Tuesday, August 7, 2012

Protectionism's Cool... Until It Punches You In The Mouth

One of the reasons that protectionist laws and policies - thoroughly debunked in theory and practice - stick around is the fact that the costs of such actions are diffuse (e.g., tariffs force me to pay a few bucks more for a toaster) while their benefits are highly concentrated (e.g., the toaster manufacturer, protected from foreign competition, makes millions from those higher prices).  Thus, too few people spend the time to understand why free trade is the morally and economically optimal position, even though, on the whole, they'd benefit a lot from fully liberalized trade.  This is Public Choice Theory 101.

But, lemme tell ya, the ignorant sure smarten up quickly once protectionist policies begin to hurt them more directly.  The latest example of this truth comes from the Washington Examiner's Sean Higgins, who observes that US environmentalists - longtime opponents of free trade - have suddenly changed their tune because specific anti-trade policies against solar panels are hurting their "green" objectives:
They're not quoting free market economists Friedrich Hayek or Milton Friedman yet, but some environmentalist voices are asking whether protectionist trade policies aren't undermining renewable energy. And the broader Green movement may be listening.

What has them concerned is that the escalating trade war over the China's cheap solar panels. Domestic manufacturers have pushed hard for tariffs on them, and the White House has agreed.

That threatens to put the brakes on solar panel installation in the United States, which has taken off in the last few years, thanks in large part to those same cheap imports.

"Tariffs on Chinese solar are bad for us all," warned Sierra Club blogger Garvin Jabusch in a May posting. The policy, he said, is making solar panels "much less affordable for U.S. consumers."

In a post last month on the environmental news website Grist.org, Terry Tamminen, former secretary of the California Environmental Protection Agency, wrote: "If China is subsidizing solar panels, let's thank them and ask them to do more."

Last week, Bill Waren, trade policy analyst for Friends of the Earth, concluded a lengthy blog post with this warning: "Trade complaints will not solve our problems; in fact, in the long run, they may undercut clean energy and low carbon policies globally."

It's a thorny issue for the environmentalist movement. Generally they've favored any federal action that boosts the domestic renewables industry. They've also tried to build ties with Big Labor, forming the BlueGreen Alliance. And they've tended to scorn anything that smacks of free market economics.
Consider this the green trade war's silver lining, I guess.  Maybe next time these environmentalists - having now experienced firsthand the pain and immorality of protectionism - won't be so fast to bash the WTO (which has been trying to finish a big agreement on liberalization of trade in environmental goods) or to embrace protectionism.


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