Chinese drones are America’s top choice. Protectionism won’t change that

beijingwalker · Oct 14, 2023

Chinese drones are America’s top choice. Protectionism won’t change that

- 10/14/23 9:00 AM ET

President Ronald Reagan famously once said: “The nine most terrifying words in the English language are ‘I’m from the government, and I’m here to help.’” Yet just as terrifying, and increasingly commonplace, are calls for government action to address imperfect policies, which often amount to cures worse than the diseases.

Such is the case with the crescendo of voices clamoring for the United States to prevent drone competition from China in markets with an alleged nexus to “national security,” a concept infinitely elastic and manipulable to advance ulterior motives.

Adam Smith, a brilliant economist, and philosopher, correctly observed centuries ago the starting point for thinking about government attempts to outfox open markets and competition:
“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.”

Smith later added that the government invariably acts to seize or maintain political power, not to optimize consumer welfare or prosperity generally. What is advertised as temporary fixes to rectify market imperfections become permanent bureaucratic deadweights. These endure long after putative solutions have become obsolete through the marvel of creative destruction — new ways of doing business — celebrated by legendary economist Joseph Schumpeter.

President Reagan also presciently taught, “Nothing lasts longer than a temporary government program.”

The high-octave cries to protect U.S.-made drones from Chinese competition should be resisted. DJI, a global company headquartered in China, currently produces the most popular drones in the world. The response from American manufacturers is not to make superior drones or to redouble their efforts to innovate, but to summon hysterical fears of China to shield themselves from competition.

Recently, Chad Wolf, former acting secretary of the Department of Homeland Security, made the domestic manufacturers’ case. He denounces these Chinese-made drones as a national security threat and says the Federal Aviation Administration and Department of Defense should step in to regulate them and encourage U.S. drone use.

What does Wolf have to substantiate his national security claim? Mostly the discredited precedent of Lewis Carroll’s “The Hunting of the Snark”: ”I have said it thrice: What I tell you three times is true.” Wolf references dangers yet gives few examples to back them up. Despite what the quote suggests, just saying something enough doesn’t amount to evidence.

Wolf also argues that the Chinese government has supported its drone makers and “flooded global markets with cheap, subsidized drones” with some estimates saying it now accounts for “more than 90 percent of the U.S. consumer drone market,” “more than 70 percent of the drones used as industrial tools,” and “a majority of drones used by first responders.”

But United States anti-dumping laws already prohibit foreign suppliers from unfair predatory pricing to compromise competition with domestic rivals.

Wolf also stoops to the pejorative “cheap” to stigmatize the Chinese-made drones. But why would users and consumers voluntarily buy them if they did not provide commensurate value? In reality, these drones have been adopted in large numbers because American companies have found that value — whether in the time they save, their ability to replace manned aircraft missions or in developing new lines of work.

Wolf finally pleads for subsidies and protectionism to gain market share for U.S.-made drones. He urges “manufacturing tax credits,” “loan guarantees to drone and component manufacturers,” and “federal grants for first responders, infrastructure inspection and Department of Defense programs.” He encouraged Congress to create a “well-funded program” to help agencies switch to American-made drones.

But are consumers served if these American drones we transition to are not sufficient for the job? Drone users should be able to choose products because they are the best option, not because they are the only option. As the market stands today, Chinese drones are, for many, the best option. Presuming otherwise ignores the reality in which we live.

“Curing” the domestic drone market by cutting off competition is vastly worse than the affliction, especially when the so-called cure rests upon presumptions rather than fact.