. But it is essentially the same to preserve the growing of cereals in rocky mountain valleys by tariffs and other devices of protectionism while elsewhere there is plenty of fallow fertile land. The difference is merely one of degree.

Ludwig von Mises, Human Action, p. 395.

Regulation of the Day 50: Tires from China

Consumers have been buying a lot of tires made in China lately. Naturally, U.S.-based tire manufacturers are upset at their competitors’ success. Fortunately, there are two ways for the aggrieved American firms to ease their troubled minds:

1: Make better tires for less money. Give consumers a reason to buy American tires rather than Chinese. Compete, in other words.

2: Don’t compete. Too much hard work. Instead, persuade some politicians to place a 35 percent protective tariff on competitors’ tires. Price them out of the market. Then keep making the same old tires that people don’t want. If the tariff is large enough, you may even be able to raise your prices, even without raising quality.

This is a choice between raising the bar and lowering it. Unfortunately, U.S. tire firms and allied politicians have chosen to lower it. China, by putting up its own barriers to retaliate, is lowering the bar even further.

The really audacious part is that tire tariff supporters think they are really helping the economy. Raising that bar. Saving American jobs!

There is something very unsettling about the notion that an American job is intrinsically more valuable than a Chinese job. We are all human beings, are we not?

This is an ugly, ugly mindset. And it is one that politicians and tire companies have explicitly adopted. The burden is on them to explain why they think people who live in one country are more deserving of economic opportunity than people who live in another.

Regulation of the Day 48: Barbers in Nevada

Want to be a barber in Nevada? You’ll need to get a license first. One of the requirements is a chest X-ray, of all things. And a blood test.

More onerous is the 18-month apprenticeship under a licensed barber, which requires its own license – plus another chest X-ray and blood test.

Occupational licensing regulations are rarely in place to benefit consumers. Their primary purpose is often to limit competition by putting up barriers to entry. Why do this? Because keeping the supply of barbers artificially low means that existing barbers can keep their prices artificially high.

Three of the four licensing board members must be licensed barbers. They write the apprenticeship rules and the license examination. They decide who gets in, and who gets left out. They have plenty of excuses built into the rules for excluding potential competitors.

Owing child support payments, for example, is by itself grounds for exclusion. What this has to do with cutting hair is beyond me. And getting a job cutting hair is one way to be able to make those payments. But there it is, encoded in state law. The board can legally keep you from being a barber if you owe child support.

A sure sign of an anti-competitive practice is using the force of law to prevent competitors from entering the marketplace. Where is the antitrust investigation into Nevada’s barber licensing?