On Trade, Protectionism and Tariffs

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Henry George in Protection or Free Trade:
http://www.aei.org/publication/some-eco ... ry-george/" onclick="window.open(this.href);return false;

Trade is not invasion. It does not involve aggression on one side and resistance on the other, but mutual consent and gratification. There cannot be a trade unless the parties to it agree, any more than there can be a quarrel unless the parties to it differ. England, we say, forced trade with the outside world upon China, and the United States upon Japan. But, in both cases, what was done was not to force the people to trade, but to force their governments to let them. If the people had not wanted to trade, the opening of the ports would have been useless.

Civilized nations, however, do not use their armies and fleets to open one another’s ports to trade. What they use their armies and fleets for, is, when they quarrel, to close one another’s ports. And their effort then is to prevent the carrying in of things even more than the bringing out of things—importing rather than exporting. For a people can be more quickly injured by preventing them from getting things than by preventing them from sending things away. Trade does not require force. Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do. Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.

Can there be any greater misuse of language than to apply to commerce terms suggesting strife, and to talk of one nation invading, deluging, overwhelming or inundating another with goods? Goods! what are they but good things—things we are all glad to get? Is it not preposterous to talk of one nation forcing its good things upon another nation? Who individually would wish to be preserved from such invasion? Who would object to being inundated with all the dress goods his wife and daughters could want; deluged with a horse and buggy; overwhelmed with clothing, with groceries, with good cigars, fine pictures, or anything else that has value? And who would take it kindly if any one should assume to protect him by driving off those who wanted to bring him such things?

Why do we seek to do to ourselves what we do to, say, Iran: Keep out foreign goods. By the protectionists logic, Iran should be prospering.

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More from Henry George:
http://www.aei.org/publication/quotatio ... d-tariffs/" onclick="window.open(this.href);return false;

1. Maximize Imports, Not Exports. If foreigners will bring us goods cheaper than we can make them ourselves, we shall be the gainers. The more we get in imports as compared with what we have to give in exports, the better the trade for us. And since foreigners are not liberal enough to give us their productions, but will only let us have them in return for own productions, how can they ruin our industry? The only way they could ruin our industry would be by bringing us for nothing all we want, so as to save us the necessity for work. If this were possible, ought it seem very dreadful?

2. Voluntary Trade is Mutually Beneficial. Trade is not invasion. It does not involve aggression on one side and resistance on the other, but mutual consent and gratification. There cannot be a trade unless the parties to it agree.

3. Exposing Protectionist Fallacies. In a profitable international trade the value of imports will always exceed the value of the exports that pay for them, just as in a profitable trading voyage the return cargo must exceed in value the cargo carried out. This is possible to all the nations that are parties to commerce, for in a normal trade commodities are carried from places where they are relatively cheap to places where they are relatively dear, and their value is thus increased by the transportation, so that a cargo arrived at its destination has a higher value than on leaving the port of its exportation. But on the theory that a trade is profitable only when exports exceed imports, the only way for all countries to trade profitably with one another would be to carry commodities from places where they are relatively dear to places where they are relatively cheap. An international trade made up of such transactions as the exportation of manufactured ice from the West Indies to New England, and the exportation of hot-house fruits from New England to the West Indies, would enable all countries to export much larger values than they imported. On the same theory the more ships sunk at sea the better for the commercial world. To have all the ships that left each country sunk before they could reach any other country would, upon protectionist principles, be the quickest means of enriching the whole world, since all countries could then enjoy the maximum of exports with the minimum of imports.

4. Exposing Tariff Fallacies. To every trade there must be two parties who mutually desire to trade, and whose actions are reciprocal. No one can buy unless he can find someone willing to sell; and no one can sell unless there is some other one willing to buy. If Americans did not want to buy foreign goods, foreign goods could not be sold here even if there were no tariff. The efficient cause of the trade which our tariff aims to prevent is the desire of Americans to buy foreign goods, not the desire of foreign producers to sell them. Thus protection really prevents what the “protected” themselves want to do. It is not from foreigners that protection preserves and defends us; it is from ourselves.

5. On the Fallacy of Protecting Infant Industries. What are really infant industries have no more chance in the struggle for governmental encouragement than infant pigs with full-grown swine about a meal-tub. Not merely is the encouragement likely to go to industries that do not need it, but is likely to go to industries that can be maintained only in this way, and thus to cause absolute loss to the community by diverting labor and capital from remunerative industries.

6. Protectionism = Force. Trade does not require force. Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do. Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.

7. On the Fallacy of Trade Retaliation. And in the same way, for any nation to restrict the freedom of its own citizens to trade, because other nations so restrict the freedom of their citizens, is a policy of the “biting off one’s nose to spite one’s face” order. Other nations may injure us by the imposition of taxes which tend to impoverish their own citizens, for as denizens of the world it is to our real interest that all other denizens of the world should be prosperous. But no other nation can thus injure us so much as we shall injure ourselves if we impose similar taxes upon our own citizens by way of retaliation.

[Silver]

Ajax, you, sir, are on a roll. Please keep posting this highly informative info. I can feel the soft breeze of liberty blowing, ever so slightly, when I read this material.

Helaman 6:
7 And behold, there was peace in all the land, insomuch that the Nephites did go into whatsoever part of the land they would, whether among the Nephites or the Lamanites.

8 And it came to pass that the Lamanites did also go whithersoever they would, whether it were among the Lamanites or among the Nephites; and thus they did have free intercourse one with another, to buy and to sell, and to get gain, according to their desire.

9 And it came to pass that they became exceedingly rich, both the Lamanites and the Nephites; and they did have an exceeding plenty of gold, and of silver, and of all manner of precious metals, both in the land south and in the land north.

[ajax]

Then there's the local thug angle:

More Questions for Trump and Other Protectionists and Mercantilists
http://cafehayek.com/2016/10/more-quest ... lists.html" onclick="window.open(this.href);return false;

Donald Trump is a protectionist like many other politicians, save that he unfurls his vast economic ignorance more fully and more proudly than do more seasoned politicians. I’ve more questions for Trump and his fans, and, indeed, for protectionists of all stripes, colors, and temperaments. Such as….

– If you buy your tomatoes and okra from a stranger across town and, in response, your neighbor hires a gang of neighborhood thugs to rough you up if you don’t start buying your tomatoes and okra from him, do you regard your neighbor’s actions as just? After all, his actions increase demand for his output and make him richer.

– If the neighborhood thugs succeed in getting you to buy fewer tomatoes and okra from the stranger across town and more from your neighbor, and if (as is indeed likely) your neighbor is enriched by this thuggery public policy for the neighborhood, do you believe that your neighbor’s increased wealth necessarily means that your neighborhood is thereby made wealthier? Are you thereby made wealthier?

– Do you believe that the success of the neighborhood thugs in getting you to buy more of your neighbor’s tomatoes and okra will encourage your neighbor to be more attentive to your wishes as a consumer – your wishes as someone who buys tomatoes and okra? Do you believe that the quality of the tomatoes and okra that you buy from your neighbor under these circumstances will be as high as would the quality of the tomatoes and okra that you buy were there no neighborhood thugs to rough you up whenever you purchase tomatoes and okra from outside of your neighborhood?

– Suppose that your neighbor shows you indisputably correct facts and figures that prove that you and your neighbors have for several years running bought larger dollar amounts goods and services from people who live outside of your neighborhood than people who live outside of your neighborhood bought from you and your neighbors. Your neighbor explains that this fact – this “neighborhood trade deficit” – is reason enough for him to employ local thugs to rough you up each and every time you buy tomatoes and okra from outside of the neighborhood. Would you excuse your neighbor? Would you, in light of these fine facts and figures, volunteer to pay part of the salaries of the thugs who rough you up whenever you spend your money outside of the neighborhood?

– Suppose that your neighbor shows you indisputably correct facts and figures that prove that he hasn’t been working in his garden as much as he normally does, and that the reason is that there is now less-than-typical demand for the tomatoes and okra that he grows and offers for sale. “Normally,” says your neighbor, “I’d have neither an ethical right nor a good economic justification for employing local thugs to rough you up each and every time you buy tomatoes and okra from outside of the neighborhood. But because I’m now not working as much as I normally do in my garden, I’m now both ethically and economically justified in employing local thugs to rough you up each and every time you buy tomatoes and okra from outside of the neighborhood.” Do you accept your neighbor’s reasoning?

– Suppose that your neighbor shows you indisputably correct facts and figures that prove that a homeowners’ association outside of your neighborhood spends part of its budget encouraging its residents to grow more tomatoes and okra. Your neighbor explains that this fact – this “subsidization of produce by an outside-of-our-neighborhood collective-decision-making entity” – is reason enough for him to employ local thugs to rough you up each and every time you buy tomatoes and okra from outside of the neighborhood. Would you excuse your neighbor? Would you, in light of this revelation, volunteer to pay part of the salaries of the thugs who rough you up whenever you spend your money outside of the neighborhood?

– Suppose that you question your neighbor’s claim that subsidization of outside-of-our-neighborhood production of tomatoes and okra by an outside-of-our-neighborhood homeowners’ association justifies his use of thugs to rough you up each and every time you buy tomatoes and okra from outside of your neighborhood. Your neighbor replies that “such use by that outside-of-our-neighborhood homeowners’ associations of its homeowners’ funds is a clever and crafty way to make that other neighborhood richer at our neighborhood’s expense!” Do you find this explanation compelling? Does its asserted truth justify your neighbor employing local thugs to rough you up each and every time you by tomatoes and okra from that other neighborhood?

– Suppose instead that your neighbor shows you compelling evidence that the other neighborhood has been overtaken by a gang of brutish thugs who violently extract resources from the citizens of that other neighborhood. These brutish thugs spend these extracted resources subsidizing the production of tomatoes and okra grown in that other neighborhood and the sale outside of that neighborhood of those tomatoes and okra. Your neighbor informs you that these thugs are thereby “strategically” enriching that other neighborhood at our neighborhood’s expense – which is why (your neighbor continues with his scholarly explanation) your neighbor is justified in “strategically” employing local thugs to rough you up each and every time you purchase tomatoes and okra from that other neighborhood. Do you believe that the gang of brutish thugs in the other neighborhood are really making the people of that neighborhood, as a whole, more prosperous? Regardless of your answer to the previous question, do you believe that your neighbor is justified in using local thugs to rough you up each and every time you buy tomatoes and okra from that other neighborhood?

…..

Now slightly reword each of the above questions so that “neighborhood” is replace by “country,” “thugs” replaced by “government authorities,” and “tomatoes and okra” is replace by “goods and services.” I’m distressed, dear protectionist friends, to guess that your answers change when the questions are so reworded. Can you explain why?

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Perhaps the Candlemaker's were right in Bastiat's satirical piece, needing protection from the sun:

The Candlemaker's Petition
https://fee.org/articles/the-candlemakers-petition/" onclick="window.open(this.href);return false;

We candlemakers are suffering from the unfair competition of a foreign rival. This for­eign manufacturer of light has such an advantage over us that he floods our domestic markets with his product. And he offers it at a fantastically low price. The moment this foreigner appears in our country, all our customers de­sert us and turn to him. As a re­sult, an entire domestic industry is rendered completely stagnant. And even more, since the lighting industry has countless ramifica­tions with other native industries, they, too, are injured. This foreign manufacturer who competes against us without mercy is none other than the sun itself!

Here is our petition: Please pass a law ordering the closing of all windows, skylights, shutters, cur­tains, and blinds — that is, all openings, holes, and cracks through which the light of the sun is able to enter houses. This free sunlight is hurting the business of us deserving manufacturers of candles. Since we have always served our country well, gratitude demands that our country ought not to abandon us now to this un­equal competition.

We hope that you gentlemen will not regard our petition as mere satire, or refuse it without at least hearing our reasons in support of it.

First, if you make it as difficult as possible for the people to have access to natural light, and thus create an increased demand for artificial light, will not all domestic manufacturers be stimulated thereby?

For example, if more tallow is consumed, naturally there must be more cattle and sheep. As a result, there will also be more meat, wool, and hides. There will even be more manure, which is the basis of agri­culture.

Next, if more oil is consumed for lighting, we shall have extensive olive groves and rape fields.

Also, our wastelands will be covered with pines and other res­inous trees and plants. As a re­sult of this, there will be numerous swarms of bees to increase the production of honey. In fact, all branches of agriculture will show an increased development.

The same applies to the shipping industry. The increased demand for whale oil will then require thousands of ships for whale fish­ing. In a short time, this will re­sult in a navy capable of upholding the honor of our country and grat­ifying the patriotic sentiments of the candlemakers and other per­sons in related industries.

The manufacturers of lighting fixtures — candlesticks, lamps, candelabra, chandeliers, crystals, bronzes, and so on — will be espe­cially stimulated. The resulting warehouses and display rooms will make our present-day shops look poor indeed.

The resin collectors on the heights along the seacoast, as well as the coal miners in the depths of the earth, will rejoice at their higher wages and increased pros­perity. In fact, gentlemen, the con­dition of every citizen of our country — from the wealthiest owner of coal mines to the poorest seller of matches — will be improved by the success of our pe­tition.

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And maybe something akin to a Negative Railroad will provide jobs aplenty:

A Negative Railroad
https://www.libertarianism.org/publicat ... e-railroad" onclick="window.open(this.href);return false;

I have said that as long as one has regard, as unfortunately happens, only to the interest of the producer, it is impossible to avoid running counter to the general interest, since the producer, as such, demands nothing but the multiplication of obstacles, wants, and efforts.

I find a remarkable illustration of this in a Bordeaux newspaper.

M. Simiot raises the following question:

Should there be a break in the tracks at Bordeaux on the railroad from Paris to Spain?

He answers the question in the affirmative and offers a number of reasons, of which I propose to examine only this:

There should be a break in the railroad from Paris to Bayonne at Bordeaux; for, if goods and passengers are forced to stop at that city, this will be profitable for boatmen, porters, owners of hotels, etc.

Here again we see clearly how the interests of those who perform services are given priority over the interests of the consumers.

But if Bordeaux has a right to profit from a break in the tracks, and if this profit is consistent with the public interest, then Angoulême, Poitiers, Tours, Orléans, and, in fact, all the intermediate points, including Ruffec, Châtellerault, etc., etc., ought also to demand breaks in the tracks, on the ground of the general interest—in the interest, that is, of domestic industry—for the more there are of these breaks in the line, the greater will be the amount paid for storage, porters, and cartage at every point along the way. By this means, we shall end by having a railroad composed of a whole series of breaks in the tracks, i.e., a negative railroad.

Whatever the protectionists may say, it is no less certain that the basic principle of restriction is the same as the basic principle of breaks in the tracks: the sacrifice of the consumer to the producer, of the end to the means.

[ajax]

Ajax, you, sir, are on a roll. Please keep posting this highly informative info. I can feel the soft breeze of liberty blowing, ever so slightly, when I read this material.

Helaman 6:
7 And behold, there was peace in all the land, insomuch that the Nephites did go into whatsoever part of the land they would, whether among the Nephites or the Lamanites.

8 And it came to pass that the Lamanites did also go whithersoever they would, whether it were among the Lamanites or among the Nephites; and thus they did have free intercourse one with another, to buy and to sell, and to get gain, according to their desire.

9 And it came to pass that they became exceedingly rich, both the Lamanites and the Nephites; and they did have an exceeding plenty of gold, and of silver, and of all manner of precious metals, both in the land south and in the land north.

Thanks, I'm just a simple man trying to make my way in the universe. And trying to be as consistent I can in the ideas of liberty.

[Separatist]

http://www.aei.org/publication/sunday-evening-links-4/" onclick="window.open(this.href);return false;

VennTrumpInsuranceChoicea.png (282.22 KiB) Viewed 1700 times

1. Venn Diagram of the Day (above). According to Donald Trump’s website, part of his vision to reform healthcare is to “Allow people to purchase insurance across state lines, in all 50 states, creating a dynamic market. By allowing full competition in this market, insurance costs will go down and consumer satisfaction will go up.” But when it comes to trading goods across imaginary lines called a national border, Trump seems to reverse his position, and wants to restrict competition and choice. Using Trump’s logic for selling health insurance across state lines, won’t his restrictions on foreign trade cause prices to go up and consumer satisfaction to go down?

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Protectionism’s Enduring Costs
Read more at: http://www.nationalreview.com/article/4 ... es-economy" onclick="window.open(this.href);return false;

by GEORGE WILL
December 28, 2016 How politicians’ favorite ‘job saving’ measures damage the economy

It is axiomatic that if someone is sufficiently eager to disbelieve something, there is no Everest of evidence too large to be ignored. This explains today’s revival of protectionism, which is a plan to make America great again by making it 1953 again.

This was when manufacturing’s postwar share of the labor force peaked at about 30 percent. The decline that began then was not caused by manufactured imports from today’s designated villain, China, which was a peasant society. Rather, the war-devastated economies of competitor nations were reviving. And, domestically, the age of highly technological manufacturing was dawning.

Since 1900, the portion of the American workforce in agriculture has declined from 40 percent to 2 percent. Output per remaining farmer and per acre has soared since millions of agricultural workers made the modernization trek from farms to more productive employment in city factories.

Was this trek regrettable?

According to a Ball State University study, of the 5.6 million manufacturing jobs lost between 2000 and 2010, trade accounted for 13 percent of job losses and productivity improvements accounted for more than 85 percent: “Had we kept 2000-levels of productivity and applied them to 2010-levels of production, we would have required 20.9 million manufacturing workers [in 2010]. Instead, we employed only 12.1 million.” Is this regrettable? China, too, is shedding manufacturing jobs because of productivity improvements.

Douglas A. Irwin of Dartmouth College notes that Chinese imports may have cost almost one million manufacturing jobs in nearly a decade, but “the normal churn of U.S. labor markets results in roughly 1.7 million layoffs every month.” He notes that there are more than 45 million Americans in poverty, “stretching every dollar they have.” The apparel industry employs 135,000 Americans. Can one really justify tariffs that increase the price of clothing for the 45 million in order to save some of the 135,000 low-wage jobs? Anyway, if tariffs target apparel imports from China, imports will surge from other low-wage developing nations.

The Wall Street Journal’s Greg Ip, who reports that there currently are 334,000 vacant manufacturing jobs, says that when Jimmy Carter tried to protect U.S. manufacturers by restricting imports of Japanese televisions, imports from South Korea and Taiwan increased. When those were restricted, Mexican and Singaporean manufacturers benefited.

In his book “An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy,” Marc Levinson recalls the 1970 agonies about Japanese bolts, nuts, and screws. Under the 1974 Trade Act, companies or unions claiming “serious injury” — undefined by the law — from imports could demand tariffs to price the imports out of the market. Of the hundreds of U.S. bolt, nut, and screw factories, some were, Levinson writes, “highly automated, others so old that gloved workers held individual bolts with tongs to heat them in a forge.” A three-year, 15 percent tariff enabled domestic producers to raise their prices, thereby raising the costs of many American manufacturers. By one estimate, each U.S. job “saved” cost $550,000 as the average bolt-nut-screw worker was earning $23,000 annually. And by the mid-1980s, inflation-adjusted sales of domestic makers were 15 percent below the 1979 level.

Levinson notes that Ronald Reagan imposed “voluntary restraints” on Japanese automobile exports, thereby creating 44,100 U.S. jobs. But the cost to consumers was $8.5 billion in higher prices, or $193,000 per job created, six times the average annual pay of a U.S. autoworker. And there were job losses in sectors of the economy into which the $8.5 billion of consumer spending could not flow. The Japanese responded by sending higher-end cars, from which they made higher profits, which they used to build North American assembly plants and to develop more expensive and profitable cars to compete with those of U.S. manufacturers.

In 2012, Barack Obama boasted that “over a thousand Americans are working today because we stopped a surge in Chinese tires.” But this cost about $900,000 per job, paid by American purchasers of vehicles and tires. And the Peterson Institute for International Economics says that this money taken from consumers reduced their spending on other retail goods, bringing the net job loss from the job-saving tire tariffs to around 2,500. And this was before China imposed retaliatory duties on U.S. chicken parts, costing the U.S. industry $1 billion in sales. Imports of low-end tires from Thailand, Indonesia, Mexico, and elsewhere largely replaced Chinese imports. The past is prologue. The future probably will feature many more such self-defeating government interventions in the name of compassion as protectionist America tries to cower its way to being great again.

[Separatist]

New York’s ‘Buy American’ policy makes as little sense as ‘Buy New York’ or ‘Buy Albany County’ or ‘Buy Syracuse’
https://www.aei.org/publication/new-yor ... -syracuse/" onclick="window.open(this.href);return false;

I’ve taken the liberty of doing some editing of this press release from New York Governor Cuomo’s office about his new “Buy American New York” mandate for state procurement spending to help demonstrate how those protectionist policies are self-defeating and illogical. If a “Buy America” policy can save US jobs, then a “Buy New York” policy should do an even better job of saving state jobs. If “Buy New York” is successful at saving and protecting jobs at the state level, the governor’s proposal should next be extended to the county level for government procurement spending at each of New York state’s 62 counties, e.g. “Buy Albany County,” “Buy Allegany County,” “Buy Bronx County,” etc. to protect and save jobs at the county level. If successful at the county level, the governor’s plan could then be extended even further to the more than 1,000 towns and cities in New York e.g. “Buy Buffalo,” “Buy Rochester,” and “Buy Syracuse” policies to save and protect city jobs. If those campaigns to force local governments to procure locally produced goods at the state, county and city levels seem like an unconvincing way to make local economies prosper, that’s because they’re not an effective strategy to promote economic growth and jobs in the long-run. And neither are “Buy American” campaigns an effective to “make America great again.”

[Click here for edited press release.]

Bottom Line: According to Governor Cuomo’s protectionist reasoning, forcing state offices in New York to “Buy American” protects and saves American industries jobs. But if Cuomo’s main responsibility is to the citizens of New York, wouldn’t a “Buy New York” campaign do an even more effective job of protecting and saving jobs and industries in the governor’s own state? And from there, the protectionist logic can be extended down to the county and city level. But if it’s obvious that a “Buy New York” or “Buy Albany County” or “Buy Syracuse” campaign would make the citizens of those jurisdictions worse off, then it’s also the case, although maybe less obvious, that a “Buy American” campaign will also make Americans and New Yorkers worse off.

Walter Block’s conclusion about the flawed internal logic of protectionism in his 1975 book Defending the Undefendable is one of the best explanations ever for why “Buy American” campaigns are flawed and self-defeating, here’s a slightly edited version below:

The entire fabric of civilization rests upon mutual support, cooperation, and trade between people. To advocate the cessation of all trade is nonsense, and yet it follows ineluctably from the protectionist mandates to Buy American put forward by Governor Cuomo. If the argument for the prohibition or restrictions of trade with tariffs, trade barriers, and procurement mandates at the national level is accepted, there is no logical stopping place at the level of the state, the city, the neighborhood, the street, or the block. The only stopping place is the individual, because the individual is the smallest possible unit. Premises which lead ineluctably to an absurd conclusion are themselves absurd. Thus, however convincing the protectionist, anti-trade “Buy American” procurement mandates proposed by Governor Cuomo might seem on the surface, there is something terribly wrong with them.

Like Trump’s threats to erect protectionist trade barriers with 30-40-50% tariffs, Cuomo’s proposal might benefit a small subset of American workers in selected, protected industries like manufacturing, but will inexorably lead to a reduction in US economic growth and a reduction in jobs overall. But that’s the distorted and ill-advised temptation of protectionism – it can protect some jobs in some industries in the short-run and those jobs are concentrated and visible, but at the expense of even greater job losses dispersed throughout the economy in the long-run in many other industries, and those jobs are much less visible. Cuomo’s protectionist mandates, like Trump’s tariffs and border taxes, will impoverish America and New York, not “make them great again.”

[Separatist]

Protectionism’s Enduring Costs
Read more at: http://www.nationalreview.com/article/4 ... es-economy" onclick="window.open(this.href);return false;

According to a Ball State University study, of the 5.6 million manufacturing jobs lost between 2000 and 2010, trade accounted for 13 percent of job losses and productivity improvements accounted for more than 85 percent: “Had we kept 2000-levels of productivity and applied them to 2010-levels of production, we would have required 20.9 million manufacturing workers [in 2010]. Instead, we employed only 12.1 million.” Is this regrettable? China, too, is shedding manufacturing jobs because of productivity improvements.

That damn curse of labor saving machinery:

The "Curse" of Labor-Saving Machinery Is Nothing New
https://mises.org/blog/curse-labor-savi ... othing-new" onclick="window.open(this.href);return false;

[ajax]

Tariffs are a regressive tax that impose the greatest burden on low-income Americans
http://www.aei.org/publication/tariffs- ... americans/" onclick="window.open(this.href);return false;

tarrifburden.png (18.77 KiB) Viewed 1533 times

The chart above displays the estimated burdens of trade tariffs (as a share of after-tax household income) on US households by income deciles. It represents graphically the main conclusion of a new research article “US tariffs are an arbitrary and regressive tax” by economists Jason Furman (Chairman, Council of Economic Advisers), Katheryn Russ (UC-Davis), Jay Shambaugh (Council of Economic Advisers), emphasis mine:

Tariffs – taxes on imported goods – likely impose a heavier burden on lower-income households, as these households generally spend more on traded goods as a share of expenditure/income and because of the higher level of tariffs placed on some key consumer goods. We estimate the tariff burden by income group and by family structure using a new dataset constructed by matching of granular data on trade and consumer spending. The findings suggest that tariffs function as a regressive tax that weighs most heavily on women and single parents.

Here’s their methodology:

We match import duties to standard consumer expenditure data to take a more detailed look and find evidence that low- and middle-income households do, indeed, spend a higher fraction of their income and non-housing expenditure on tariffs. The findings indicate that tariffs act as a regressive tax on American consumers and are distortionary in their variation across products.

Here’s the paper’s conclusion:

Based on this initial analysis, it appears tariffs are imposed in a regressive manner – in part because expenditures on traded goods are a higher share of income and non-housing consumption among lower income households, but also due to explicit regressivity within categories. The analysis highlights an underexplored aspect of trade policy and its effects and leaves open a path for subsequent research. More research on this area would be welcome – and the new dataset created for this analysis hopefully will help further some of that research.

Bottom Line: The economic lessons here are: a) America’s low-income households benefit the most from free trade and hav
ing access to cheap imports because they spend a greater share of their budgets on traded goods like clothing, footwear, household items, school supplies, appliances, toys, and furniture (think Walmart shoppers), and b) America’s low-income households have the most to lose from greater restrictions on free trade with import quotas, protective trade tariffs, border taxes, and other trade barriers. If Trump starts a trade war with tariffs and border taxes, it will be a “war on the poorest Americans,” as Johan Norberg explains in the video below “Unequal Benefits of Trade” (MP: and unequal burdens of tariffs).

[davedan]

When we get our banana's from Central America, we allow the middle men to take over those countries to supply our "out-of-season" tastes. The middle men like Phoenicians and Venetians, and British East India Trading Company, and Walmart today enrich themselves buying from the poor and selling to the rich.

Instead the land in 3rd-world countries should be used to produce food and products for its own people and not us.

[ajax]

When we get our banana's from Central America, we allow the middle men to take over those countries to supply our "out-of-season" tastes. The middle men like Phoenicians and Venetians, and British East India Trading Company, and Walmart today enrich themselves buying from the poor and selling to the rich.

Nothing wrong with importing bananas. Nothing wrong with middle men moving the goods. Voluntary trade by definition helps both parties. One billion people have moved out of poverty in just the last 30 years. This is due to trade, not some archaic idea of doubling down and building walls.

Instead the land in 3rd-world countries should be used to produce food and products for its own people and not us. It's nice that you have a perfect plan for other people and how their land should be used. You may be of use yet in a politburo somewhere. The fact they are producing goods voluntarily for the world market is good enough for me. If not voluntarily, I'm for removing all restrictions.

[Bronco73idi]

The cattle pollution in South America is worse then all of our personal cars in the US!!!! We have 93 million head of cattle in the US. World has 1.5 billion!!!!!

https://www.google.com/amp/www.independ ... ent=safari" onclick="window.open(this.href);return false;

Free trade isn't free

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“The philosophy of protectionism is a philosophy of war. The wars of our age are not at variance with popular economic doctrines; they are, on the contrary, the inescapable result of a consistent application of these doctrines.” - Ludwig von Mises, Human Action

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Yes, protectionism can save some US jobs, but at what cost? Empirical evidence suggests it’s very, very expensive
https://www.aei.org/publication/yes-pro ... expensive/" onclick="window.open(this.href);return false;

Read the entire thing by clicking on the above link. But here is an excerpt:

The empirical evidence is clear-cut. The costs of protectionist trade policies far exceed the benefits. The losses suffered by consumers exceed the gains reaped by domestic producers and government. Low income consumers are relatively more adversely affected than high-income consumers. Not only are there inefficiencies associated with excessive domestic production and restricted consumption, but there are costs associated with the enforcement of the protectionist legislation and attempts to influence trade policy.

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Should Free Trade With Red-Headed People Be Supported?
http://www.economicpolicyjournal.com/20 ... eaded.html" onclick="window.open(this.href);return false;

A Don Boudreaux letter to a correspondent:

Mr. Wilson Shannon

Mr. Shannon:

You ask how I can “continue to regard [myself] scientific” given my “failure to consider the differences that mark off foreign trading from domestic trading.”

What differences do you have in mind? I can think of none that are economically relevant. I can think of no economically relevant differences that cause voluntary trades between people who live in different countries to be any less likely to be mutually advantageous than are voluntary trades between people who live in the same country. I can think of no differences that render increased competition from foreign firms to be any less economically advantageous for the domestic economy than is increased competition from domestic firms. I can think of no differences that cause the pain of losing a job to a foreign competitor to be any more intense than is the pain of losing a job to a domestic competitor.

To consistently support free trade with foreigners is no less scientific than is, say, to consistently support free trade with red-headed people. Just as there is no reason to suppose that trading with red-headed people is different from trading with non-red-headed people, there is no reason to suppose that trading with people who live abroad is different from trading with people who live in the home country. Indeed, what is unscientific is the all-too-common, unreflective assumption that trading with foreigners does differ in economically relevant ways from trading with fellow citizens.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

The above originally appeared at Cafe Hayek.

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When it comes to trade, the ‘Deal-Maker-in-Chief’ gets his deal-making completely upside-down and backwards

[Silver]

When it comes to trade, the ‘Deal-Maker-in-Chief’ gets his deal-making completely upside-down and backwards

Very good article. It will be ignored by the Trumpsters here. Nice quote from Adam Smith proving that certain principles are eternal regardless of setting.

"And the proper objective for a nation as Adam Smith put it, is to arrange things, so we get as large a volume of imports as possible, for as small a volume of exports as possible."

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If you’re reading this post, you’re a major beneficiary of free trade.

John Tamny writes:

If you’re reading this post, you’re a major beneficiary of free trade. That’s true even if you disagree. Indeed, a solitary individual could never create a computer by himself, let alone one with the internal capabilities that enable global conversation, along with the ability to buy goods and services produced everywhere. Absent free trade, our existence would be gruesomely primitive, and almost certainly defined by constant hunger.

Have you, the reader, ever crossed town, or crossed state lines, to get a better deal on an appliance, or in search of better food? Of course you have. Thanks to technology and transportation advances, the range of individuals and businesses fighting to serve our needs has expanded in ways that have made all of us better off. In short, if you’ve ever bargain shopped, or turned up your nose to a local restaurant with lousy service, food or both, then you’re an ardent free trader.

[Silver]

If you’re reading this post, you’re a major beneficiary of free trade.

John Tamny writes:

If you’re reading this post, you’re a major beneficiary of free trade. That’s true even if you disagree. Indeed, a solitary individual could never create a computer by himself, let alone one with the internal capabilities that enable global conversation, along with the ability to buy goods and services produced everywhere. Absent free trade, our existence would be gruesomely primitive, and almost certainly defined by constant hunger.

Have you, the reader, ever crossed town, or crossed state lines, to get a better deal on an appliance, or in search of better food? Of course you have. Thanks to technology and transportation advances, the range of individuals and businesses fighting to serve our needs has expanded in ways that have made all of us better off. In short, if you’ve ever bargain shopped, or turned up your nose to a local restaurant with lousy service, food or both, then you’re an ardent free trader.

Great point. Right-thinking residents of Connecticut cross their state border to get unrestricted rifle magazines.

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David Hume

OF THE JEALOUSY OF TRADE
http://www.econlib.org/library/LFBooks/ ... MPL29.html" onclick="window.open(this.href);return false;

Nothing is more usual, among states which have made some advances in commerce, than to look on the progress of their neighbours with a suspicious eye, to consider all trading states as their rivals, and to suppose that it is impossible for any of them to flourish, but at their expence. In opposition to this narrow and malignant opinion, I will venture to assert, that the encrease of riches and commerce in any one nation, instead of hurting, commonly promotes the riches and commerce of all its neighbours; and that a state can scarcely carry its trade and industry very far, where all the surrounding states are buried in ignorance, sloth, and barbarism….

It is obvious, that the domestic industry of a people cannot be hurt by the greatest prosperity of their neighbours; and as this branch of commerce is undoubtedly the most important in any extensive kingdom, we are so far removed from all reason of jealousy. But I go farther, and observe, that where an open communication is preserved among nations, it is impossible but the domestic industry of every one must receive an encrease from the improvements of the others.

Click link for entire essay