Concerned about Trump’s proposed tariffs?
If so, you’ve got plenty of company.
Googling the topic, I couldn’t immediately find a single article in favor of the tariffs. Economics is my weak suit, and at this point there are very few prognosticators (if any) I trust.
However, I’m inclined to think that in this case the naysayers are correct (tariffs don’t have such a great track record of doing what they’re supposed to do), but I simply don’t know. And although part of this is expectations and psychological atmosphere (as well as political posturing), isn’t psychology often rather important when we’re talking about the economy?
For what it’s worth, here’s an article describing the jitteriness and uncertainty. Here’s another that seems pretty evenhanded and generally informative:
While the exact amount of tariffs has not been confirmed, the President has indicated that he favors tariffs of 25% on steel imports and 10% on imported aluminum. Similarly, the specifically affected countries were not called out, but it’s likely the President might exempt some of our closest trading partners.
The imposition of tariffs would, according to the President, level the playing field between the United States and countries like China. However, some economists worry that imposing tariffs simply invites retaliation – tit for tat. In other words, if you impose a tariff on my goods, I’ll impose a tariff on yours…
The idea, of course, is that the imposition of tariffs makes it more expensive to use foreign goods. In theory, that should mean a decline in imports (making those goods more expensive) and an uptick in the use of domestic goods (assuming that the goods are manufactured or available at home). In that way, some economists argue that it’s government intervention in a free market. However, others argue that the protection is warranted if it achieved a desirous result.
So do tariffs work? Not always as intended…
I expect you all will have something to say on the subject.
Once more, Trump “saying” is one thing, Trump “doing” quite another.
My take is they are probably not the best thing but they are also not nearly as damaging as some are saying. If they are targeted correctly tariffs are just the way the world works.
“While the exact amount of tariffs has not been confirmed, the President has indicated that he favors tariffs of 25% on steel imports and 10% on imported aluminum. Similarly, the specifically affected countries were not called out, but it’s likely the President might exempt some of our closest trading partners.”
This is Trump’s opening position in trade negotiations.
Check out CNBC, where the talking heads were astonished that many of their commentators said “about time”. Rick Santelli brought up a 2016 WSJ story about mounds of steel in the Mexican desert – origin was China, apparently it was being brought into the US via NAFTA as Mexican steel. This is the opening volley in what I hope will be a discussion about international trade and the way it is run. Free traders can be as ideologically inflexible as any other group which has not examined its premises in some time. Many trade agreements are being blatantly violated; heretofore the US has accepted even the most egregious.
From Zacks: “Biggest volumes of finished steel imports in January were from Turkey with 244,000 net tons (up 34% from December), South Korea with 241,000 net tons (up 2%), Japan with 188,000 net tons (up 31%), Brazil with 154,000 net tons (up 124%), and Germany with 121,000 net tons (down 1%).
Despite some favorable developments on the import front in the recent past, the domestic steel industry still remains under the risk of cheaper imports in the face of a stronger dollar. Unfairly-traded, subsidized imports are still flowing into the American market due to foreign producers’ overcapacity. Finished steel imports captured a record 29% share of the domestic market in 2015.”
Read it all here: https://www.zacks.com/stock/news/209147/us-steel-imports-drop-sharply-year-over-year-in-january
The tariffs may only apply to those countries that subsidize their steel industries and are creating an uneven playing field. Another approach would be to only allow 20% of steel to be imported and then only from unsubsidized countries. Allowing U.S. steel companies to supply 80% of consumption in this country ought to provide a healthy environment for the industry and allowing 20% imports would force a certain amount of price competition.
Prices would rise on many manufactured goods, but I’ve seen estimates that the cost of a $36,000 car would go up by $360 – a one percent increase, which is hardly inflationary. It is also estimated that aluminum cans would rise in price by 1 cent. Again, hardly inflationary.
All countries want to maintain strong basic industries because that is where the true wealth of a country is generated. With the anti-business, globalist path the U.S. has followed since the days of the Clinton administration, our basic industries have become much smaller and have created less wealth for the nation. That is what Trump is trying to remedy. It is not going to be easy and the tariffs may not be the best way because of their psychological impact. It’s amazing the way people’s hair is on fire and all he has done is float the idea in a transparent way. Usually these things are done in great secrecy to prevent all the pearl clutching that always ensues. We will see.
Being here in the rust belt, it would be great if someone could flick a switch and the steel mills of Gary, Cleveland and Pittsburgh would open up tomorrow. But there’s been a lot of water over the dam, as they say, since they were put out of business lo those many years ago.
Still, a tariff threat may be a negotiation tool. I’ve heard say that Trump is good at negotiation.
I conclusion, I heartily agree with the last paragraph of the posting.
1. NAFTA negotiations have reached a critical phase.
2. Canada is consistently the largest steel importer.
3. Trump has shown the stick.
4. Watch for the carrot.
Turkey is not a major steel player. She’s engaged in steel flipping — passing through Chinese steel.
