THE PURPOSE AND RESULT OF TARIFF POLICIES by Jerry Ogles

 

            I have long been sympathetic to the Von Mises approach to free trade; however, trade is not free if not balanced on both sides of the issue. When unfair trade imbalances results in the demise of a nation’s manufacturing capacity and the loss of sound employment conditions, then tariffs must be considered as an alternative. Allow me to provide a first-hand example:

            In 1968, I was assigned to Korea as an aviation officer. I became intimately familiar with the culture and geography of Korea. But I was not pleased at the inferior products being marketed by the local industries of Korea. Any automobile from abroad would cost around ten times the cost of those produced locally. Any foreign made product would similarly cost an arm and a leg. The Korea auto-market today challenges our own domestic manufacturer of automobiles.

            Many good Korean friends would ask me to favor them by purchasing shoes for them from the Army Post Exchange. I wanted to satisfy their requests but could not due to black-market laws. This made me resentful of the policy of the US government in forbidding me to make such purchases for the local Koreans; but, then, I learned that it was not the US government that imposed restrictions on making such purchases, but the Korean government itself. 

            Korean made shoes were made of miserably inferior quality. The soles were like cardboard and would disintegrate over a three month period. So why did the Korean government prevent their citizens from wearing quality American-made shoes without paying an exorbitantly high tariff? I will tell you.

            I left Korea in 1970. By 1973, American-made tennis shoes were almost non-existent. However, the American market was flooded with Korean-made tennis shoes. How and why did this happen? Korea was protecting their domestic market and labor force by charging high tariffs on American imports. That protection resulted in the development of the domestic market in Korea to the point that they could now compete on the international market. This is common sense to the serious economist who values the interests of his native country. 

            Such policies of market protection may not be as necessary in the developed, industrialized nations, but it may be quite necessary when the domestic market is handicapped by high tariffs or trade policies imposed by foreign countries. In fact, the lack of equitable trade policies have nearly reduced America to less than an industrialized nation. Perhaps an imposition of fair tariffs on foreign goods will have the same favorable results on the American manufacturing as it did on the shoe producers of Korea. 

            To those who advocate a globalist political approach, perhaps zero tariffs for western countries and unlimited restrictions on imports to foreign countries makes sense in lowering the living standards to a rough equivalent to that of third world powers, but it certainly does not make sense to those who love America and desire to perpetuate its future security for their family and fellow citizens.