English: Solar panel installation at an inform...

Solar panel installation (Photo credit: Wikipedia)

Mark Perry is another of my favorite economists. He took an announcement from the Commerce Department, and made corrections to it so that the rest of us can understand what’s really going on:

The Commerce Department issued its final ruling Wednesday in a long-simmering trade dispute with China, imposing tariffs (taxes on consumers and solar-installation companies) ranging from about 24 to nearly 36 percent on most solar panels imported from (China, in order to protect domestic producers from foreign competition.)

The penalties (on consumers) are somewhat lower than those announced by the department earlier this year, when the government determined that Chinese companies ( consumers) were benefiting from unfair government subsidies (from Chinese citizens) and were selling their (benefiting from purchasing Chinese products) in the United States below the cost of production, a practice known as dumping  (giving consumers a great deal.)

Perry uses a clever technique to illustrate what’s really going on. When tariffs are raised, the alleged advantages are touted – this is the “seen” part of the scam: jobs are protected, wrongs are righted, justice prevails, the playing field is leveled, and all is well once again, thanks to the intervention. What is unseen is that the American consumer (of solar panels, in this case) has to pay more. It’s always the consumer that gets it in the end.

Perry’s point is that if the Chinese government wants to subsidize solar panel companies, let them. A subsidy from a government is a gift to the consumer.

But the other part of the story is the crony-capitalist part: solar panel companies, rather than try to compete, run to Washington for protection. It’s easier. Perry nails it:

 The trade case has divided the solar industry, with some manufacturers and installers siding with SolarWorld and others (siding with consumers and) strongly opposing the tariffs.  The opponents argue that the duties (taxes) would make it more expensive for families and companies to install solar systems, (and called the trade protection an example of unfair “crony capitalism.”)

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