Originally published at AIER. ​

Tariffs, often promoted as a tool to protect American jobs and industries, are a hidden tax that disproportionately burdens consumers and producers alike. Both the Trump and Biden administrations have embraced these protectionist policies, and future administrations may likely do the same. But these policies do more harm than good, undermining the very people they are designed to protect.

Recently, protectionist policies have been championed by the Trump-Pence administration, continued by the Biden-Harris administration, and likely doubled down upon by Trump-Vance or Harris-Walz. Tariffs may seem like a good way to shield domestic industries from foreign competition by making imports more expensive, but the reality is starkly different. Tariffs are taxes on imports; like all taxes, the costs are inevitably passed down to the consumer. When the federal government imposes tariffs, it raises the prices of goods that many American businesses rely on, leading to higher costs. This isn’t just an abstract economic concept — it affects every American who buys a car, electronics, groceries, or other everyday items.

In 2023, the US imported over $3.8 trillion of goods and services while exporting $3.05 trillion. This nearly $7 trillion in trade volume highlights how imports and exports play a role in the US economy, supporting millions of American jobs, but is a relatively small share of the $27.3 trillion economy. While the US ran a current account deficit as imports exceeded exports by $773.4 billion in 2023, this amount doesn’t tell the whole story. 

For instance, the US had significant trade surpluses with regions like South and Central America ($54.9 billion) and countries like the Netherlands ($43.7 billion) and Hong Kong ($23.6 billion). Conversely, it recorded deficits with China ($279.4 billion), the European Union ($208.2 billion), and Mexico ($152.4 billion). Notably, while substantial, trade with China represents only 8.4 percent of the total US international trade volume, even as it accounts for 36 percent of the current account deficit. This deficit and the total trade deficit are met with a capital account surplus, with funds flowing into the US, including investments that help finance the national debt, support lower interest rates, and support capital to businesses.

International trade provides mutually beneficial exchanges between people in different countries, supporting peace and prosperity.

The Real Economic Impact of Tariffs
Proponents of tariffs often argue they are necessary to rebuild America’s manufacturing sector, but the problem isn’t foreign competition — it’s at home. US manufacturers’ core issues stem from excessive government spending, high taxes, inflated minimum wages, overregulation, and a lack of right-to-work laws. Instead of addressing these root causes, tariffs exacerbate the problems by acting as an additional tax on American businesses and consumers.

When tariffs are imposed, the costs of imported goods rise. These goods are finished products, raw materials, and components that American producers rely on in their supply chains. This increased cost of production ripples through the economy, making American goods more expensive both domestically and internationally and hurting US businesses’ ability to compete.

Take, for example, the tariffs on steel, which were implemented to protect US steel producers. While they may have helped some steel manufacturers, they raised costs for industries that depend on steel, such as the automotive and construction sectors. These industries were forced to pass on these costs to consumers, making American-made goods more expensive and less competitive. Rather than revitalizing manufacturing, these tariffs hinder growth, slow job creation, and harm consumers.

Moreover, tariffs fail to address the real reasons behind the loss of manufacturing jobs. Automation and technological advances have displaced many jobs, allowing US manufacturing output to reach record highs with fewer workers. The Rust Belt’s loss of manufacturing jobs is less about foreign competition and more about the evolving nature of the global economy, tariffs do nothing to solve these domestic challenges.

When tariffs increase, they tax what we purchase from other countries. This tax directly affects producers and consumers who rely on foreign goods. The process reduces the demand for foreign currencies to purchase foreign goods while raising demand for the dollar, especially when the federal government runs deficits that result in higher interest rates. This results in an appreciated dollar by roughly the size of the tariff itself. This currency appreciation helps keep the cost of the taxed goods from rising too quickly, but it simultaneously disrupts the supply chain and other factors of production. As the dollar appreciates, US exports become more expensive for foreign buyers, leading to fewer exports and more imports. This dynamic undermines the goal of balancing or reducing the trade deficit with the targeted country or others.

Moreover, foreign countries often respond with retaliatory tariffs, raising costs for their producers and consumers while driving a wedge between trade relationships. This creates direct costs and increases economic and political uncertainty — something businesses dread when planning for the future. Although tariffs don’t directly cause inflation — an issue controlled by the Federal Reserve’s monetary policy — they raise prices on specific goods through the added tax. These increased costs can ripple through the supply chain, affecting many products. International trade is complex, and protectionist measures like tariffs only exacerbate the complexities, worsening the situation.

