Friday, March 10, 2017

There Are No Tariffs on Coffee. Care to Guess Why?

Being a world-class economist, my colleague Walter Williams spends much of his time asking probing questions.  Here’s one that he posed to me recently by e-mail:
I don’t think there are tariffs on coffee and I know of no organization calling for coffee tariffs. I wonder why.
Great, probing question.
The answer is that there are very few coffee growers in the United States. In the U.S. states, coffee is grown commercially only in Hawaii.  Coffee is also grown commercially also in Puerto Rico.  The result of this small number of American coffee growers is that these growers are too small in number to form a powerful-enough interest group.  But, of course, coffee is consumed massively throughout the U.S.  (I’m drinking some right now, by the way.  It’s from Guatemala.  Yum!)  The pain to consumers caused by restrictions on coffee imports would be too great relative to the gains to American coffee growers; politically it would be a bad move for most members of Congress to support protective tariffs on coffee.

Every trade restriction is a privilege granted to a greedy and powerful domestic interest group.
Yet if Congress and U.S. presidential administrations really were, as their members often pretende, intent on apolitically using U.S. trade policy to “level the playing field” or to otherwise correct for distortions in global markets induced by other governments’ destructive policies, we likely should see U.S. tariffs on coffee imports.
I haven’t researched the matter, but I’d be shocked to discover that the governments of coffee-growing countries such as Colombia, Costa Rica, Guatemala, Ethiopia, Brazil, and Jamaica engage in none of the policies that are typically alleged to create “uneven playing fields” in global markets.  If Uncle Sam really were so self-sacrificingly and apolitically intent on using tariffs and other trade restrictions to improve global markets, why does Uncle Sam not use such tariffs and restrictions in the coffee market?
The bottom line, of course, is that every trade restriction is simultaneously justified publicly as a righteous intervention against some foreign evil-doing while, in fact, it is a monopoly-power privilege granted by an unethical government to a greedy and powerful domestic interest group.

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