Whatever you do in life, and no matter how good you do it,
somebody out there will eventually try to better you. This especially applies to business: your company may produce an amazing product
or service at an incredibly low cost. But
I guarantee you: one day, somebody
somewhere will try to out-compete you.
Naturally, this is bad news to a lot of people. Nobody likes to get beaten, especially at
their own game, and especially if they've invested a great deal into getting
where they are.
So when the inevitable happens, what is the normal human
response? Is it to roll up your sleeves,
break out the drawing boards, put on your thinking caps, plan for some
overtime, and figure out a solution?
Unfortunately, no.
Rather, the usual response is: whip
up some crocodile tears and go crying to the government to protect you.
Let me state flat out that:
competition is good. Competition
forces all of us to work as hard as we can and produce the best product or
service we can for the best price.
The entirety of human history can be summarized as
follows: people are constantly figuring
out better ways to do things. Yes, it's
sad when some newfangled startup forces a legacy business to shut down and fire
all its employees. When transistors were
invented, it shut down all the vacuum-tube manufacturers. Today, online retailers are causing
brick-and-mortar stores to close shop. But
time marches on, and erecting governmental barriers to progress is not smart
governance.
The biggest and latest manifestation of competition protection
is the realm of international trade. It
seems that certain businesses are calling for government protection from evil
competitors on the other side of the border.
These competitors have figured out how to sell their products at a lower
price than those on our side of the border.
The main crocodile tear-bearing parties this time around are metal
producers, and coal mines. And they have
found a sympathetic ear in none other than Mr. Free Trade himself, our
illustrious President Trump.
Allow me to debunk this idea that borders should have
anything to do with trade. Like it or
not, we all live on the same planet, and if anybody anywhere figures out a way
to make a better mousetrap, then the whole planet benefits. A border is just some arbitrary line drawn on
a map. Why is it that someone in, say,
Texas, can trade all they want with someone in Hawaii, which is thousands of
miles away and halfway across the Pacific Ocean; but if they want to trade with
someone in Mexico, which is just a stone's throw away, then government must
interfere?
If you use the argument that government is "protecting
local interests", then let's carry this silly "border" argument
all the way to its logical conclusion. Let's
restrict people in Texas from trading with people in Louisiana. Or go further: restrict people in, say, Harris County from
trading with their neighbors in Ft. Bend County. (Nothing special about these localities; it
just happens to be where I live.) Or
restrict people inside Houston city limits from trading with people on the
outside. Or even limit trade to within
neighborhoods! That will surely make us
all wealthy, right?
A common argument for erecting international trade barriers
is because the competition is not playing "fair", or because our
government doesn’t like something that their government does. Ergo: the
USA must restrict trade with China because they aren't "fair", or so
the conventional wisdom goes. It's never
clear just what they mean by "fair".
If they sell a better product at a better price, what's "unfair"
about that? The usual response is that
their foreign government considers this business or this industry a special
interest and is giving them extra assistance in the form of subsidies or other
legislation, and thus domestic businesses cannot compete.
It is true that I always say that governments should give
neither help nor hindrance to any business operation. However, the US government cannot impose
policy on foreign nations. Every nation
around the word does something that the US government disagrees with. But, the jurisdiction of the US government
ends at the border. Over the last century
or so, our government has attempted to force many other governments to bend to
our will. The methods include military
intervention, embargoes, trade restrictions, tariffs, supporting dictators, and
many others nasty actions. They all have
one thing in common: 99.9% of the time,
they do NOT achieve their intended results.
(See: Cuba). And it actually ends up hurting a lot of
people, on both sides of the fence.
Besides, if the citizens of Country X pay big taxes so that
their government can subsidize some product so that US consumers can get it
cheap, I got no problem with that. If
and when those citizens figure out that they're being fleeced for my benefit,
then THEY, not the US government, must choose to change things.
So again I say: competition
is good for all! Ignore the whiners. This applies regardless of which side of some
border the competitor lives, because all trade is good. The market, if left alone, will do an awesome
job of figuring out who wants what, and who will produce it. When government interferes, that does not
"help" anybody, and certainly does not create wealth.
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