Scott Lincicome and Chad Smitson
In my new Bloomberg column today, I discuss the travails of Whirlpool Corporation, a longtime advocate (and recipient) of government protection from import competition—and a company struggling mightily from the very same protectionism.
As part of the research for this column, my colleague Chad Smitson and I created a table documenting Whirlpool’s years-long campaign for protection (“more than a dozen interventions under six different laws”). The table was cut from the Bloomberg column due to length constraints, so we’re publishing it here for good measure.
As I note in the Bloomberg column, the results of all this protectionist advocacy have been hundreds of millions of dollars in costs, cuts to US employment, offshoring to Mexico, and a steep drop in the company’s share value—results that might be surprising to American protectionists but are, as I also explain, par for the protectionist course:
Whirlpool’s enduring weakness is a case study in protectionist failure, not success. Firms that lobby the hardest for protection are often the least capable of competing on quality and price, and tariffs perversely insulate them from the market’s relentless pressure to improve. Windfall profits—generated at consumers’ significant expense—are frequently squandered, while competitiveness continues to erode.
Protectionist advocacy also often spirals in unintended ways—via trade diversion, tariffed inputs, investment uncertainty, and more—putting protected firms at an even bigger disadvantage. And too often the companies’ response is to request even more protection.
You can read the whole thing here.