Does Protection Save Jobs?

The idea

Whether protection saves jobs is the question most tariffs are sold on, and the honest answer runs through four steps. First, the protected industry does gain: the tariff raises its price, its output and its employment, and those jobs are visible, concentrated and grateful. Second, the losses are spread where nobody counts them. Consumers pay more for the protected good and have less to spend on everything else, so employment falls a little across many industries. And every firm that uses the protected good as an input pays more than its foreign rivals do, loses sales to them, and cuts jobs; an input tariff can drive a whole downstream industry abroad, taking with it more employment than the protected industry ever had. Third, the arithmetic. The consumer cost per job saved, the extra spending divided by the jobs preserved, runs far above the wage of the job, because most of the higher price becomes profit, equipment and raises rather than payroll, and part of it is pure deadweight loss from producing where the country lacks comparative advantage. The workers could have been paid to stay home for less. Fourth, why it persists anyway. Producers are few, concentrated and organized; consumers and downstream firms are many, diffuse and each little affected, so the side that loses more cannot organize, and legislators hear only one side. Protection therefore reshuffles jobs toward the industries that lobby best and away from the ones that do not, and the total is lower, not higher, than before.