“The philosophy of protectionism is a philosophy of war” – Ludwig von Mises
One of the first things a person will learn in Economics 101 is the notion of “opportunity cost” – that the value of something can be measured not by its price tag but rather by the value of other opportunities which it denies to you. For instance, if I give you a pair of concert tickets that sell for $50, what would you say they cost you? Some may say $0, but in fact the opportunity cost to you is $50 – because you could sell them and have the $50 in your pocket. Now suppose that the actual street value of the tickets has skyrocketed to $500 – what do they cost now? Once again, they “cost” you $500, because you could otherwise have $500 if you chose not to keep the tickets.
Back when Wisconsin and a few other states kicked collective bargaining overboard for the state’s public unions, it sent a rather clear “warning shot” through the ranks other public worker unions (perhaps all unions). Possibly seeing the writing on the wall, the American Postal Workers Union (APWU) has put out a commercial defending themselves against near-certain exposure to the movement against public worker unionization. The commercial claims that the work done by the post office doesn’t cost you anything (commercial below):
But of course it costs you something. The post office enjoys deals that almost no other business gets (more on that in just a moment). As congressman Darrel Issa pointed out recently, “the Postal Service is exempt from, among other items, federal, state, and local income tax, all state and local taxes (including property tax), and vehicle registration and titling fees. Additionally, the Postal Service has the ability to exercise eminent domain to secure property … Finally, because it can borrow through the U.S. Treasury, the Postal Service is able to borrow at very low interest rates.” Do FedEx or UPS get those deals?
Does this “cost” the taxpayer anything? Almost surely. Let’s ask it a different way, if these perks (and the federally protected monopoly status) did not exist, would you or I pay less to send a letter? I doubt anyone knows the actual end price, but it could hardly cost more. (After all, if this is the most efficient form, then it will thrive in a free market.) Furthermore, federal, state, and local revenues would all increase if the Postal Service had to pay taxes like everyone else. (That’s not to say I like the production-taxation system, but giving someone a break from putting into the revenue stream costs everybody else something.)
Of course, the situation isn’t nearly as rosy as even this discussion paints. As the New York Times notes, the Postal Service is Nearing Default as Losses Mount. They might still need a bailout, or higher postage rates.
This is all heading toward an obvious end. Prices go up and fewer people use the Postal Service, moving at an even quicker pace toward email and other mediums of exchange. This requires even higher postage and a greater flight. There are three logical ends: (i) the Postal Service becomes a zombie organization, propped up by constant bailouts (ii) the Postal Service is privatized and forced to compete or (iii) the Postal Service just disappears altogether. The political appetite for (i) is small, and (ii) and (iii) represent a bad day for the APWU.
When the APWU uses the force of government to prop up its protected status, it costs each of us something. Lest I am accused of piling on to unions, let’s broaden the scope a bit. When large corporations like GE or GM or Goldman Sachs use the government to apply regulations that make life incredibly difficult for their competition, it costs each of us something. Economic protectionism ultimately costs the consumers (that’s us).
And what is the answer? Freedom. If we (and I mean you and I here) stop using the government as a foil to protect our personal economic interests and let freedom apply to everyone, then we’ll all be better off. You can rest assured we will never apply economic protectionism equally to all. (If we did it would have no purpose.) The organized and politically connected will always have the advantage in this game, whether they be public unions or corporate giants.