The Heritage Foundation - Leadership for America

January 5, 2009 len, Alexandria,KY writes:

Just a small observation, Obama and the Democrats talk about a huge stimulus ( unfunded), and based on the last one I see no good coming out of it other than a possible increase in taxes, he talks about cutting taxes to working people as though $ 500 were alot of money and in addition he is really ignoring retirees whose savings , 401K’s and investments have gone sOUTH thanks to the insanity of Frank, Dodd, and Waters among many over the inpending Freddie and Fannie Disasters which those three so stupidly ingnored…So who is going to Throw those Inepts out of office???

January 6, 2009 Howard Richman, Kittanning PA writes:

You are correct that protectionism is a lousy economic philosophy. It is designed to protect politically-favored industries over other industries. The result is that it often hurts the unprotected industries, especially if they use inputs manufactured by the politically-favored industries.

In this case, a tariff designed to protect certain fabric manufacturers hurt furniture manufacturers because they faced foreign competition from offshore contracts and there would be no tariff on those foreign contracts.

However, you are not aware that there are four trade philosophies, not just two. The choice is not just between free trade and protectionism. The four alternatives are: (1) free trade, (2) protectionism, (3) mercantilism, and (4) balanced trade. Balanced trade is a relatively new philosophy that is needed in order to combat mercantilism, the philosophy which purposely imbalances trade.

In order to achieve balanced trade, a country insitutes a generalized tariff or Import Certificates that apply to all foreign goods or just the goods from the mercantilist countries. Such a generalized tariff helps all American producers.

For example, take the case where the United States would apply generalized Import Certificates as we recommend. Then the only component of the furniture that would require the purchase of Import Certificates would be the foreign-made fabric. Should Lane, Bauhaus, and H.M. Richards export US furniture, they would receive salable Import Certificates that they could use to pay for the fabric imported, with additional Import Certificates to sell to others who wished to import goods or services into the US. These Import Certificates would make all of these US furniture manufacturers, as well as American fabric manufacturers, much more profitable.

There is a difference between protectionism and balanced trade. I recommend that you take the time to purchase and read our book Trading Away Our Future, which is the foundational book on the philosophy of balanced trade.

Howard Richman
http://www.tradeandtaxes.blogspot.com

January 7, 2009 Mike Sheahen, Hickory North Carolina writes:

Once again, another example of isolationism which has in fact been tried more than once before and so very predictably failed at nothing other than “torpedoing” the people and our economy.

Example: In the era about the turn of the 20th Century, under the guise of responding to “unfair trade practices”, “inferior products”, and, in no small measure, also in response to a massive influx of LEGAL immigrants, politicians succeeded in demagoguing and pandering enough to impose a “protectionist” (read: isolationist) trade embargo against imports.

Result? Too many American companies found themselves facing a corresponding lack of competition; that resulted in skyrocketing prices and plummeting quality; that resulted in correspondingly plummeting sales since increasing numbers of customers would not and/or could not pay the price of such products; that resulted in significant loss of both businesses and jobs, and the bottom line was the people, businesses, jobs, and thus also our economy got “screwed” by isolationism.

In other words, “protectionist” isolationism of all sorts has been tried before and failed miserably at anything but “torpedoing” businesses, jobs, the people, and thus also our economy. And what’s the definition of insanity? Continuing to try the same thing, expecting different results!

January 7, 2009 Mike Sheahen, Hickory North Carolina writes:

Correction:

Once again, another example of isolationism which has in fact been tried more than once before and so very predictably failed at nothing other than “torpedoing” the people and our economy.

Example: In the era about the turn of the 20th Century, under the guise of responding to “unfair trade practices”, “inferior products”, and, in no small measure, also in response to a massive influx of LEGAL immigrants, politicians succeeded in demagoguing and pandering enough to impose a “protectionist” (read isolationist) trade embargo against imports.

Result? Too many American companies found themselves facing a corresponding lack of competition; that resulted in skyrocketing prices and plummeting quality; that resulted in correspondingly plummeting sales since too many people would not and/or could not pay the price of such products; that resulted in significant loss of both businesses and jobs, and the bottom line was the people, businesses, jobs, and thus also our economy got “screwed” by “protectionist”/isolationism.

In other words, “protectionism” of all sorts has been tried before and failed miserably at anything other than “torpedoing” private businesses, jobs, the people, and thus also our economy. And what’s the definition of insanity? Continuing to try the same thing, expecting different results!