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In Anticipation of Car Imports!

In Anticipation of Car Imports!
In Anticipation of Car Imports!

In line with economic interventionism, a government tries to separate the domestic market from the global market. It imposes tariffs on foreign goods to raise their prices higher than global prices to help domestic producers form cartels that have come under constant attacks. Ludwig von Mises, the notable 20th-century economist, recommends the panacea: Approve an anti-cartel law! Hossein Haqgou, an economist, prefaced his article for the Persian daily Ta’adol with this note. A translation of the text follows:
The minister of industries, mining and trade [Reza Fatemi-Amin] recently announced that the government is willing to import cars as soon as possible. 
“The import of cars was banned for four years and the people are now counting the days for car imports to start again,” he said.
Closing the import channel, not only for cars but for other items as well, creating monopoly and forcing people to buy low quality yet expensive products is a wrong economic approach. The believers in free market economy have always emphasized the necessity of reforming this policy and using tariffs to create trade balance. 
Yet, the government’s subjective, patronizing and interventionist perspective toward economy, that it can ban or liberalize import and export of a product whenever it wishes, does not allow such a change of course. What is the economic justification behind the government’s overnight decision to place a trade ban and inflict losses on people and economic enterprises and consumers?
The minister also talked of people “counting the days” for buying imported cars. This is highly unlikely. As statistics show, one-third of people are living in absolute poverty; their income has fallen to the level of a decade ago; according to the government, nine income deciles now receive cash subsidies. How can they anticipate purchasing cars worth 10-20 billion rials [about $25,000-50,000]? People cannot even afford to buy a locally-made car! 
His words regarding the government’s eagerness to import cars is correct, though. This is because of the huge potential for rent-seeking practices in the market, thanks to the so-called “golden signatures” [a metaphor used in Farsi to suggest influence peddling], which strengthen the hierarchy of power in the administrative system. If that’s not the case, why should the import of cars be so exciting? Have we reached a milestone of sorts, or have domestic carmakers manufactured a high-quality product? We decided to ban car imports for four years and now we want to lift that ban a little. How come such a move is not considered wonderful and exciting in other parts of the world where only the entry of drugs and guns is prohibited?
A few months ago, the ministry had increased the number of items in the list of banned imports from 1,500 to 2,150. Home appliances are considered smuggled goods, but they are being brought into the country by poor border couriers at the cost of their lives. What scientific logic or national or social interest can justify this flip-flop policy? Competition is the fundamental principle of all advanced economies. The policymaker’s denial of market dynamism through state interventions, restrictions and subjective bans is hurting car and other markets. It will be the same old story, as long as decisions are not based on supply and demand.
 

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