Government subsidies are not free trade. They’re not fair. They’re not right. They hurt the economy that relies on them. Through the use of government force, they inefficiently allocate resources, providing a windfall for those who buy them cheaply, in this case, the American consumer. They’re not “fair trade,” and they’re not “free trade,” but free trade can solve the problem. “Fair trade,” protectionism, will solve nothing except perhaps to force us to misallocate resources and start making overpriced aluminum foil instead of something more suited to our economy and ensuring Americans lose at the cash register.
Are we really that short on jobs that we need more aluminum foil factories? Apparently so, despite this, the foil association reports that it’s growing! The subsidies aren’t “taking away” anyone’s job even. So what’s the fuss about?
Of course, we as capitalists ought to know that we are literally incapable of centrally planning economics well. We keep telling the socialists this. The law of unintended consequences always bites us in the butt, just like it will bite the Chinese in theirs. Then there’s the opportunity cost to the Chinese people. Foil probably should be spun off to another country, but China wants to keep it. In the meantime, China misses out on producing something better and more valuable that it can trade.
If we tax it in response, we’ll spend more for everything where foil is used, and it’s really common.
It’s everywhere in our economy, the wrappers around our hamburgers and tacos, the seals on our pill bottles, etc. and so forth.