DownsizeDC.org
October 10, 2011
URGENT! Trade Isolationism Is Bad For You
By James Wilson

Quote of the Day: "The sort of dependence that results from exchange, i.e., from commercial transactions, is a reciprocal dependence. We cannot be dependent upon a foreigner without his being dependent on us. Now, this is what constitutes the very essence of society. To sever natural interrelations is not to make oneself independent, but to isolate oneself completely." - Frederic Bastiat

American politicians like to scapegoat other countries for problems they create. The latest example is blaming high unemployment on cheap Chinese goods. On Tuesday, the Senate is expected to vote on bill S.1619, a bill that will "punish" China by...

...raising taxes!

That is, S.1619 will raise tariffs on goods from China because the Chinese government, supposedly, undervalued its currency (the yuan). Tariffs make us poorer and will NOT create or save productive jobs. As the Bastiat quote above suggests, trade isolationism is bad for YOU and your community.

That's why I wrote Congress objecting to S.1619 using DownsizeDC.org's Cut Federal Taxes campaign.

I urge you to do the same. You may borrow from or copy this letter...

I oppose S.1619, which will raise duties on Chinese imports in retaliation of China's supposedly undervaluing the yuan.

I oppose ALL tax increases, including tariffs. Tariffs should be abolished. Tariffs do more harm than good, even when...

* The U.S. is running a trade deficit...
* And a country like China is intervening in its economy to increase exports.

The reason is that when the U.S. consumers buy imported goods in dollars, China can't do much with the money except send it back to America through...

* Financing federal budget deficits by purchasing Treasury bills
* Purchasing U.S. made goods, or
* Investing in the U.S. to create jobs and provide new goods and services

This is called a "capital account surplus." This surplus is what you get when you run a trade deficit. The two balance each other.

Almost all of the dollars the U.S. spends in international trade find their way back to the U.S. If you dislike the idea that the Chinese are buying U.S. debt, then CUT SPENDING AND STOP BORROWING! That will mean that China will invest more money in our voluntary sector and help make us more productive.

Moreover, raising tariffs WON'T increase U.S. employment. Labor laws, regulations, and complicated business taxes are the real obstacles to employment growth. And these are imposed by Congress.
 
Tariffs lead to higher prices. Higher prices cut into savings. Savings are needed to expand business and hire people.

Besides, American demand for inexpensive goods will remain. Targeting China will most likely mean that other countries will take China's place. Can we then expect Congress to pass another tariff, pretending that will solve our economic problems?

If the Chinese State wants to devalue its currency or otherwise boost exports, the only people it hurts are the Chinese people, who suffer inflation or higher taxes as a result. American consumers, however, BENEFIT when foreign countries artificially try to boost exports. 

I'm tired of Congress scapegoating foreign nations for economic problems Congress itself has created. If you want to boost employment in the U.S. relieve us of the burdensome taxes and regulations that make it harder to compete. Raising tariffs, for any reason, will do more harm than good.

END LETTER

You can send your letter using DownsizeDC.org's Educate the Powerful System.

Please tell your friends about this important vote. "Like" and Tweet this post on our blog.

And check out our post "Is the Sun an Unfair Trading Partner?" at the Downsize DC Foundation.

James Wilson
Policy Research Director
DownsizeDC.org

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