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One Man’s Privilege is Another’s Punishment

by Matt Mitchell on August 23, 2012

in Crony Capitalism, Government-Granted Privilege

When governments bestow privileges on particular firms, they also impose costs on others. A recent CNN report brings this to light (HT, Rob Raffety).

It tells the story of Bill Keith, an entrepreneur who started a small business out of his garage. He installs solar-powered attic fans that pump away hot air and lower cooling bills. The Obama campaign heard about him and sent someone out to meet (vet) him. Soon the campaign, and then the Administration, was featuring Mr. Keith in speeches and other materials. His story was perfect politics: small businessman meets green energy meets financial success.

Mr. Keith’s business soared, peaking at $5 million in revenue in 2009. But more recently he’s run into trouble:

Today, Keith’s solar star appears to be on a collision course with another Obama policy that may put him out of business. The irony is not lost on Keith: A man whose profile and company soared because of the administration’s energy policy [MM: it isn’t clear from the story what policy he actually benefited from, other than the loads of free advertising] is now falling apart because of a new Obama anti-dumping policy involving China.

While 95 percent of Keith’s fans are American-made, he has yet to find a U.S. company that can make the small customized solar panels that make his fans run.

So he has had to turn to—gasp—Chinese suppliers. And that has made him a target of the Administration’s so-called “anti-dumping” policy. Unless he can prove that the panels he buys are not Chinese-made, he faces tariffs as high as 250% (!). This is an effective rate of $270,000.

In response to CNN inquiries a White House spokesperson responded:

[T]hat the tariff “highlights the degree to which solar panel manufacturers have faced unfair competition from countries like China” and the president’s move to impose a tax on Chinese-made goods is a way to establish “a level playing field with China for American businesses and workers.”

There is a reason that economists are nearly unanimous in supporting free trade. Though tariffs such as those on imported solar panels are a privilege for domestic panel manufacturers, they are a burden for domestic consumers such as Mr. Keith. To make matters worse, economic theory and evidence long ago established the point that the costs borne by consumers outweigh the benefits bestowed on producers.

In this case, there is another cost: debasement of the English language. Notice the words used by the spokesperson. In order to establish a “level playing field” we need to tilt the playing field in favor of domestic producers at the expense of foreign producers and domestic consumers. So an uneven playing field is an even playing? Newspeak, much?

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