The current account deficit with other countries is balanced by a capital account surplus, where foreign savings flow into the US, helping finance our national debt and keeping interest rates lower than they would otherwise be. However, the flow of funds is slowing as some countries shift away from the US dollar, opting for gold and other assets. This trend poses a risk to the US economy by potentially restricting our ability to trade with other countries and raising the cost of borrowing as interest rates rise. This shift from the dollar, known as de-dollarization, underscores the importance of maintaining strong international trade relationships and avoiding protectionist policies alienating trading partners. As global confidence in the US dollar wanes, the economic benefits of foreign investment could diminish, leading to higher costs for Americans.

Tariffs Worsen Broader Problems at Home
As noted above, the broader economic problems facing the US stem from high taxes, overregulation, and government policies that make it more expensive for businesses to operate. Tariffs worsen these problems by raising costs for American businesses and consumers. By taxing imports, tariffs increase the prices of goods that US producers need to remain competitive. This adds to the burdens already imposed by high taxes and government mandates, effectively taxing Americans twice — once through tariffs and again through the costs of domestic overregulation.

Rather than addressing the domestic policy environment that has hindered US competitiveness for decades, tariffs only complicate matters. US companies struggle with excessively high corporate taxes, incentivizing them to move operations overseas. Before the Tax Cuts and Jobs Act of 2017, the US had the highest corporate tax rate in the developed world. While the Act lowered the federal corporate tax rate to 21 percent, proposals to raise it to 28 percent would once again make US companies less competitive globally.

Like Texas, right-to-work states in the South have demonstrated how pro-growth policies can attract manufacturing jobs by creating a business-friendly environment. These states have attracted jobs lost from the Rust Belt by fostering lower taxes and fewer regulations. On the other hand, tariffs stifle economic growth by driving up costs, making it harder for these states to sustain their competitive advantage.

In sum, tariffs don’t solve American businesses’ real issues — they make them worse. Instead of protectionist measures, the US needs to focus on reducing domestic costs by lowering taxes, cutting red tape, and fostering an environment that encourages innovation and growth.

Protectionism: A Failed Policy
The economic data between 2016 and 2021 highlight the failure of protectionist policies, including raising tariffs that began in 2017. 

Consider that global manufacturing output was $14.1 trillion in 2016, with China leading at $4 trillion and the US following at $2.3 trillion. In 2021, it rose to $16 trillion, with China’s part increasing to $4.9 trillion and the US’s to $2.5 trillion. Global manufacturing output grew by 13.5 percent. While China’s manufacturing surged by 22.5 percent, the US had a more modest increase of 8.7 percent. Of course, this period had significant initial and retaliatory tariffs between these countries and lockdowns in response to a global pandemic.

Since 2017, the Trump and Biden administrations have imposed $79 billion in tariffs as part of protectionist policies meant to shield domestic industries. Despite these efforts, global manufacturing continued to grow, and the economic pie expanded — but China captured a larger slice, increasing its share from 28.3 percent to 30 percent. The US trade deficit with China continued to widen, undermining the asserted goal of protectionism. Meanwhile, US manufacturers struggle with higher production costs, passed down to American consumers through increased prices on specific goods.

The Case for Free Trade
The US should abandon protectionism and embrace free trade policies that foster innovation, improve efficiency, and lower costs for consumers and businesses. When countries engage in free trade, all parties benefit from the specialization of labor and resources. Protectionist measures like tariffs distort markets, raise costs, and create uncertainty, hurting American consumers and producers.

Free trade doesn’t mean ignoring unfair trade practices by bad actors like China. However, the best way to address these challenges is not through blanket tariffs but by expanding trade with allies and non-hostile nations. For example, the Trans-Pacific Partnership (TPP) offered an opportunity to strengthen economic ties with 12 countries, pressuring China to play by the rules or risk losing access to major markets. Unfortunately, withdrawing from the TPP in 2017 was a missed opportunity to enhance American competitiveness while holding China accountable.

