Protectionism

No to Trade Barriers

Protectionism doesn't protect Americans.

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No, President Trump, it's not true that if you tax imported steel, we "will have protection for the first time in a long while."

The opposite is true. If you raise tariffs on steel and aluminum, you punish consumers.

Yes, such tariffs also punish Chinese producers and protect some American businesses and workers, but the tariffs will hurt many more Americans.

They'll hurt every business that makes things from steel or aluminum. They'll hurt most everyone who buys anything. Tariffs are taxes, and they don't just affect inanimate metal objects. They punish people.

Even if China "dumps" products—sells below their manufacturing cost—that just means that China hurts its people and gives us discounts. We win. We get products. All the Chinese get is paper with pictures of American presidents printed on it.

What can they do with those? Either buy our products, or invest in America. Either way, we win.

Did we learn nothing from what happened when President George W. Bush raised steel tariffs? The trade barriers protected 1,000 jobs.

But they destroyed 200,000 other jobs. Bush wisely withdrew the tariffs.

Trade only happens when both sides think they are better off for making the trade. Win-win, or it doesn't happen. Trade is always good because it is voluntary.

Adam Smith figured that out more than 200 years ago.

But when Trump thinks about trade, he just sees downsides. "Before NAFTA [lowered trade barriers], there were 285,000 autoworkers in Michigan," he says. "Today, that number is only 160,000!"

Trump is right about the jobs numbers. But autoworker jobs disappeared because of automation, not trade. Robots replaced some workers.

But thanks to trade, most of those workers found other, often superior, jobs. Total American sales of cars and car parts are up.

It's shortsighted to look at costs or trade without acknowledging the even larger benefits.

NAFTA made today's avocado craze possible. American avocados are scarce in winter, but Mexico grows them year-round. Today, American producers sell about as much avocado as they did before NAFTA, but thanks to trade, avocados cost less than they would otherwise, and Americans eat four times as many of them.

Trade makes iPhones affordable, too.

Apple buys minerals from 63 countries. It ships those minerals to 34 different countries for processing.

Apple could do more of that in the United States, but every place offers different skills. Turkey and China are good at smelting. Digging through rock is cheaper in Mongolia, and so on.

This doesn't cut the U.S. out of the process. The highest-paying jobs are those held by techies who design the software and program the phone. Most of those jobs are in the USA. It's foolish to "protect" old-fashioned jobs by robbing new workers of better jobs.

The U.S. shouldn't cling to expensive, outdated ways of producing things. We should adapt to the new jobs that America does better—high-end machinery, energy, and intellectual property like movies, music, medicine, internet startups, etc.

Not only do Americans make more money doing those things, also they are safer in those better jobs. Do you want your kids to work in factories? That's often dangerous and physically demanding work. I bet you'd prefer they take the new jobs.

Yes, trade hurts some Americans. Some without new skills, or the right training, will struggle.

But many, many more are better off—much better off—because of trade.

On my Twitter feed, Trump supporters trash me for writing that. They like it when the president talks "tough" about foreigners. It helps politicians to sound like they're getting tough on something, and trade is a popular target.

"There has never been a trade deal as bad as NAFTA," said Trump. He promises to "fix" it and, as always, he sounds confident. But his plan is not the answer.

The ideal NAFTA reform would be elimination of tariffs—no government involvement in trade at all.

We'd all be richer if that happened.

COPYRIGHT 2018 BY JFS PRODUCTIONS INC.

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  1. Yes, but….

    “What of the furriners do not play “fair” with us”?!?!?!?”

    /Proggie and/or Troglodyte

  2. Yes, but….

    “What of the furriners do not play “fair” with us”?!?!?!?”

    /Proggie and/or Troglodyte

  3. I agree fewer trade restrictions are generally a good thing, but I don’t mind using strong negotiating tactics to get others to lower their barriers. I don’t think Trump WANTS to jack any rates, I think he just wants others to lower theirs. Trump is the first president in decades any foreign government will think is actually crazy enough to follow through with his threats… It’s basically just a game of who blinks first. I think if he really got tough with China they would blink first, because they have to. We could cut them off, or disadvantage their products, and still be fine importing away from India, Vietnam etc. They cannot replace us in a similar manner though. That’s what is commonly referred to as “Having the upper hand” in the deal. If you have the upper hand and don’t use it, you’re a fucking chump.

