Claude Frederic Bastiat (1801-50) -- a French classical liberal theorist, political economist and member of the French National Assembly -- wrote an influential essay titled "That Which Is Seen and That Which Is Not Seen." Bastiat argued that when making laws or economic decisions, it is imperative that we examine not only what is seen but what is unseen. In other words, examine the whole picture.
Americans who support tariffs on foreign goods could benefit immensely from Bastiat's admonition. A concrete example was the Bush administration's 8 to 30 percent tariffs in 2002 on several types of imported steel. They were levied in an effort to protect jobs in the ailing U.S. steel industry.
Those tariffs caused the domestic price for some steel products, such as hot-rolled steel, to rise by as much as 40 percent. The clear beneficiaries of the steel tariffs were steel industry executives and stockholders and the 1,700 or so steelworkers whose jobs were saved. But there is no such thing as a free lunch or a something-for-nothing machine. Whenever there is a benefit of doing something, there is a guaranteed cost.
A study by the Peterson Institute for International Economics, predicted that saving those 1,700 jobs in the steel industry would cost American consumers $800,000 per job, in the form of higher prices. That's just the monetary side of the picture. According to a study commissioned by the Consuming Industries Trade Action Coalition, steel-using industries -- such as the U.S. auto industry, its suppliers, heavy construction equipment manufacturers and others -- were harmed by higher steel prices.
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