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Posts Tagged ‘protectionism’

Hanger tariff takes us to the cleaners

Posted by Richard on October 1, 2008

If you've noticed your dry cleaning bills increasing this year, here's one reason: a tariff on Chinese wire clothes hangers has doubled their price, costing dry cleaners $4,000 or more each per year. The reason for the tariff? To protect the sole U.S. hanger manufacturer, M & B Hangers of Alabama.

Mark Perry, citing a report by economist Frank Stephenson in The Freeman, illustrated the absolute stupidity of this "job protection" tariff: 

Further, Stephenson cites this analysis that divides the total cost of the hanger tariff to U.S. dry cleaners ($4,000 x 30,000 dry cleaners = $120 million year), by the number of potential domestic jobs saved (564 jobs) in the U.S. hanger industry, indicating that each American job saved costs us about $212,765 per year. Since the typical full-time worker in this sector earns about $30,000 per year, it would be cheaper for the U.S. to eliminate the tariff, purchase cheaper hangers from China, let the domestic industry die, and pay each American hanger worker $30,000 per year to retire.

Almost a quarter million dollars a year to save a $30k a year job!

Economic illiteracy, coupled with Pat Buchanan style jingoism, is incredibly costly to our economy. As Perry noted, protectionism typically costs us two jobs for every job saved, and thus punishes American consumers and businesses far more than it "punishes" the foreign country it's aimed at.

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