Conclusion
Tariffs are not the right tool to address the challenges facing American industries. They are a tax on imports, raising costs for consumers and producers while failing to tackle the real issues at home: excessive government spending, high taxes, overregulation, and outdated domestic policies hinder US competitiveness. By embracing free-market solutions — eliminating tariffs, reducing spending, reforming taxes, and cutting regulations — the US can create an environment where American businesses can thrive without relying on harmful protectionist measures. The path forward lies in pro-growth free trade efforts — unilaterally or through agreements with other countries — and domestic reforms, not in tariffs that hurt those they aim to protect.

Originally published at Pelican Institute. 

​Louisiana’s economy, deeply reliant on global trade, faces unique challenges under the weight of federal tariffs. As recent protectionist policies continue to gain traction, Louisiana finds itself vulnerable to the unintended consequences of these measures, which often do more harm than good. While these tariffs are marketed to protect American industries, they act as a hidden tax that burdens consumers and producers, ultimately stifling economic growth and prosperity.

At first glance, tariffs might seem like a tool to bolster domestic industries by making imported goods more expensive and less competitive. However, the reality is starkly different. Tariffs are taxes on imports; like all taxes, the costs are passed down to consumers and businesses. When the federal government imposes tariffs, it raises the prices of goods that Louisiana’s industries rely on, leading to higher production costs. This isn’t just an abstract economic concept—it affects every Louisianan who buys a car, electronics, or even groceries.

Louisiana’s Trade Profile

In 2023, Louisiana exported over $122 billion worth of goods, making it the 3rd largest exporter among U.S. states. The state’s top exports included liquefied natural gas (LNG) at $22.2 billion, light petroleum distillates at $16.3 billion, and soybeans at $14.4 billion. These exports underscore Louisiana’s significant role in global energy and agricultural markets. On the import side, Louisiana purchased $38.2 billion of goods from foreign countries, ranking as the 24th largest importer among U.S. states. The top imports included petroleum oils ($5.78 billion), light petroleum distillates ($4.63 billion), and copper cathodes ($1.31 billion). This robust trade activity highlights imports’ critical role in supporting Louisiana’s industries, particularly in energy production and manufacturing.

Despite this impressive trade performance, Louisiana faces a substantial trade deficit driven by the high volume of imports relative to exports. The state’s reliance on imported petroleum and other raw materials exposes it to the direct impact of federal tariffs, which increase the cost of these essential goods. While a trade deficit is often considered a detriment to an economy, these imports are important to the production process and consumers who desire the goods. What’s more important is that the total trade volume in Louisiana is $160 billion with other countries to satisfy the needs and wants of Louisianans. Recall that people trade, not countries or states, so they trade only when both parties mutually benefit.

The Economics Behind Tariffs

When tariffs increase, they tax the goods Louisiana imports, impacting both producers and consumers who depend on these foreign products. This tax reduces demand for foreign currencies while increasing demand for the U.S. dollar, especially when federal deficits drive interest rates higher. This dynamic results in an appreciated dollar, which, while keeping the cost of taxed goods from rising too quickly, also disrupts supply chains and other production factors.

As the dollar appreciates, U.S. exports become more expensive for foreign buyers, leading to fewer exports and more imports. This dynamic undermines the questionable goal of balancing or reducing the trade deficit with the targeted country or others. Moreover, foreign countries often respond with retaliatory tariffs, raising costs for their producers and consumers while driving a wedge between trade relationships. This scenario is particularly detrimental to Louisiana, where trade is crucial to the state’s economic health.

Although tariffs don’t directly cause inflation—an issue controlled by the Federal Reserve’s monetary policy—they raise prices on specific goods through the added tax. These increased costs ripple through the supply chain, affecting many products. As highlighted by the Tax Foundation, tariffs can also reduce economic output, lower wages, and lead to job losses in affected industries, further illustrating the negative impacts of such policies.

Navigating Federal Uncertainty with Fiscal Conservatism

Given the federal uncertainty and the complexities of international trade, Louisiana must focus on improving its competitiveness to navigate these challenges effectively. The state should consider pro-growth policies of spending less, cutting taxes, and supporting a workforce for careers that align education and training programs with the needs of key industries. This will help Louisiana develop a skilled workforce that attracts businesses and supports existing industries. A well-trained workforce is critical to maintaining the state’s competitive edge, which will be helped by the recent passage of the LA GATOR Scholarship Program to empower parents with school choice.

