Dry-Cleaning Economics in One Lesson

The Foundation for Economic Education reports that an American clothes hanger company has succeeded in persuading the government to slap a tariff on its foreign competitors. Who wins?

…the tariff is expected to cost some $212,765 for each of the 564 jobs saved. …

The lesson is that the misguided attempt to save jobs for domestic hanger manufacturers comes at the expense of other domestic employment. Failure to base policy on Hazlittā€™s wisdom has led to the substitution of political competition and bureaucratic fiat for the market process. Not only has M&B [the domestic hanger maker] enriched itself by using the political process to stifle competition from foreign firms, it has also taken advantage of the reduced competition by raising its price by more than 10 percent.

See Dry-Cleaning Economics in One Lesson for the whole story.

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