20 — MANCHESTER HERALD, Tuesday, Aug. 28, 1984 Support keeps growing Protectionism carries costs and benefits Cooper plant needed, Sports Hall of Fame Have a bunch shelter group learns to honor Fred Nassitf the U.S. market — the amount the In tor brunch “ It is the maxim of every autos, textiles, copper, wine and authority, cited the same kinds of industry now wants to stop — cost prudent master ol a family never many other products. costs — but not nearly as big. the domestic industry $2.3billion in ... page 3 ... page 9 to attempt to make at home what it Adam Smith's simple'idea that iSt^el Import Quotas The FTC said the total cost to page 17 lost sales. will cost him more to make than to nations, like households, gain from consumers would be $605 million a (W ould cost coiisim Mirs He calculates that when this loss buy. The tailor does not attempt to specializing in the goods they year. The quotas it studied would had rippled through the economy, make his own shoes, but buys them make best, is where the debate $7.8 billion in 1989 apply to only 70 percent of U.S. the total effect was a $5.1 billion from the shoemaker. ... “ What is starts. >f 4.SBfli.lOW steel imports. Many other techni­ I Where does the money go? smaller gross national product, prudence in the conduct of every In the 19th century. David Shift ol Incoma from cal differences explain the wide private family can scarce be folly Ricardo refined this into the theory I consumers to domestic'] range of figures. 62,000 jobs lost directly and indi­ rsteel kKhistry. creating, in that of a great kingdom. If a of comparative advantage — when rectly, $1,1 billion in taxes lost to 34,000 steel jobs and f $1.1 Bm.fON^ Both of these studies indicate the foreign country can supply us with two nations, one good at making the government and $350 million Cloudy tonight: L modernizing plants consumer cost per job saved would a commodity cheaper than we wine, the other at cheese, each ^ A cost tc the nation, ‘ paid out in unemployment Manchester, Conn. ourselves can make it, better buy it produce the one at which they are I this would simply be high. CBO's figures amount to benefits. warm Thursday $200,000 per job in the fifth year, Wednesday, Aug. 29, 1984 of them with some part of the relatively best, both countries end k evaporate as an That assumes money Americans the FTC's to $99,000 a year per job — see page 2 produce of our own industry, up with more wine and more , efficiency loss spent last year to import steel was Single copy; 25<t saved. employed in a way which we have cheese and a higher standard of "lost” to the economy. CBO The FTC compared the financial analysts say ranch of this money HanrhpBtpr M m lJi some advantage." Adam Smith. living through increased efficiency “ The Wealth of Nations," 1776. of production. ■ cost of quotas to consumers over would come back in orders for U.S. five years with their financial export goods. These, in turn, would . ‘ $2.2 BILLfOW He showed this gain comes even benefit to steelworkers — the produce jobs and economic to a nation with no absolute ^Also a cost to the nation By Donald H. M ay earnings these workers otherwise growth. advantage at either wine or this would go to foreign United Press International would lose over the same period. It Smith and Ricardo said money , steel producers who cheese, but which exports the one found that for every $1 saved by spent on imports comes back with ^ hold the quota rights in which it has least disadvantage. steelworkers, consumers would a bonus. They were arguing WASHINGTON - Have Ameri­ to sell steel , j CBO's steel report illustrates lose $30. against a theory called mercanti­ cans forgotten Adam Smith's how most economists believe the . VI the U.S. New figures In a 1980 study, the FTC lism, widely believed in their homespun advice on the benefits of benefits and costs of restricting measured these costs and benefits times, which held that imports international trade, written in the trade come about. in other U.S. industries of various were in general bad, only exports A year of our national birth'.’ The proposed quotas on steel kinds of trade restriction during were good. Consider the plea of the domestic imports would cause their price to the late 1970s. 2 The U.S. Trade Representative's steel industry. It wants Congress to I rise. This would increase demand UPl Comparing just the efficiency Office estimates 20 percent of V limit steel imports to 15 percent of suggesting for domestic steel, and its price Congreosional Budget Office 1060 Eetimatee loss to the economy — not the full manufactured goods consumed by the U.S. market for five years. also would rise. consumer cost — against the Americans in 1980 were covered by This, it contends, will provide jobs Because of the higher price. earnings benefits to workers, over some kind of import restriction. for American steelworkers and Americans would u.se4 percent or5 All this, CBO says, would cost orate, an eilicieney loss from the • four years, it calculated the costs Attempts to find out how much t bring the industry the cash needed percent le.ss steel. But. even so. American consumers $7.8 billion in fact that steel that could be bought of protection were 3.5 times the all forms of protection cost Ameri­ to modernize and become more domestic producers would sell the fifth year of quotas alone. This more cheaply abroad now would be benefits in the sugar industry, cans have been just as subject to siowdown competitive. about 6 percent more steel to fill money would flow from their produced in this country. This is seven times the benefits in clothing debate as the separate industry The potential benefits have the gap left by reduced imports. pockets in three different ways: the mirror image of what Smith and 25 times the benefits in shoes. studies. 9 received wide national publicity: In tbe fifth year, 1989, there • $4.5 billion of the total would go and Ricardo were talking about. It If — as the U.S. steel industry Michael C. Monger at Washing­ By Denis G. Gulino the costs have received less notice. would be 34.000 more U.S. steel Compotita IndaN ol from American consumers to is the efficiency gain from trade argues — quotas would not raise ton University in St. Louis, Mo., A recent report by the Congres­ industry jobs us the direct effect of United Press International domestic steel producers because that protection takes away. prices as much as CBO says, while estimated that protection cost L ead in g sional Budget Office estimates quotas — although CBO said other these firms not only would sell All three are losses to consu­ domestic production increased American consumers $58.5 billion WASHINGTON (UPI) — The Econom ic those costs. factors could be at work at the more steel but also collect higher mers, but only the last two are more, then the cost to consumers in 1980 and said even this was not a index of leading indicators, the Average steel prices in this same time causing a net job prices for the steel they already costs to the nation. The first, and Indicators ] [Down I would be less, the gains to the full accounting. He called it a government’s sensitive economic country, it calculates, would be 10 decline. sell. biggest, is a shift of income from lnd.>: l0-8‘^r industry and workers would be "hidden tax” of $1,200 a year for barometer, fell 0.8 percent in July 1807.100 percent higher with quotas than The domestic industry would a $2.2 billion would, as quotas consumers to the steel' industry bigger. the average American family of after a 1.3 percent decline in June, without them. How about the gain in pre-tax profits by $1.7 normally are administered, go to and its workers. James Collins, executive vice four. the Commerce Department said industries that use steel? How do billion in the first year, rising to foreign steel producers who would The Federal Trade Commission, president of the American Iron and Consumers for World Trade, an today. we weigh gains for steelworkers $4.5 billion in the fifth. Under likely hold the quota rights to sell steel in estjmating the effects of a similar Steel Institute, says CBO failed to educational group, estimates that The figures represent the first against losses for consumers? tax conditions, this would give it this country. Quotas are in effect 15 "percent quota that Bethlehem include in the balance the full “ cost restrictions added since 1980 and back-to-back declines since the Those questions are at the heart $1.5 billion to $2.5 billion a year (in licenses to sell a fixed amount of Steel Corp. and the United Steel­ of imports,” inflation may have increased recession began to fade in De­ of current debate over restrictions 1983 dollars) in extra cash that it goods at a higher price. workers of America want Presi­ Last year, he contends, steel Monger's figure to as high as $2,000 cember 1981 and January 1982, new of trade not only in steel but in could invest to modernize. • $1.1 billion would simply evap­ dent Reagan to impose on his own ^ ... imports in excess of 15 percent of a year per family.