Another vital step is reducing regulatory burdens at the state level. By streamlining regulations, Louisiana can offset some of the negative impacts of federal tariffs, fostering a more business-friendly environment that encourages investment and job creation. Moreover, promoting Louisiana’s status as a right-to-work state helps maintain its competitive advantage. The flexibility offered by right-to-work laws is attractive to businesses, particularly those looking for a more favorable labor environment. Diversifying trade relationships is also essential. While trade with major economies like China is significant, Louisiana must continue to expand its exports to other regions and countries. By doing so, the state can reduce reliance on any single market, mitigating the risks associated with global trade tensions.

Conclusion

Tariffs, while intended to protect American industries, ultimately function as a tax that harms consumers and producers. For Louisiana, where the economy is deeply integrated with global trade, the negative effects of tariffs are particularly severe. Louisiana must embrace fiscal conservatism, improve competitiveness, and address the real domestic issues hindering growth to secure the state’s economic future. By doing so, Louisiana can ensure that its industries remain competitive, its economy is resilient, and its citizens are prosperous in a global economy.

​In episode 77 of This Week's Economy, I break down the flawed economic promises of presidential candidates who ignore that nothing is truly free. From proposed AI regulations and fracking policies to tax plans and protectionism, I explore the impact these issues have on innovation, energy independence, and economic growth while highlighting why free-market solutions are key to prosperity. Get the show notes and more information at vanceginn.substack.com.

​Originally published at Kansas Policy Institute. 

As the debate over tariffs continues to dominate political discussions, Kansas finds itself caught in the crossfire of these trade policies. Though touted as a way to protect American industries, tariffs often act as hidden taxes that ultimately burden consumers and largely restrain economic growth and prosperity in the state.

Kansas, known for its strong agricultural and manufacturing sectors, is particularly vulnerable to the economic impacts of tariffs. While tariffs may seem like a tool to give local products a competitive edge by making foreign goods more expensive, the reality is that these costs are passed down, increasing the prices of goods essential to Kansas families and industries. This isn’t just theoretical; it affects every Kansan, from the prices paid for everyday goods to the costs of doing business by the tariff rate over time.

Kansas’ Trade Dynamics
In 2023, Kansas exported over $14 billion worth of goods, making it the 32nd largest exporter among U.S. states. Especially given the overall size of the state, Kansas is punching above its weight. The state’s top exports included aircraft parts ($2.63 billion), fresh or chilled boneless beef cuts ($970 million), maize/corn ($537 million), frozen beef cuts ($422 million), and soybeans ($365 million). These figures highlight Kansas’ vital role in both aerospace and agriculture. On the import side, Kansas brought in $13.4 billion in goods, ranking as the 35th largest importer in the U.S. Significant imports included unspecified commodities ($1.54 billion), aircraft parts ($671 million), turbo-jet engines ($403 million), communication apparatus ($331 million), and electrical machinery ($302 million). This trade activity underscores the importance of imports in supporting Kansas’ diverse industries, particularly in aerospace and technology.

Despite Kansas’ robust trade performance, the state is not immune to the economic strain caused by tariffs. These trade barriers increase the cost of imported materials and components crucial to its industries. While trade deficits often draw negative attention, the focus should be on Kansas’ overall trade volume of $27.4 billion, which supports jobs and drives economic activity across industries and the state. Trade is not just about deficits or surpluses; it’s about the mutually beneficial exchanges that allow Kansans to thrive.

The Economic Impact of Tariffs
Tariffs, by design, impose a tax on imported goods, impacting both producers and consumers. This added cost reduces demand for foreign currencies while increasing demand for the U.S. dollar, especially when federal deficits push interest rates higher. A stronger dollar can mitigate some price increases caused by tariffs but also disrupt supply chains and raise production costs. As the dollar appreciates, Kansas’ exports become more expensive for international buyers, reducing demand for these goods abroad. This can lead to a decline in Kansas’ export volume, undermining efforts to balance trade deficits. Additionally, tariffs often trigger retaliatory measures from other countries, further complicating trade relationships. For Kansas, where global trade is integral to the economy, such disruptions can have serious consequences.

Although tariffs don’t directly cause inflation, as the Federal Reserve creates inflation by printing too much money, tariffs increase prices on certain goods by the amount of the tax hikes on them over time. These higher costs ripple through the supply chain, affecting a broad range of products. As noted by the Tax Foundation, tariffs can also lead to reduced economic output, lower wages, and job losses in affected industries, illustrating these policies’ broader negative effects on Kansas.