    Even if he has to put in some small tariff (like this steel one) to drive home the point he is serious, if that scares the shit out of other foreign countries to the point where they’d rather drop their tariffs on our goods versus take the risk of getting their goods blocked by high tariffs coming into the USA… Isn’t that a good thing?

    1. If you are too afraid to ask for a good deal in negotiations, you’ll NEVER GET A GOOD DEAL. You can’t get something you don’t ask for! You have to be willing to walk away from a deal to negotiate from strength. The USA is better positioned than any other country on earth to negotiate true free trade deals, yet our politicians have been too scared to demand real bilateral free trade. That should end NOW.

    2. Re: vek,

      We could cut them off, or disadvantage their products, and still be fine importing away from India, Vietnam etc.

      Again with the “we”?

      There’s no “we”, you disgusting Commie. I told you yesterday: trade is ALWAYS an activity between individuals, not between ‘countries’. It’s not “us vs. them”, either. It’s sellers and buyers agreeing, with jingoistic assholes having apoplectic attacks.

      I don’t need the president to negotiate anything with my money. You may wish tariffs represent a negotiation tool, but tariffs in reality punish BUYERS, like ME, not the sellers, for daring not buy ‘Murican.

      Second: these Trumpian tariffs don’t make a distinction between China and the other countries you mention.

      And Third: just who the FUCK are YOU telling anyone from which country a person should be buying his or her goods? Who is the president? Neither of you are anyone to impose your economically illiterate views on me or anyone else.

      1. ^^^This.

      2. Yesterday, Pat Buchanan, for the umpteenth time, declared that America’s great economic success during the second half of the 19th century and the early part of the 20th century was due to the high tariffs erected by Republican party presidents. He wrote:

        “From Lincoln to William McKinley to Theodore Roosevelt, and from Warren Harding through Calvin Coolidge, the Republican party erected the most awesome manufacturing machine the world had ever seen.”

        Do you know that there are people who swallow such post hoc ergo propter hoc “reasoning?” Pat embarrasses himself with this non-sense.

        1. Pat Buchanan is a douche.

          1. In some areas, yes. In others, no.

      3. Do you know that the largest steel company in China is owned by the Communist Party?

        They are not individuals, they are communists.

        The very definitions of communist is them.

        1. Re: DJF,

          Do you know that the largest steel company in China is owned by the Communist Party?

          And, what? Are you making a morality play about it? Am I a bad person from wanting to buy things from a manufacturer owned by Communists?

          Get it through your THICK SKULL: IT’S NOT YOUR MONEY, ASSHOLE. If I want to buy steel from Joseph Stalin’s House O’Rebar, that would be MY GAWD-DAMNED BUSINESS.

          Stop it with the red herrings as well. Who the fuck cares if steel manufacturers in China worship Mao? Fuck you, it’s not your money.

        2. And then there’s this whole aspect. It is frequently said that no real monopolies/major markets can be manipulated, because of course nobody could stay in business long enough to “win” on the other side of their game… This is true. The caveat always being state actors, especially those with sovereign fiat currencies!

          Yet somehow that caveat always gets left out when discussing China. There’s a REASON Germany doesn’t get blamed for doing things like intentionally flooding the entire global steel market… It’s because they’re private companies that can’t possibly survive long enough to achieve any positive end game, and they’re only out for themselves, not their “collective” nation. If you goal is simply to drive people out of business, and put some peasants to work, LIKE IN CHINA, it’s a totally different game being played by totally different rules. They can sustain monopolistic practices indefinitely, or at least for very long periods of time.

          1. Re: vek,

            Yet somehow that caveat always gets left out when discussing China.

            So what? Who cares? That has NOTHING to do with trade, only with internal economic policy, i.e. that’s the Chinese people’s problem if they acquiesce in supporting those monopolies. You’re conflating two issues in order to moralize about buying goods from China.

            They can sustain monopolistic practices indefinitely, or at least for very long periods of time.

            Actually, they can’t. But that’s still a red herring. The fact that Chinese A is a monipoly in China is the Chinese people’s problem, not mine.

            If YOU want to proselytize about the ‘eeeevils’ of state-run monopolies, you’re more than welcome to do so —with YOUR MONEY. Not mine.

