ECON 130 - Public Policy Readings 1

Protectionism and job-saving (The $750,000 Steelworker)

Tariffs and import quotas aim to “save” domestic jobs but actually shift employment, protecting a few while reducing overall efficiency and trade.

Jobs vs. wages (The $750,000 Steelworker)

Workers asking for trade barriers are really seeking protection from lower-paying competition, not “saving jobs” in general.

Trade balance (The $750,000 Steelworker)

Imports must ultimately be paid for with exports; restricting imports reduces exports and total employment.

Mutual gains from trade (The $750,000 Steelworker)

Voluntary trade benefits both countries; limiting trade destroys those gains.

Cost of auto import quotas (The $750,000 Steelworker)

Japanese “voluntary” quotas raised U.S. car prices—about $11 billion total = ~$420,000 per job saved.

Protection costs in other industries (The $750,000 Steelworker)

Apparel $50k/job per year; glassware $200k; maritime $290k; steel $750k; Chinese tire tariffs $900k per job saved.

Hidden job losses (The $750,000 Steelworker)

Import barriers cut export jobs and port/trucking employment, so total jobs fall even while some industries gain.

Bush 2002 steel tariffs (The $750,000 Steelworker)

Up to 30% tariffs caused ~200,000 job losses in steel-using industries—more than total steel jobs protected.

Impossibility of lasting protection (The $750,000 Steelworker)

Even with decades of trade barriers, industries like textiles, clothing, and steel continued losing jobs.

Overall lesson (The $750,000 Steelworker)

Free trade yields wider, long-term benefits, while protectionism “saves” jobs only at massive cost and with unintended losses.

Unintended consequences (CA Politicians Overlook Potential Pitfalls)

Term coined by sociologist Robert Merton (1936): policies often create results opposite to lawmakers’ intentions.

California power “deregulation” (CA Politicians Overlook Potential Pitfalls)

1990s reform meant to lower electricity bills instead caused market manipulation, blackouts, and utility bankruptcies.

AB 218 (2019 sex-abuse lawsuits) (CA Politicians Overlook Potential Pitfalls)

Lifted statute of limitations to help victims, but triggered thousands of costly suits ($4 billion L.A. County alone) and insurance crises for public schools.

Policy feedback (CA Politicians Overlook Potential Pitfalls)

Even bill’s author later sought limits on attorneys’ fees—illustrating how well-intended laws require revision.

AB 1264 (ultra-processed foods ban in schools) (CA Politicians Overlook Potential Pitfalls)

Aims to improve child health but could overreach—depending on vague definitions—inviting lawsuits and banning common foods.

AB 495 (temporary caregivers for students) (CA Politicians Overlook Potential Pitfalls)

Intended to protect children of deported parents, but loose wording may let unqualified adults gain custody.

Gerrymandering attempt (CA Politicians Overlook Potential Pitfalls)

Proposal to redraw congressional districts to offset Texas maps could politicize California’s independent system, showing trade-offs between fairness and power.

Key insight (CA Politicians Overlook Potential Pitfalls)

Politicians highlight intentions (equity, safety) but often ignore costs, incentives, and long-term ripple effects—positive vs. normative tension in policymaking.

FASTER Act (2021) (New Label Law Has Unintended Effect: Sesame in More Foods)

Required food manufacturers to list sesame as a major allergen on labels starting in 2023.

Goal (New Label Law Has Unintended Effect: Sesame in More Foods)

Help roughly 1.6 million Americans with sesame allergies avoid hidden ingredients—a normative public health policy.

Unexpected result (New Label Law Has Unintended Effect: Sesame in More Foods)

Instead of reformulating, many companies added sesame to existing recipes so they could legally label “contains sesame.”

Industry incentive (New Label Law Has Unintended Effect: Sesame in More Foods)

Adding sesame was cheaper and easier than cleaning equipment or preventing cross-contamination.

Consumer impact (New Label Law Has Unintended Effect: Sesame in More Foods)

People with allergies now face more foods they must avoid—opposite of the law’s intent.

FDA response (New Label Law Has Unintended Effect: Sesame in More Foods)

Criticized the practice but admitted the law did not prohibit adding sesame—revealing a regulatory loophole.

Economic lesson (New Label Law Has Unintended Effect: Sesame in More Foods)

Regulations must anticipate how firms respond to incentives; failing to do so can worsen the original problem.

Broader theme (New Label Law Has Unintended Effect: Sesame in More Foods)

Good intentions (safety or fairness) must be paired with incentive-aware policy design to avoid negative side effects.