Strengthening Kansas’ Economic Future
Kansas must proactively enhance its competitiveness in response to federal trade policy uncertainties. Of course, the state cannot set interest rates or tariff policies. The state should focus on policies that promote growth through fiscal responsibility—reducing unnecessary government spending, lowering taxes, and aligning workforce training with the needs of key industries like agriculture and aerospace. A skilled workforce is essential for attracting businesses and supporting Kansas’ existing industries.

Additionally, reducing the regulatory burden on businesses can help Kansas offset some negative impacts of federal tariffs. Creating a more business-friendly environment encourages investment and job creation, ensuring long-term economic resilience. Expanding trade relationships and exploring new markets is another critical strategy. Diversifying export destinations reduces reliance on a few large markets, mitigating risks from global trade tensions. It’s nice that many state leaders attend the occasional international air show or economic confab, but these taxpayer-funded trips don’t help “sell” Kansas. However, sound economic policy will “sell” the state, making it easier for a business to expand in The Sunflower State than in The Palmetto State. 

Finally, Kansas leaders should advocate for federal trade policies that support free trade and minimize reliance on tariffs. Supporting global trade agreements will help secure Kansas’s prosperous future and contribute to a stronger national economy.

Conclusion
While tariffs aim to protect American industries, they function as a tax that burdens consumers and businesses. For Kansas, which is deeply tied to global trade, the negative impacts of tariffs are particularly significant. By focusing on fiscal responsibility, enhancing competitiveness, and addressing domestic challenges, Kansas can ensure its industries remain strong, its economy resilient, and its people prosperous in the global market.

​Originally posted here: https://www.politicsandparenting.com/p/the-economy.

​Today on the show I am joined by Vance Ginn, Ph.D. A leading economist and advocate for free-market principles and fiscal conservatism. He is the former associate director for economic policy at the White House’s Office of Management and Budget and chief economist at the Texas Public Policy Foundation.   He is the founder and president of Ginn Economic Consulting and host of the Let People Prosper Show podcast, providing high-impact economic consulting that dives deep into pressing issues with top influencers. He lives in Round Rock, Texas, with his family, championing policies that promote economic freedom and prosperity.

We discuss inflation, debt, minimum wage, currency, and tariffs. This is a great episode for average citizens trying to get a handle on this complex topic. Be sure to follow Vance on X and Substack, and check out his new article out in the Freemen-News Letter.

Originally published at AIER. 

​Both major presidential candidates, Joe Biden and Donald Trump, have leaned towards protectionism, a stance recently echoed by Terry Schilling in The American Conservative. Unfortunately, this perspective misses the mark. 

Protectionism is not the solution to revitalize American manufacturing or the economy. The real culprits are flawed internal policies — excessive government spending, high taxes, and stringent regulations — that stifle growth and innovation.

Politicians from both sides of the aisle often scapegoat countries like China and Mexico for the decline in US manufacturing. This narrative overlooks reality. 

Technological advancements and productivity gains are the primary drivers of change in manufacturing, and that’s a good thing for the many beneficiaries at the expense of the few. Industrial production in manufacturing has remained relatively flat, indicating stable output despite economic fluctuations, while manufacturing employment has declined significantly, reflecting the sector’s increased productivity and automation.

In short, we don’t need as many hard jobs to provide the same output, and those displaced individuals can find better avenues to flourish, even with tough transitions. While it would be great if there were a way to protect everyone’s job, this is a fool’s errand resulting in control by politicians and bureaucrats in government at the expense of everyone else. 

Free-market capitalism is needed now more than ever, not big-government socialism, which is already sending us down the road to serfdom. American manufacturing’s decline is largely due to domestic policies that reject free-market capitalism, thereby hindering economic growth. 

Progressive policies have led to excessive government spending, high taxes, and overregulation. The federal government is spending about 25 percent of GDP and running nearly $2 trillion deficits, including paying about $1 trillion in net interest payments annually, even with record-high tax collections. Add to this how the Competitive Enterprise Institute reports federal regulations cost the US economy $1.9 trillion annually, equivalent to 7 percent of GDP. Spending and regulations shackle about one-third of our economy, creating perverse incentives for businesses and workers to compete and innovate. 

