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Monday, December 18, 2017

A Modern Day Candlemaker’s Petition

Bastiat’s objections to trade protectionism in 1845 are just as relevant today as they were 172 years ago.

In 1845, during a period when there was a rising tide of protectionism in France, the French economist Frederic Bastiat wrote a famous satirical parable known as “The Candlemakers’ Petition.” In that famed economic fable, Bastiat humorously wrote to the French parliament on behalf of French candlemakers and lantern makers and lobbied the French government to enact protectionist legislation against the unfair competition of a foreign rival – the sun.

Bastiat humorously lobbied the French government to enact protectionist legislation against the unfair competition of a foreign rival – the sun.

I’ve taken the liberty of channeling my “inner Bastiat” to revise and modernize “The Candlemakers’ Petition” for today’s protectionist climate that is being advanced by a president the Wall Street Journal referred to as “the first authentic protectionist to win the White House since the 1920s.”

The Candlemakers’ Petition of 2017

A PETITION: From the American Lighting Association (a trade association representing the US lighting industry), US lighting and bulb manufacturers including Aero-Tech Light Bulb, American Light Bulb Manufacturing Company, LedRadiant, Morstar Electric, and LED-Green, and the International Brotherhood of Electrical Workers (the trade union representing America’s electrical workers).

An Open Letter to President Trump on behalf of the US lighting industry.

You are on the right track when it comes to international trade. You reject abstract economic theories about trade and have no time for the claims that economic abundance and “making America great again” can come from low import prices.

For political purposes, you correctly concern yourself with the fate of US producers and US workers, and wisely ignore US consumers. You wish to protect US producers and manufacturers from more efficient foreign rivals, that is, to rightfully reserve the American market for American producers and their American workers to “make America great again.”

We come to offer you a wonderful opportunity for your — what shall we call it? Your theory of international trade? No, nothing is more deceptive than economic theory. Your trade doctrine? Your principle? But you dislike economic doctrines, and as for principles, you deny that there are any in politics; therefore we shall call it your political practice — your practice about international trade without any economic theory and without any principle.

Simply put, the American lighting industry is suffering from the damaging competition of a foreign rival whose conditions are so far superior to our own for producing light that it is flooding the American market with light at an incredibly low, unfair price. That is, this foreign producer is “dumping” light into the US economy to our great disadvantage. The moment the foreign rival appears, our sales of lighting fixtures drop precipitously, all cost-conscious American consumers turn to him, and an important segment of American industry is reduced to economic stagnation, with the accompanying loss of American jobs and the impoverishment of our country.

Who is this foreign rival? It is none other than the sun, and it is waging war on the American lighting industry.

Who is this foreign rival? It is none other than the sun, and it is waging war on the American lighting industry so mercilessly that we suspect it must be unfairly receiving subsidies that allow it to dump sunlight on the American market at a price below the cost of production. We seek your protection against this ruthless rival.

Specifically, to help make America great again, we ask the Trump administration to save our industry by passing laws that require the permanent closing of all windows, skylights, shutters, curtains, and blinds — in short, all openings in US buildings that allow the free natural light of the sun to enter our houses and buildings, to the great disadvantage of the domestic lighting industry. Please don’t abandon an important US industry today to a rival that has such an unfair advantage because of such an unfair natural geographic location.

Team Trump, please take our request for protectionism seriously, and do not reject it without hearing the reasons that we have. First, if you pass trade protection to shut off access to natural, free light, and thereby create a demand for artificial light, what industry in America will not ultimately be stimulated?

If America produces more light fixtures and light bulbs that will help to “make America great again” by providing new jobs in US manufacturing, US retail, US shipping industries and for electric workers. Further, with more indoor lighting, there will be an increased demand for electricity, which help make America great by stimulating new jobs in the electric power generation industry.

It needs but a little reflection, President Trump, to be convinced that there is perhaps not one American, from the wealthy stockholder of Amazon to the humblest convenience store employee, whose condition would not be improved by the success of our petition to combat the unfair advantage of that sphere of hot plasma known as the sun.

We anticipate some objections, Mr. President; but there is not a single one of them that have not been recycled from the outdated, old, discredited books of free trade advocates like Smith, Ricardo, and Friedman.