            1. Here’s the thing, if 100% dogmatic libertarians ever tried to JUST argue these things on the MORAL grounds, I would say “Okay. I get your position, but I am okay with ignoring this moral a bit here and there. But I understand where you’re coming from, and morally you’re correct.”

              The problem is that you ALSO try to argue some issues on empirical grounds, where there are real world consequences you just wave off as either not existing, or not mattering… Yet these issues DO matter to most people. So if you want to be intellectually honest, stick to the moral argument only.

              A strict reading of libertarian doctrine creates the best real world results in 99% of cases IMO. That’s why I consider myself a pretty strong libertarian leaner. But in that other 1% I make value judgements that, for me, outweigh the moral arguments. I think libertarianism is unassailable on every issue morally… It’s the practical world where it fails that 1% of the time. In those cases make the moral argument, because the practical argument doesn’t always hold water.

          2. For some “libertarians” its all about the short term profit.

            1. “For some “libertarians” its all about the short term profit.”
              For some “libertarians”, it’s all about control of others through coercion.

        3. “Do you know that the largest steel company in China is owned by the Communist Party?”

          OH, well, gee! In that case………..
          I’ll trade with them if I please; none of your business.

      4. So there’s only an Us and Them when it’s YOU brown people from south of the border that are somehow a privileged class nowadays, and US white Americans who are evil racist oppressors??? Because you sure use US and Them comments on that subject.

        THIS is the kind of stuff where 110% dogmatic libertarians lose almost everybody else in the world. Most people accept, that on SOME basic level, there is a We. Why? Because there clearly is a De Facto We. Maybe in theory there is no We, but in practice there very much is. We are tied together by a government, by taxes, by history, by language, by geography, by economics, etc. Your economic success (or failure) effects me FAR more than that of somebody in China, because if YOU lose your job, I have to pay taxes that you can no longer pay. There is a We whether you like it or not. We don’t live in AnCap world Jose!

        Frankly, people don’t care about the principle in this argument. Or almost any arguments really. They care about results. If a policy to block the importation of widgets cost 1% of US GDP in higher prices, but increased US GDP by 3%, most people would consider that a win. You would not because it restricts your freedom, which is true, but good luck convincing 98% of the population about that moral argument.

        1. Re: vek,

          So there’s only an Us and Them when it’s YOU brown people [sic] from south of the border that are somehow a privileged class nowadays, and US white Americans who are evil racist oppressors?

          Are you now wanting to engage in a red herring-throwing competition? Can you at least address the issue?

          If a policy to block the importation of widgets cost 1% of US GDP in higher prices, but increased US GDP by 3%, most people would consider that a win.

          Indeed? Could you show direct causality? You would be the first one to ever do so in history, if you could.

          Moron.

          1. I’m simply pointing out your own hypocrisy my man! You accept Us/Them in some situations, when it suits you, but not in others. I find this to be a pretty common thing, I do this a bit myself! I just don’t try to deny the concept entirely, as it clearly exists in the world.

            Frankly, that’s a lie. It is possible to show scenarios where there are winners/losers in trade. This is accepted. The trick to making it all pencil out better in theory is: The person magically goes on to doing an even more productive job than before!

            And in all fairness, in Smith or Ricardo’s day, I believe the theory held true to the world as it existed. If you lost a job you went back to farming, or did something else. Nowadays we not only have situations of unemployment (returning to the farm isn’t viable anymore), but we also have the welfare state on top of it. These change the math VERY considerably.

            If you look at economic activity as a communal thing, national GDP say, it is possible to have win/lose. If the above moving on to something better doesn’t happen, then the theory crumbles. We’ve seen in the West in the last few decades that very frequently people DO NOT move on to something better, but rather far worse situations. Therefore the theory has observed holes in one of its key areas.

            I still believe true free trade is a good thing, but I’m not completely blinded by a centuries old theory that has obvious, massive, gaping holes in the modern world due to changed circumstances.

            1. “I’m simply pointing out your own hypocrisy my man!”

              No, you’re pulling stuff out of your ass to change the subject.

              1. Not really. He refused to accept any Us/Them/We concept, and then railed on somebody who did… When he uses those same terms in other contexts when it suits him. That’s calling out a hypocrite. I didn’t change the subject since I went on to cover the subject.

      5. “We” refers to “anyone who trades’. And it can be used in a non-collective sense here because vek is referring to the universal law of economics–that all people want the best they can get from every interaction. ‘Want’ and ‘the best they can get’ being entirely subjective to the individual.

