Trade protectionism from the Legislature will hurt Texas, Texans

Robert Pratt photo Copyright Pratt on Texas

Robert Pratt

I’ve regularly expressed discomfort with the “Buy American” bills that have passed both the Texas House and Senate with different wording. The bills let domestic steel companies, those not even in Texas, charge Texas taxpayers up to twenty percent more than market prices on steel for State of Texas projects.

Such policies are almost always bad economically and lump all non-domestic producers in the same bundle as those who are said to dump, or sell product, below real cost. General protectionism is a tax upon consumers, reduces choice, and in the mid- and long-term destroys quality and innovation by letting those protected make fatter margins which reduces their need to innovate and improve efficiency. In other words, they get fat and lazy and we all lose.

The protectionist bills which have won favor in the Texas Legislature have drawn the ire not of China but of Canada. Canada’s situation provides yet another example of why rah-rah protectionism is economically dangerous if not plain dumb.

Canada actually purchases more iron and steel from Texas than it sells here, leaving the state with a Canadian trade surplus of more than $100 million for the commodities in 2016

“Canadian officials voiced concern this week about the potential for Texas to enact a “Buy American” law for iron and steel. Among other things, they pointed out that Canada actually purchases more iron and steel from Texas than it sells here, leaving the state with a Canadian trade surplus of more than $100 million for the commodities in 2016,” reported the Austin American-Statesman.

Many have been propagandized to believe we don’t make things anymore but here is a fine example of where Texas, not a rust-belt state, produces and sells more iron and steel to our nation’s largest trading partner than Texas buys from Canada.

So go ahead populists in the Legislature and pass your protectionism that supposedly helps all U.S. steel, not just that from Texas, and watch the Canucks pass their own which will hurt Texas badly.

What do you think?...

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