Tuesday, March 04, 2008

Sowell on the Rust Belt

Thomas Sowell is one of the clearest thinking economists around. His latest book is Economic Facts and Fallacies and if every citizen would read it before getting in the voting booth, we might get better economic policies. Probably not, but at least people would know what they were voting for.

Sowell has an article at NRO about the pandering Hillary Clinton and Barack Obama have been doing in Ohio with respect to NAFTA:

It is fascinating to watch politicians say how they are going to rescue the “rust belt” regions where jobs are disappearing and companies are either shutting down or moving elsewhere.

The North American Free Trade Agreement (NAFTA) is being blamed for the jobs going elsewhere. Barack Obama blames the Clinton administration for NAFTA, and that includes Hillary Clinton.

Senator Obama says that he is for free trade, provided it is “fair trade.” That is election-year rhetoric at its cleverest.

Since “fair” is one of those words that can mean virtually anything to anybody, what this amounts to is that politicians can pile on whatever restrictions they want, in the name of fairness, and still claim to be for “free trade.” Clever.

We will all have to pay a cost for political restrictions and political cleverness, since there is no free lunch. In fact, free lunches are a big part of the reason for once-prosperous regions declining into rust belts.

As Sowell points out, the Rust Belt is the Rust Belt because unions and politicians have done everything in their power to push industry out of these states. There's a reason Honda and the other foreign manufacturers who set up shop in the US don't site their plants in the Rust Belt. High taxes and oppressive unions are not a recipe for attracting new manufacturing plants.

Politicians like Clinton and Obama find it easier to blame it on NAFTA because as Sowell puts it:

NAFTA makes it easier for politicians to blame the problem on foreigners. In fact, foreigners make ideal scapegoats for politicians. After all, people in Japan or India can’t vote in American elections.

Americans who can vote would do well to start spending more time thinking about economic realities, instead of being swept away by political rhetoric.

I don't worry about the rhetoric; that's just politics as usual. What I worry about is that these politicians may actually believe their own rhetoric and try to follow through on this nonsense.

Read all of the Sowell article; it's well worth the time.

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