        The fact that you cannot see it as anything other than collectivism says more about you than vek–particularly since you ARE a collectivist.

        It’s as if you’re desperate to tar somebody–anybody– else with the brush you have so studiously applied to yourself in these recent months.

        1. Old Mexican just likes to lash out with ridiculously dogmatic responses whenever the opportunity presents itself. Theories are a nice lens to view the world through, but you also have to take into account how the world actually works in reality. I’m pretty damn individualistic, but anyone who ignores that humans have a tribal us/them/we aspect to our nature is blind to reality. It shows up in literally EVERY single facet of life.

          All the people here are a WE group of libertarians/libertarian leaning people, other than the few actual leftist trolls. That’s a WE that libertarians identify with! Accepting reality for what it is, versus what one wishes it was, is the best way to go. You can think on how you might change the world to be more like what you want, but you should never deny how it is now, or deny human nature when planning for your improved future.

          Globalists completely ignored the WE aspect of human nature, and they’re getting bit HARD in the ass now because of all the shit they’ve done that most people don’t like. Lots of Germans don’t want to become a minority in their own homeland where their ancestors have lived for thousands of years, for instance. It’s always best to live in reality, even if you don’t like it.

      6. Perfectly. Said.

  4. Of all of Trump’s stances during the election, his view of free trade was the one that bothered me the most. Let’s hope some of his underlings can at least temper his outlook.

    1. “Let’s hope some of his underlings can at least temper his outlook.”

      I doubt it. He seems like someone who surrounds himself with yes-men.

    2. Re: libertarian,

      His view on free trade bothered you the most? All gis views bothered me as they’re all interconnected. His views on immigration are in lockstep with his gross economic ignorance.

      1. I don’t disagree with anything you said.

      2. Except for at least on immigration he just wants to keep half illiterate people from third world shitholes from moving here, and instead only allowing people with skills useful for the 21st century… I kind of like the idea of keeping America America myself, versus turning it into a socialist shithole. But that’s just me I guess 🙂

        I’m more worried about his handling of the economy than a “horrible” outcome like that!

        1. America is already a socialist shithole. Do you know which race is to blame for that?

          1. Funny you should ask, but have you looked at voting demographics, opinion polls by race, etc lately? If not I dare you to do a few hours of reading on the subjects. After you do, you at least won’t be able to fool yourself into thinking more immigrants is going to make the country MORE free. It won’t. Period.

            Most white folks aren’t my perfect libertarianish type of people, but they’re for a lot smaller government than every single other ethnicity. These are statistics and facts, like it or not. 90%+ of blacks, 70% of Hispanics, all vote for the farther left of our parties, and openly call for still more government. And they’re not even net tax payer groups! The ENTIRE black community on the whole receives hundreds of billions a year more in services than they pay in! People in that situation are TOTALLY gonna wake up and decide to cut government one of these days! LOLOLOLOL

            Maybe America is fucked now already (it totally is!), but importing people with EVEN WORSE views ain’t gonna help. And that’s before you even look at the economic issues of having millions more net negative tax payers, crime rates, etc.

        2. Re: vek,

          he [the racist means me] just wants to keep half illiterate people from third world shitholes from moving here,

          And that somehow justifies tariffs… HOW?

          1. It doesn’t! You were talking about various Trump views, and order of importance. I’m just saying I’m more worried about him fucking up the economy (honest opinion here), than his immigration positions. I’m not that worried about either, but if I had to pick one it’d be the economy.

            I don’t think cutting off low skill immigration is going to do a single bad thing for most people in the USA. Wages would probably rise a touch, costs might rise a touch, but we still have such a low labor force participation rate it’s not going to do much. Maybe a few more deadbeats will get off of welfare. But nothing big overall either way.

            He could theoretically fuck up some economic stuff though. I don’t THINK he will, because nothing he has proposed, including relatively low percentage tariffs, has the potential to be that bad. Maybe minor goods or minor bads, but nothing huge.

  5. “Today, American producers sell about as much avocado as they did before NAFTA, but thanks to trade, avocados cost less than they would otherwise, and Americans eat four times as many of them.”

    Just imagine how much Chipotle could charge for guac if we repealed NAFTA! #MAGA

  6. Well said, You have to consider the practicality of this whole “protectionist” concept he has.

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