Perhaps you object that though US producers and their employees will benefit from this protection against foreign competition, America will not gain at all, because the US consumer will bear the expense? We have thought of that and have an answer:

Going back to the campaign trail in 2016, you have promised to sacrifice consumers whenever you find his interests opposed to those of the US producer. You have done so in order to encourage American industry and to increase employment and to “make America great again.” For the same reason, you ought to do so this time too to “make America great” by protecting the US lighting industry from the sun.

If you grant our industry a monopoly over the production of lighting during the day, we shall buy large amounts of inputs to supply our industry; and, moreover, we and our numerous suppliers, having become rich, will increase our consumption and spread prosperity throughout the entire US economy, i.e., our monopoly will help “make America great again.”

Now, perhaps there are some free trade advocates who will say that the light of the sun is a free gift of Mother Nature dumped onto the US market daily, and that to reject such philanthropy would be to reject wealth itself under the pretext of encouraging the means of acquiring it?

But if you take this position, you contradict your own trade policy that helped get you elected; remember that you have proposed excluding foreign goods from US markets because and in proportion as they approximate free gifts of foreign aid from our trading partners like China, Japan, and Mexico.

Labor and Nature collaborate in varying proportions, depending upon the country and the climate, in the production of goods. The part that Nature contributes is always free of charge; it is the part contributed by human labor that constitutes value and is paid for. If oranges, tomatoes, and berries from Mexico sell for half the price of those products produced in the United States, it is because the natural heat and light of the sun, which is, of course, free of charge, does for Mexico what US states owe to artificial heating and lighting, which necessarily is reflected in higher prices for American produce.

Thus, when tomatoes reach us from Mexico, one can say that they are sold to us half free of charge, or, in other words, at half the price compared to those from the US. Now, it is precisely on the basis that Mexican and Chinese goods are being provided semi-free to American consumers that you maintain that American producers deserve protectionism.

The basic point Bastiat makes in “The Candlemakers’ Petition” is timeless.

But if products like tomatoes or berries from Mexico are sold in America half free leads you to impose trade protection for US farmers or exit from NAFTA, how can you allow an imported product being sold totally free of charge like sunlight to enter the US market without protective tariffs? To be consistent, if you decide to exit NAFTA or impose new trade barriers on what is half free of charge like Mexican tomatoes and berries because they are harmful to our economy, how can you not exclude from the American market what is totally gratuitous (free sunlight) with even more justification and with twice the enthusiasm?

Mr. President, when it comes to US trade policy, please be consistent. For as long as you plan to exit from NAFTA and continue to impose tariffs on foreign steel, solar panels, aluminum, lumber, aircraft, washing machines, and textiles, in proportion as their price approaches zero, how inconsistent it would be to freely admit the light of the sun into the US market, whose price is zero all day long!

In conclusion, to “Make America Great Again” and bring jobs back to the US, we implore you President Trump to protect the American lighting industry by protecting us from a foreign rival that provides natural sunlight at a price so low (zero) that we simply can’t compete. If there ever was a legitimate case of a foreign producer putting American producers and workers at an unfair disadvantage through unfair trade practices that might include “dumping” goods below cost, receiving foreign subsidies, or manipulating currency, the case against the sun for dumping free sunlight in America has to be the strongest trade case ever in US history, and one deserving your attention. Please protect us.

Bastiat’s Relevance Today 

Bastiat’s objections to trade protectionism in 1845 are just as relevant today as they were 172 years ago. The basic point Bastiat makes in “The Candlemakers’ Petition” is timeless: Since we would never complain about an abundance of light “imported” from the sun for free, then we should likewise not complain about low-cost imports from foreign producers.

It really doesn’t matter if those foreign producers have natural geographical, labor or technological advantages, nor does it matter if they receive such generous subsidies from their own citizens that they can “dump” goods in the US at prices below their cost of production. Nor does it matter if a country manipulates its currency to our advantage and lower prices for Americans. Free goods and services from foreigners is the best of all possible economic outcomes but realistically not generally possible (except for free sunlight); goods, and services sold at prices to Americans that are below the cost of production is probably second best; and goods and services at prices below the cost of US goods is third best.

To really “make American great again,” a general rule is that we should never turn down the philanthropic, wealth transferring foreign aid that comes to America from low-cost foreign goods and services.

Reprinted from AEI. 

  • Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.