The Trump administration’s efforts to boost manufacturing through tariffs led to trade wars that aimed to bring jobs back to the US. These measures backfired, however, increasing costs for American businesses and consumers, as tariffs are just taxes on Americans. Manufacturing output saw little sustained improvement, and employment gains were modest and short-lived. 

Deficit spending, which contributed to an appreciated currency from foreigners’ demand for the US dollar, made it cheaper to purchase foreign goods, exacerbating the trade deficit. The trade deficit expanded even after Trump imposed tariffs on Chinese goods. Similarly, the Biden administration’s attempts to revitalize the sector through initiatives like the American Jobs Plan and the Inflation Reduction Act have yet to do more than drive up the deficit and prop up specific markets. 

Despite potentially good intentions, these policies have yet to deliver the promised results, often perpetuating the same issues of overregulation and high spending.

The United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA and mentioned in the piece, introduced more protectionist measures than its predecessor. The USMCA’s stringent labor and content rules have complicated trade and increased production costs, undermining its effectiveness in promoting free trade. These provisions counter what should have been done to promote more trade and prosperity.

It is wise to remember that free trade has provided the best opportunities for people to prosper and has significantly reduced extreme poverty globally, including in China. 

America should not isolate itself from other countries, as we benefit from a growing global demand for our products and the supply of goods we can purchase from abroad. Consumers and producers in America are better off with more domestic and international trade. As we don’t want to produce everything we consume daily, trading with others is the most efficient way to meet our needs.

Our national debt, driven by excessive government spending, is a significant economic burden. This debt will continue to grow without the resolve to cut spending and implement a strong spending limit. The Federal Reserve’s monetary policy, which has reduced purchasing power and higher inflation, also impacts manufacturing and should be regulated through a monetary rule. 

The PROVE IT Act aims to ensure that carbon emissions from imports are accurately measured. Still, the underlying assumption of a need to tax carbon dioxide — a necessary component of life — is flawed. Pigouvian taxes are problematic because they often target the wrong factors at incorrect tax rates, essentially serving as tools for government overreach rather than effective economic policy. 

The focus should be on minimizing government control over economic actions, which create more problems. A carbon tax or one of its spinoffs is a misguided attempt to control what the EPA doesn’t consider a pollutant, leading to worse outcomes for everyone, especially the poor.

Another way to improve relationships with countries and put more collective pressure on China to liberalize while meeting the needs of consumers and producers in America would have been to approve a version of the Trans-Pacific Partnership (TPP). 

This trade agreement negotiated by the Obama administration allowed expanded free trade with 11 other Asia-Pacific countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam). By partnering with multiple countries, America could have promoted free trade practices that fostered a more robust economic environment that competes with China, Russia, and other potential adversaries. 

The TPP, as detailed by the Council on Foreign Relations, aims to enhance trade and economic integration across the Asia-Pacific region, providing significant benefits to all member nations. The TPP would reduce tariffs, establish common trade standards, and open new markets for American goods and services, ultimately leading to greater economic growth and job creation at home. 

Unfortunately, Trump rejected the TPP when he took office in 2017 instead of trying to negotiate the TPP better. While America was left out, the other 11 countries joined trade agreements after TPP’s demise, a major setback for Americans that could have been avoided.

Revitalizing American manufacturing requires addressing internal policy failures rather than blaming foreign competition.

We can ensure long-term prosperity by reducing government interference, embracing free trade, and fostering a competitive environment. The better path forward with fewer trade-offs lies in free-market principles, which have the power to drive innovation, efficiency, and economic growth. 

It’s time to shift the focus from protectionism to fostering a robust, open market that benefits everyone.

Watch interview at NTD News. ​

Vance Ginn, president of Ginn Economic Consulting and former chief economist for the White House Office of Management and Budget, offers his analysis of the latest U.S.-China policy after the Biden administration recently announced a 100 percent tariff on Chinese electric vehicles.

​In this bonus episode, we discuss:
​
1) How immigration helps the U.S. economy and the truth behind common immigration myths, such as fear that immigrants "steal jobs,"
2) Why the tariffs against China didn't work, and the tyranny of excessive government spending; and
3) Dangers of antitrust laws, and the importance of letting markets work.

​Be sure to check out and subscribe to “The Immigration Guy” podcast.