Mexico is doing likewise. Our #1 import good category from Mexico is electrical goods — essentially steel and aluminum. Using Mexico as a cut-out Red China is dodging a tariff.
Canada is also flipping steel from China. Remember that Red China is producing more steel than the rest of the planet. At last look ~ 600,000,000 tons per year.
This is WAY beyond her internal needs — and due to cash flow required to service debts — Red China is exporting steel at prices right on the floor.
This means that non-serious producers can flip finished steel, which explains why Red China appears to be a non-factor even though it’s driving the WHOLE game.
In the case of Mexico, there’s a double whammy as steel and aluminum are being exporting into our markets as finished goods. So they don’t show up in the steel and aluminum numbers at all.
The fact is that Red China over-built her heavy industries — and is now looking for every other nation to bail those investments out.
Trump is totally correct on policy.
At all times prior, Canada and Mexico were trivial exporters of steel to the US market. Their plants simply lack scale.
And for steel and aluminum, bigger factories are better… and cheaper.
Great comment blert. I know in the past that some alum. production was done in Wash. state because they could buy exceptionally cheap Canadian hydro-electricity. Did Canada never build their own alum. plants?
________
The first MarketWatch article was weak. Tech stock prices declined in anticipation of a soft economy? Please! We’re only two weeks away from an aggressive stock market correction. The markets are a daily battle between fear and greed, and fear doesn’t go away in a couple weeks.
To Neo’s point, isn’t the economy impacted by psychology? Yes, in the short term; not so much after a couple years. Although here we have the specter of reactionary government actions, that could be persistently irrational.
Should the gov. interfere with a free market? Not if it is really free, but international trade usually isn’t a level playing field. For example Buicks and Cadillacs are surprisingly desirable in Asian countries, but Japan has a myriad of arcane regs. and tariffs against such imports.
The obvious worry is a trade war of escalating tariffs. The less obvious worry is blert’s claim that finished products can come in from Mexico via NAFTA tariff free. Electrolux (major appliances) claimed today the their new plant planned for the southern U.S. may go elsewhere.
______
The point that Trump has made via his sec. 232 authority is that steel and alum. production is a strategic national security issue. Is that BS? Or a legalism to skirt congress? Sure it’s possible, and I wouldn’t put it past Trump. But I actually think it is on target.
There is a story about a point in WWII when the German U-boats were sinking our cargo ships on a regular basis, and Hitler spoke to one of his intelligence people about the rate at which the U.S. was manufacturing new cargo (Liberty) ships. He told Hitler the production rate was perhaps ten times the rate of destruction. Hitler replied, “We’ve lost the war.” (Check out the book “Freedom’s Forge.”)
I wonder if Trump had placed the tariff on steel and aluminum based on the lack of progress on cleaning up the environment, would everyone have loved his decision?
I know of one US company that uses recycled steel products, melts it down and produces specific materials such as rebar. Since they are doing this process in a micro mill, it is more energy efficient and can be duplicated in more areas so even transportation costs are reduced. Here is a link to their environment page..
https://www.cmc.com/en/global/ourcompany/sustainability/environmentalresponsibility
Most recently, President George W. Bush had tariffs on steel, from roughly 2002 to 2003, which elicited much of the same protests and push-backs from other nations. In the 1980s, the Reagan administration was able to get Congress to pass tax breaks for the steel industry, hoping for modernization after the structural problems of that industry in the 1970s and onward. That did not exactly work as planned, with a steelworkers strike in 1986 leading to other complications.
US Steel, founded in 1901, was dropped from the Dow Jones 30 in 1991 (by which time it was known as USX Corporation). With divestitures and shrinking market capitalization, US Steel went from the S&P 500 Index to the S&P MidCap 400 Index by 2014.
It could be really interesting to see what happens; in general, I have confidence in Mr. Trump and people like Commerce Secretary Wilbur Ross. The economy of today is also rather different from that of 2002 and the economy of the 1980s.
Sundance thoroughly explains the NAFTA loophole through which third parties use Canada and Mexico to access U.S. markets.
https://theconservativetreehouse.com/2018/03/02/unhappy-canada-vows-retaliation-for-steel-tariffs-nafta-steel-tariffs-and-an-introduction-to-liu-zhongtian/
Also, the commenter, Handle, has more at Coyote Blog. He uses the example of emissions regulations, but you can’t have “free trade” when one side’s goods bear a burden of environmental and OSHA regulation, and tax and employment laws, etc., that the other side does not.
http://disq.us/p/1qkvp0n
If anyone is interested in saving the steel industry without tariffs, the only book to read is Richard Preston’s American Steel. It’s the story of how the remains of the REO Motor company turned into Nucor, and how its entrepreneurial genius, Ken Iverson, built the first mini mill to produce flat rolled steel using thin-slab technology. I can’t praise this book enough. Preston’s writing skill is superb.
Here is a review from Goodreads by Patrick Peterson who met Iverson and relays his thinking about tariffs:
“I read this book about 1992 and remember really enjoying it.
