The White House has yet again filed a complaint with the WTO. This time accusing China of $1 billion in illegal subsidies for exports of cars and car parts. This plays beautifully in swing-state Ohio where the average voter is either entirely clueless, or cares about little else than the immediate benefits to the 850 thousand folks whose jobs are tied to the American auto industry. Well… when I put it that way – of course it’s the latter! Who’d blame them? The problem is, there’s another 310+ million Americans who the President is throwing under the bus. And, alas, given Romney’s China-trade-bashing rhetoric, they’re both on the same page on this one.

Make no mistake folks, protectionism is always bad news, but only for the protectionist country. The foreign customer benefits (as does the importing country’s economy) when the exporting country spends its own taxpayers’ money to buy down the price of its products.

Or, as Don Boudreaux put it in his open letter to Barak Obama;

Pres. Barack Obama
Campaign Trail, USA

Dear Mr. Obama:

Speaking today in Ohio, you bragged that your administration brought unfair-trade complaints against China “at nearly twice the rate” at which George W. Bush’s administration brought such complaints.  In other words, your administration…

… is nearly twice as active as was that of your predecessor at raising Americans’ cost of living by badgering suppliers to hike the prices charged on products such as consumer electronics, furniture, and footwear;

… has doubled-down on the Bush administration’s efforts to raise production costs for the many American producers who buy inputs such as zinc and oil-field-drilling equipment from Chinese manufacturers;

… is two times as likely to pander to the economically ignorant in order to grant special privileges to the politically powerful, all in efforts to prevent Americans from spending their money as they see fit.

And you’re proud of this record?

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA  22030

Here’s my illustration on subsidies and solar panels: