Who's Trump And What's a Tariff?
What year is it? People are talking about border taxes, i.e., tariffs; or, in the statist-to-English translation, the government preventing you from freely trading with others to both of your mutual benefit because some third-party interventionist thinks one of them lives in a geographical region they don't like. Where am I? They're talking about some guy named "Trump" or something, who apparently his ideas trump economic reality? I'm not sure what's going on.
Trump is totally bogus, and if I didn't know the game of statism I'd be like one of the democratic-socialists who's baffled he's the President. Nevertheless it's surreal to me too. It's not unbelievable or unpredictable for statism to conclude with such characters; it's just that it has happened, and with it has come a resurrection of failed ideas, from economic ones to perhaps political or social ones of reigniting the bigotry in many that would be a criticism by the Left of Trump. I usually shrug off this latter claim in that only 18% of the population voted for the guy, and of those many were "lesser of two evils votes." Therefore I don't buy the whole dramatization that America has gone racist. I'm not a racist. My bosses aren't racists. My girlfriend isn't. My friends aren't.
Sadly for us, Trump's idea of "America first", which I think should make anyone hesitant to applaud his supposed stance against globalism, is to create economic barriers between us and the rest of the world that hurt us just as much as it might them. He's just another politician [now] who knows exactly how it works, but fools his own followers as to how it really does, having them believe that his great acts of "saving" or "protecting" domestic industries is precisely all that's been needed to save America and get it working again.
There are many reasons to not like Adam Smith, who I believe is fairly unfortunately hailed as the "father of economics", but for the most part what people have taken from him (aside from Marx, who ran with this Ricardian-Smithian Labor Theory of Value) which has prevailed in popular thinking is good: that it doesn't make a nation poor to have imports; that free-trade across borders is good for both nations involved. Many economists have conceded long ago that free trade is beneficial for all parties to the transaction, and protectionism hurts one another, especially when it breaks out into a trade-war where both countries up the tax against one another in response to the other's tariff.
I thought high-tariff mercantilist-economics was refuted thousands of times, long ago. Apparently it isn't frequently done enough. Free-trade is superior to protectionism. I don't see why one would even need to go to great lengths to defend this. It would be an assault on common sense to think differently. For instance: Would it make anyone living in such areas better off if Coloradans imposed a tax on all commerce between Kansas? Of course not. What Trump doesn't want you to know is that: Tariffs are a tax on American consumers.
Somehow though socialists like Donald Trump are able to fool people into believe that exchange isn't mutually profitable, that someone must be harmed by it, and that there's a boogeyman to blame on the other side of the border (which he, too, says is due for a wall to be constructed along it that will supposedly be paid for by "them", i.e., with the tax collected that was stolen from the American consumers in their attempt to trade with their Mexican economic partners) that seeks nothing but to make us poorer. In this sense, he's dangerous for what he can do to the minds of the people ("conservatives") who are most likely to accept the premises of free-trade, losing them forever to nationalistic tendencies; the logic might have escaped many leftist-socialists long-ago, who are adverse to trade, period.
It isn't just Bernie Sanders who needs to read Henry Hazlitt's Economics in One Lesson; it's Donald Trump. If he were to ever pick it up, and truly be interested in living out his campaign slogan to "Make America Great Again", he would see that Henry asks and answers in his book, "who's protected by tariffs?" As was more or less the thesis of the book, that bad economics stems from looking at A and not B, or as Bastiat called it "the seen and unseen", Hazlitt had this to say on where they go wrong:
"...the fallacy comes from looking merely at this manufacturer
and his employees, or merely at the American sweater industry. It
comes from noticing only the results that are immediately seen, and
neglecting the results that are not seen because they are prevented
from coming into existence."
This same applies to the minimum wage law: they see (A) the person who has the job at the nominally-higher wage, and call this rising real-wages; and forget about (B) the person who lost their job as a result. Trump will point out the "seen", since it's all the blind public is able to see, of the job losses for A while knowing that the dumb, duped-public can't see B, themselves, who are paying higher prices for goods as a result.
