Protectionism Kills Jobs

I would imagine there are some aluminum extruders who wish I weren't in business, but politicians who think that by eliminating more cost competitive foreign suppliers like us tend to be somewhat shortsighted. This is particularly when you realize that our clients are able to use the savings to reinvest in their businesses. In what must be a plethora of examples, Marginal Revolution points to an analyses that quantifies the costs of tariffs on hangers and the effects on dry cleaners and those who use dry cleaning services:

There are roughly 30,000 dry cleaners in the U.S., and on average, each pays an additional $4,000 per year due to the hanger tariff. This indicates an average annual cost of 30,000 firms x $4,000 per firm = $120 million. According to the U.S. International Trade Commission's report, U.S. employment in wire hanger manufacturing was 564 workers in 2004 and fell to 236 workers by 2006. Let's assume that employment in this sector would have fallen to zero in the absence of the tariff, and that with the tariff, employment will recover to 2004 levels. In other words, assume the tariff "saves" 564 jobs. Dividing the cost of the tariff to U.S. dry cleaners ($120 million year) by the number of jobs saved (564 jobs) indicates that each job saved costs about $212,765 per year. Keep in mind that the typical full-time worker in this sector earns about $30,000 per year. Even if we assume that industry employment doubles, the cost of the tariff is still roughly $120,000 per job.

More from the Economist. Given the way the US seems to be headed politically, I'm worried that Carl Icahn may be right (Club for Growth).