The most disturbing political attacks spewing from the droopy mouth of John Kerry are not the expected jibes over national security policy, but rather his stated disdain for free trade. Kerry’s economic ignorance aside, his anti-outsourcing routine is almost comical in light of the fact that his family’s lifeblood, Heinz Corporation, has outsourced 57 of their 79 factories to places like China, India, Singapore, Indonesia, and other such nations that Kerry exploits for political gain when decrying the loss of American jobs.
Expect Bush, Nader, and any other politicians with an interest in highlighting Kerry’s continuous string of hypocrisies to bring this embarrassing issue to light over the summer, even though there is nothing wrong with such business decisions.
The Heinz Corporation’s decision to open factories overseas is a perfect example of how a business can benefit from strategic placement of jobs where a competitive advantage exists. When more can be produced with fewer resources, everyone benefits. Putting government controls over trade will certainly benefit particular interest groups (and the pull-pusher politicians who pander to them), while hurting everyone else with higher prices. Tariffs are simply a tax on consuming international goods, while the dividends of that tax go to the protected group.
Consider this debate locally. Florida orange growers are in a constant battle with California orange growers. Both factions produce high quality oranges and typically compete on price. If free-trade amongst the American states were not protected under the US Constitution, it would be in the interest of California orange growers to advocate tariffs in other states against Florida oranges. Forced to pay higher prices for Florida oranges, consumers would quickly turn to California’s, certainly benefiting their industry, at the expense of the Florida industry and every consumer of oranges.
In 2001, the US government levied tariffs against Canadian softwood lumber imports. Immediately, certain mills in the USA came back online, and many in Canada were forced to shut down. The price of softwood lumber in the United States immediately went up by the same percentage as the tariff, hurting other industries reliant on softwood lumber (e.g. home construction). Ultimately, it was the consumer who paid the price – all to placate American labor lobbies and a handful of wealthy mill owners.
Kerry’s attacks on free trade are not only hypocritical, as he is a direct benefactor of open trade policies, but potentially dangerous if put into practice. One should feel bad for Heinz Corporation and the families employed by that institution as they are going to be unnecessarily scrutinized over the coming months for successfully meeting their moral obligation to protect shareholder wealth.