He elaborates:
"The tariff is repealed; the manufacturer goes out of business; a
thousand workers are laid off; the particular tradesmen whom they
patronized are hurt. This is the immediate result that is seen. But there
are also results which, while much more difficult to trace, are no less
immediate and no less real. For now sweaters that formerly cost $15
apiece can be bought for $10. Consumers can now buy the same quality
of sweater for less money, or a much better one for the same
money. If they buy the same quality of sweater, they not only get the
sweater, but they have $5 left over, which they would not have had
under the previous conditions, to buy something else."
There are many problems with any of these bogus arguments (are there even any?) for "protectionism." In the profit-and-loss economy, only people who successfully use resources (and, as entrepreneurs, correctly predict more often than not the uncertain future of consumer trends as they're taking on these risks with their capital) get to stay in business; those who take on losses, demonstrating their incompetence at being a contenders for employing resources as capitalists, lose the chance to do so. Whenever such inefficient operators are "protected", i.e., they stay in business when they otherwise wouldn't without government-privilege, they continue this misuse and mis-allocation of resources, much to our dissatisfaction as consumers. Unsuccessful companies should fail; they free up the capital that's necessary and needed somewhere else, reallocating it toward a higher-valued use as demonstrated by voluntary market demand and according the consumer's most urgently-felt preferences.
If various "jobs" have left America, because others do them better, then there's nothing wrong with this when it occurs naturally. Does Trump believe robots are the enemy too, "stealing" "our" "jobs?" Unless Trump supporters are Bernie Sander-types now who believe in positive rights (just like he stands with Bernie on revitalizing our nation's infrastructure with more tax-money rather than beginning a process of de-socialization, i.e., privatization), there is no "right" to a job; no American is entitled to the employment with another private owner of property.
I'm going back to sleep. I can't spend my life rebutting ages-old economic myths into the morning. What has likely already been dubbed Trumponomics — of tax the foreign enemies because they hurt us, increase domestic infrastructure spending, and the usual lip-service to the idea of drastically rolling-back government's hampering of the economy — is thoroughly fallacious, and you can find this elsewhere yourself. Such "economics" is totally opposed to an international division of labor, where people all over the world specialize in different things and trade to the enrichment of everyone integrated into the economic system, ignoring all the other complications laid in front of us by our respective governments.
It is important however that we constantly refute these economic lies. Bad economics, i,e., the labor theory of value, leads to statism, such as one finding the worker-capitalist relationship exploitative. Or here, with Trump, of finding it antagonistic to American interests that we're allowed to freely trade with Mexico. It seems anyone willing to call themselves a "Republican" at this point is plainly a socialist now.
Revisiting the chapter Hazlitt wrote on tariffs to find something to quote, I stumbled upon quite the pertinent quote that, like the whole rest of the book, is just as relevant to our times as it was back then in the 40's; but especially so today with the way Trump regards Mexico, coupled with how he speaks of transforming America. I leave you with this, by Hazlitt:
"...the erection of tariff walls has the same effect as the erection
of real walls. It is significant that the protectionists habitually use the
language of warfare. They talk of “repelling an invasion” of foreign
products. And the means they suggest in the fiscal field are like those
of the battlefield. The tariff barriers that are put up to repel this invasion
are like the tank traps, trenches, and barbed-wire entanglements
created to repel or slow down attempted invasion by a foreign army.
And just as the foreign army is compelled to employ more expensive
means to surmount those obstacles—bigger tanks, mine detectors, engineer
corps to cut wires, ford streams, and build bridges—so more expensive
and efficient transportation means must be developed to surmount
tariff obstacles. On the one hand, we try to reduce the cost of transportation
between England and America, or Canada and the United
States, by developing faster and more efficient ships, better roads and
bridges, better locomotives and motor trucks. On the other hand, we
offset this investment in efficient transportation by a tariff that makes it
commercially even more difficult to transport goods than it was before.
We make it $1 cheaper to ship the sweaters, and then increase the tariff
by $2 to prevent the sweaters from being shipped. By reducing the
freight that can be profitably carried, we reduce the value of the investment
in transport efficiency."