You can watch this episode and others along with my Let People Prosper Show on YouTube or listen to it on Apple Podcast, Spotify, Google Podcast, or Anchor. Please share, subscribe, like, and leave a 5-star rating!

​For show notes, thoughtful insights, media interviews, speeches, blog posts, research, and more, check out my website (www.vanceginn.com) and please subscribe to my newsletter (www.vanceginn.substack.com), share this post, and leave a comment.

President Biden recently visited the humanitarian crisis along the U.S.-Mexico border but mostly used it as a political stunt to offer more failed policies and chastise Republicans. Republicans have also had years to solve immigration issues, but the situation continues. Meanwhile, Biden and former President Trump have similar protectionist trade policies, which have come at a cost to Americans.

Given the gains from immigration and trade in a globally connected economy, many on the left and the right overlook how government failures of a broken visa system and costly big-government are the source of these problems. And this oversight leads to  many of their big-government solutions that aren’t rooted in sound economics but rather winning votes.

Immigration and trade overlap in many ways as they are exchanges with people across international borders. Given the rule of law and private property rights are essential in our republic, there are roles for government to enforce the rules of the game but otherwise politicians should address bad policies in the U.S. before trying to blame tangential problems on other countries or “market failures.” 

For instance, have you ever heard that “immigrants and trade steal jobs”? It’s a myth. 

The notion that immigrants “steal jobs” supposes that adding more people and different kinds of knowledge and innovation to the economic pie somehow prohibits the native-born population from prospering. Simply put, the aversion to immigrants joining the American workforce is rooted in fear of competition. 

Moreover, much of the skepticism fueling fear of more working immigrants tends to also be directed at international trade. But the gains to be acquired from immigration and trade outweigh the suspected costs. 

We would be wise to let markets work within the rule of law instead of imposing arbitrary restrictions and growing government. 

Working immigrants do not steal jobs. But, as economist Ben Powell recently noted in my conversation with him, they do change the mix of jobs as they expand the capacity of the economy with more workers. Similarly, when young people graduate college and enter the labor market each year, they don’t “steal jobs” but often accept the lower-skilled positions while increasing productivity. 

These groups support increased competition, fuel the creation of new jobs, and permit the native-born population to work in positions in which they’re more productive. They also increase demand for goods and services provided by lower-skilled workers.

So, immigrants and new graduates alike can increase net jobs. 

When I hire a contractor to install my ceiling fan, I don’t view it as them stealing my job because someone else is better at it. Even though I pay for the service, it’s a trade that ultimately benefits me or I wouldn’t do it, as not learning how to install the fan gives me more time to do things which I enjoy. 

The contractor and I mutually benefit, just like with all exchanges with people whether in the same community, same state, same country, or another country. Barriers to immigration and trade, such as visa limitations, border walls, tariffs, and quotas, are barriers to human cooperation enforced by politicians with limited knowledge. 

A more productive path forward would be pursuing immigration reform that improves the visa system, making it easier for immigrants to come legally. Border walls, such as the one in Texas, are a scapegoat and far cry from addressing the real issues needing reform. 

Similar to the fear of immigration, proponents of trade protectionism often fail to understand that the exchange is as economically simple as it is non-threatening. 

Whether a Texan is trading with a New Yorker or someone from China, it’s individuals, not places or entities, trading for mutual benefit. A greater exchange of goods and services through trade promotes competition as the expanded pool of resources for consumers encourages producers to innovate to stay competitive or risk closing. 

International trade doesn’t steal U.S. profits any more than immigrants steal jobs. But, like immigration, it allows people to focus on producing the goods they have a comparative advantage instead of being pressured to supply everything for themselves. The goal should be to reduce costs of doing business so there are abundant opportunities for American workers and businesses to flourish by cutting government spending, taxes, and regulations.

Restricting trade and immigration ultimately restricts the prosperity supported by free-market capitalism by keeping out an influx of knowledge, skills, and goods and services that made the American melting pot so great for so long. 

Anti-trade and anti-immigration are anti-growth. Free markets are really free people. We ought to find free-market solutions to advance freedom and opportunity rather than impose costly barriers that hinder them. 

As economist Peter Boettke recently in my conversation with him: when ordinary people are given elbow room to grow, economies thrive and people can prosper. ​

Originally published at Econlib.