Ann Coulter Comes to Texas Tech

On November 15, Ann Coulter (Ann Coulter.com) spoke at a public meeting at Texas Tech University, Lubbock, Texas. The meeting was hosted by the Young Conservatives of Texas -Texas Tech chapter (https://www.yct.org/chapter/texas-tech-university/), and was pretty much standing room only, with some 230 attendees.

Ann opened her speech by listing three topics that she wanted to discuss that evening:

· Immigration and the southern border

· Crime

· Anti-white racism

Much of her presentation was on these topics, but she also spoke on several other topics, including election voting patterns, Biden's "Build Back Better" legislation, and international trade.

I agreed enthusiastically with most of her comments, but was somewhat surprised by her remarks about international trade and "jobs leaving for other countries". Her claim that it was "Wall Street versus the little guy" had a distinctly populist flavor. There is much to admire in populist sentiments, and both traditional conservatives and populists agree on a number of issues; it is often hard to draw a distinct line. My concern with populism is that, without an understanding of underlying economic principles, populism leads to events such as "Occupy Wall Street" and other adverse results. Let's look at the protectionist tendency in international trade.

If it costs 10 cents to buy a domestically made pencil in Country A, and Country B can make and sell an equivalent pencil for 5 cents, why would anyone in Country A buy the more expensive pencils? Patriotism? Perhaps, but it would be difficult to incorporate patriotism into a meaningful business plan. The more likely result to come from the populists is tariffs, artificially inflating the price of imported pencils to equal the domestic one. However, tariffs create their own problems, as we shall discuss shortly.

The classic definition of economics, as defined by British economist Lionel Robbins, is:  "the study of the use of scarce [i.e. limited] resources that have alternative uses". The challenge that all of us face every day is where to spend our limited supply of money. If we spend more for pencils, we have less available to buy something else. The goal of each individual is to maximize his benefit and minimize his costs.

In her speech, Ann discussed "losing jobs" but did not, as I recall, actually call for tariffs. In fact, I do not believe that she recommended any specific proposals, but tariffs have historically been the political solution for this issue, at least among governments with populist tendencies. Tariffs have been politically popular, "doing something" to "save jobs". Economically, however, they have adverse effects. Artificially high prices for some commodities means less money available for other commodities, thus saving jobs in some industries at the price of losing jobs in others. In addition, tariffs often create reciprocal tariffs, as other countries impose their own. International trade volumes decline, along with the number of jobs.

There can be excellent reasons for tariffs or similar legislation, in limited circumstances. Even the most traditional conservatives would probably agree that military supplies need to be made at home. But tariffs need to be looked at in terms of the overall impact on the nation's economy, not just the beneficial effects accruing to a single industry.

A classic example is the Smoot-Hawley tariff, initially created as a response to job losses following the stock market crash of October, 1929. To paraphrase Thomas Sowell in his book Economic Facts and Fallacies (page 9):

"Unemployment peaked at 9 percent, two months after the crash, and began drifting generally downward, until it reached 6.3 percent in June, 1930. That's when the first government intervention occurred, with the Smoot-Hawley tariff. After that, the unemployment rate reversed and reached 11.6 percent in November, 1930. Following additional federal interventions, the unemployment rate stayed in double digits for the rest of the decade.

An economic analysis published in 2004 concluded that government interventions had prolonged the Great Depression by several years."

Michael Cannivet, on February 24, 2021, wrote an analysis of Donald Trump's 2018 steel tariff. His conclusions are similar to the ones above. Read the complete article here.

Government programs often have results widely divergent from the initial stated intentions, and this is not limited to Left-Progressive administrations. Populism may get you elected, but its policies do not always promote economic success. Economics, like gravity, operates pretty much the same regardless of who is in power, or what is the currently ascendant ideology. Remember the famous saying: "Be careful what you wish for - you might get it".