In 1845, the French free market economist Frederic Bastiat published his now famous satire “The Candlemakers’ Petition.” Inspired by French parliamentary debates about tariffs to be placed on foreign goods that enjoyed lower cost production elsewhere, Bastiat crafted his petition in an effort to demonstrate the absurdity of using tariffs, which always support special interest groups, as a way to benefit a nation’s entire people.
“We are suffering from the intolerable competition of a foreign rival, placed, it would seem, in a condition so far superior to ours for the production of light that he absolutely inundates our national market with it at a price fabulously reduced,” the candlemakers begin. Sounds familiar, doesn’t it? But as one might guess, the beleaguered candlemakers aren’t talking about foreign-produced candles, they are referring to sunlight.
To remedy the situation, the candlemakers call on government to close “all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds—in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses.” They reason that if this is done, “the manufacturers of candles, tapers, lanterns, sticks, street lamps, snuffers and extinguishers” will gain, as will the “producers of tallow, oil, resin, alcohol, and generally of everything connected with lighting.” Put another way, employment will surge. Seemingly, everyone will gain. But of course, all French citizens taken together who will have lost a reliable low-cost source for light will be made worse off.
But wait a minute. What about fair competition? Isn’t that the goal?
Some 174 years after Bastiat published his piece, the World Trade Organization just ruled that the United States is entitled to place tariffs on European imports because of subsidies provided to Airbus by European governments. The WTO reasons that Airbus planes, like Bastiat’s sunlight, have been made unreasonably cheap.
Celebrating the WTO ruling as a victory, President Trump called it a “big win” for America. The Trump administration then signaled its intention to impose tariffs on $7.5 billion of imports that will include cheese, whiskey, and large aircraft. Of course, the tariffs will raise the prices paid for the affected products by American consumers, though Boeing, Wisconsin cheese producers, Kentucky producers of bourbon, and perhaps Georgia bootleggers will be made a bit better off.
But is this good news for America? Some suggest that this latest American tariff action will lead to another trade war.
The newly imposed tariffs will join those already affecting Canadian timber and dairy products, European aluminum and steel, and a host of Chinese producer and consumer goods. Eventually, it would seem, everything U.S. consumers buy will become more costly because of the Trump administration’s tariffs.
Are we on the way to making America great again by making everything we buy more expensive? Should we be celebrating? Apparently, Frederic Bastiat’s lesson has not been learned.
Bruce Yandle is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business and Behavioral Science.
