I agree with you about not propping up antiquated or outdated jobs. . .just think if we had subsidized blacksmiths. . .

Rocketc, this week I reviewed an excellent book on the case for free trade. One of the author’s main points is trade does not affect the number of jobs in a nation, simply the type of jobs.

When work can be done more affordable (by mechanization, off shoring, etc), the result is a cheaper product. A cheaper product means savings that can be put to other uses. What if our country had decided to protect the jobs of farmers at the turn of the century? Half of our workforce would still be working on the farm. Can you say goodbye internet, medical advancements, television, compact discs, fast food(!), etc. Not to mention any military consequences during the world wars….

Back to your quote though. Favoring a specific industry with lower taxes would be better than not (because, as you point out the customers actually pay the taxes). But an even better policy would be lower taxes across the board. Many developing countries and eastern european countries are using this approach to great effect.

At the end of the day, two democracies have never fired a shot in anger at each other, even when they disagree strongly, violence is usually averted. This is why I think democracy is the least worst system we humans have ever come up with.