All the talk from US President on tariffs lately and how China ripped the US off on $5B worth of trade yada, yada, yada. I honestly felt like puking. Here is this reality TV star .. errr I mean president of the USA totally falling for the whole “trade deficit” economic term made popular every now and then to distract citizens (direct tax slaves) from what is really going on.
One would think that twelve years (and more in many cases) of public education would have introduced kids and young adults to the realities of economics, but you must understand that this is “government” education. Need I say more?
I am so glad that Justin Amash (Republican Representitive – MI) called out Pres. Trump on this aversion of his tariff war and his protectionist tendencies and their unintended consequences:
Why is the president of the US, philosophically, the “people’s choice” (part of the balancing attribute of this “experiment” to tweak “representative government” of the executive, legislative and judicial branches), totally all in on making sure that certain producers in the US are protected from foreign competition?
Well, truth be known, there is and has been a consistent propensity since the nation’s birth toward having the general government (as it was called back in 1787 when the coup de’tat that jettisoned the Articles of Confederation and adopted the Constitution in secret) building protective bridges with the republics budding industries (like railroad, steel manufacturing, canal building, etc).
The Whig party from the early 19th century was all about the big business – general government “partnership” (dysfunctional co-dependency) that utilized tariff income, mainly from the southern ports to fund canal projects in the north and subsidize the steel industry since it was new and vulnerable to foreign competition. Abraham was big into this mercantilism philosophy that continued to grow (imagine a government program growing like a cancer) and demand more and more tariff revenue that led to the “Tariff of Abominations” in the 1828 that South Carolina almost decided NOT to pay this tariff:
It set a 38% tax on 92% of all imported goods. Industries in the northern United States were being driven out of business by low-priced imported goods; the major goal of the tariff was to protect these industries by taxing those goods. The South, however, was harmed directly by having to pay higher prices on goods the region did not produce, and indirectly because reducing the exportation of British goods to the U.S. made it difficult for the British to pay for the cotton they imported from the South.
One would think that especially our political leaders would want to learn from history, but in fact, they want short term political bonds with big business to secure funding for the next political election season. By definition, a democracy (which this republic has become) is never interested in long term consequences to the decisions made, it is almost as bad as full on Marxism, socialism and communism in the way it treats future generations of a nation/region.
Last year when Pres. Trump first issues this threat of a tariff increase, Martin Armstrong (of Armstrong Economics) shed some truth on the matter:
The big problem is that Trump FAILS to understand how the economy truly functions. Imposing tariffs on foreign imports because they can produce something more efficiently is NOT protecting American jobs – its is imposing higher costs on the American public.
If America cannot compete against foreign steel and aluminum, the answer is not tariffs, but TAX REFORM and UNION REFORM. If unions fail to understand that demanding higher wages in an UN-competitive manner will only lead to the loss of jobs, then end result cannot be prevented by tariffs.
Once upon a time, New York City was the largest port in the United States. Because of unions and outrageous demands, little by little they killed their own jobs. Shipping moved to New Jersey, Philadelphia, and Virginia. What used to be a viable industry today is just a shadow of what it once was. No matter what the field, everything is subject to competition. Imposing tariffs is simply subsidizing overpaid jobs and higher taxes.
Another popular independent media personality, Pete Raymond, also pointed out to Pres. Trump that 150 years ago, Bastiat had already settled this issue:
What is hilarious is that even Bastiat in 1845 when he wrote this piece, (called “Candlestick Makers’ Petition” directed at the French Parliament) said:
We anticipate your objections, gentlemen; but there is not a single one of them that you have not picked up from the musty old books of the advocates of free trade. We defy you to utter a word against us that will not instantly rebound against yourselves and the principle behind all your policy.
Will you tell us that, though we may gain by this protection, France will not gain at all, because the consumer will bear the expense?
Even in 1845 (and in 1828) there were plenty of books, musty books, on shelves unused and unread by government officials. The same holds true today, the idiots are elected while the wise refuse to wield power, the ugly and self-serving political type.
I do hope that some of you are aware of the Candlestick Makers’ Petition as Frederic Bastiat had a way in his short life to make economics simple enough that even a politician could understand. A teaser clip is below. Enjoy Mother’s Day celebrations today!
-SF1
You are on the right track. You reject abstract theories and have little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry.
We come to offer you a wonderful opportunity for your — what shall we call it? Your theory? No, nothing is more deceptive than theory. Your doctrine? Your system? Your principle? But you dislike doctrines, you have a horror of systems, as for principles, you deny that there are any in political economy; therefore we shall call it your practice — your practice without theory and without principle.
We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun …
Priceless!