Import quotas like their brother tariffs are one of the unholy spawns of Protectionism. They do not benefit most people; they are designed to benefit special interest groups. They protect inefficient domestic businesses from efficient foreign competitors. Throughout this process, the customer (the masses) loses because he must pay more for his goods or receive lesser quality goods. However, everyone is constantly told by politicians (who are paid by the special interest groups) that import quotas are established for their protection, so how can this be?
Import quotas restrict the amount of goods that can be imported into a country. If those goods are in demand, then this will obviously make those goods more expensive because they will be more scarce. This is all done to encourage the customer to buy domestically. Domestic companies who can’t compete with foreign firms seek to have the government establish import quotas. These are the inefficient companies who don’t do a good enough job of pleasing the customer. They are the special interest groups. This benefits them because now they can sell their product at a higher price because they don’t face foreign competition.
In this arrangement the customer is the loser (the foreign company is too, but no one cares about them). The customer now has to pay more for his goods or get poorer quality goods. Everyone knows from their experience as a customer that this is not a good thing. This makes the customer less wealthy because he gets fewer goods. Import quotas are effectively a subsidy to inefficient domestic companies that is paid by the customers. Why should the government be subsidizing inefficiency? Is it not a desirable thing to buy cheaper or better quality goods, so that we can increase our wealth? The masses are falling for the trickery of the special interest groups and reducing their wealth because of it. It truly is about time for the masses to wake up.
I intended to make this article short and sweet, so if you would like a more detailed overview of protectionism, tariffs, and import quotas, I encourage you to check out my longer article on Protectionism here.
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