Those who hold any doubts about the value of free markets — and the destructive power of government interference — will benefit from reading Robert Murphy’s new volume, The Politically Incorrect Guide to Capitalism (Regnery, 2007).
Among the myths Murphy busts is the value of protective tariffs. He uses the auto industry to illiustrate his point:
Of course, the taxes on imports make them less attractive, and thus boost business for Detroit producers. This in turn allows for more, higher-paying jobs in Detroit’s factories. But this only proves that tariffs help the workers in Detroit. They still make the average American poorer, because the gain in Detroit is more than offset by the loss to everyone else. To see this, suppose the government fined Americans $10 every time they ate dinner at home. Such a measure would certainly boost sales and wages in the restaurant industry. Yet does anybody think it would be a good idea for America as a whole? Would such a tax on home cooking make us all richer?