So much so, that I scheduled a meeting and actually met with the focus of the book, Ken Iverson, not long afterwards.
“Ken Iverson had been an entrepreneurial hero of mine for quite a while. He was a man who founded and expanded a steel business in the US at exactly the same time that the old, huge steel companies were losing money, contracting and laying off 100s of thousands of employees.
“He ran a non-union shop in a union dominated industry. He paid average wages well ABOVE the union scale. His employees were not interested in forming unions. He paid on productivity, and his workers all contributed to increased productivity by design and by pay.
“He opposed tariffs on steel, or any other product.
“He opposed government subsidies for businesses.
“He was true to his principles.
“He hired thousands, and most loved him.
“I saved and am looking at now a full page Wall St. Journal tribute to him from 17 April 2002. Many tributes were included, but the following one reads:
He was our leader, our inspiration, and our friend. Nucor’s 8,400 employees are saddened by his passing, but committed to his principals (sp). The results of his efforts live on at Nucor, and will serve as our compass in the years ahead. NUCOR.
“This book is about him and his work as a ‘hot steel man’ creating Nucor, a fantastic tale of greatness.”
Do a Wiki search for Nucor if you’re interested in how the company grew and acquired failing steel companies with no government help.
While I don’t have enough economic knowledge to give an informed opinion on tariffs, I am willing to consider the opinions of those like Iverson who achieved great things in the industry without them.
I read a statistic that there are over 21,000 tariff’s/taxes and therefore people are saying what does it matter for one more.
Well, the deal is this…
Publicized changes can have a bigger impact than the change itself causing reactionary changes by trading partners.
Neo – Economics is not a hard science it is mostly psychological. You tweak things so that you get to the “sweet” spot of taxes so that you can most efficiently fund government without causing an economic retardation.
Of course it would be hard to impose an aluminum or steel tariff of 25% without having publicity so maybe small unpublicized tweaks by “Obama” would’ve been ignored by the press but as the Trump administration is 100% more transparent than Obama could ever dream of being people make huge deals about everything he does even when rescinding last minute regulations that Obama signed that haven’t even been enacted yet.
So… this one tariff could end up being a lot of tit for tat that lasts for years. I don’t know. Or, Trump could do something next week that takes the attention off of this change and makes people react to next week’s change.
So… One last point. I’d wager that your economic opinion has more validity than Paul Krugman. It’s not like the periodic table and specific elements make specific molecules. An attitude can change bringing a different economic outcome when no changes are made. It’s based on consumer confidence, the amount of 100’s of variables like real wage increases and even as we learned housing prices (which are all based on attitude)
TOC is correct that Nucor did a lot to reinvent steel making in the US. But, … I think Nucor was in heavy discussions with the Trump admin. I suspect that is where the 25% tariff came from. Maybe US Steel as well.
In principle free trade is ideal. In reality other countries look out for their own industries so we have to do the same. And as others point out Trump’s first shot is a negotiating tactic so let’s see how it plays out.
TommyJay:
Of course 30 years ago China wasn’t producing and dumping steel, but Japan and other countries were. That was at least part of the reason for the shutdown of Bethlehem and others during those years. So, maybe the situation is untenable now. I don’t know. If Nucor is wanting tariffs as you suggest it must be serious.
There could be a North Korea angle to the tariffs. Even though China issued orders to stop buying iron ore from NK after agreeing to UN sanctions last year, they may be ignoring them as they did with similar sanctions in prior years. This could be a way to apply pressure.
The linked article goes into the details of Chinese duplicity in this area. Worth a read:
http://www.nkeconwatch.com/category/mining/iron-ore/
liz…I’ve toured CMC plants & have close friends on their payroll. Best I can tell…they are the real deal. Trump is on the money with this one & should tell that boy in Canada to go home to his mom.
1) There is nothing wrong with tariffs that are intended for non-economic reasons–you shouldn’t outsource your tank production to the country you might be fighting, for example. They cost you something, and so do across-the-board tariffs that raise revenue.
But protective tariffs are incapable of delivering economic growth, all else being equal, because for every producer benefiting from the tariff there are consumers who are suffering from it.
We can’t all benefit from a tariff. It only goes to favored people. If everyone could get it, it would cancel out, because everyone would be paying it as well. If we put a tariff on steel, we punish our consumers of steel whose production is more expensive. Should they now get a tariff? Why not? And if they should, then shouldn’t those that THEY sell to? It’s only fair if we all get it, and if we all get it, we derive no benefit.
2) Any country that imposes a tariff is imposing extra costs on its own people, which collect in the pockets of a few of them. Tariffs are economic poison. Retaliatory tariffs are taking poison in order to make someone else sick. It is the old Russian fable, of the farmer given a wish provided his neighbor got double, who wished to lose one eye.
3) Suppose instead of underselling domestic manufacturers, Chinese or Canadians were simply carting their goods up to our docks for free and then going home with nothing.
The logic of the protectionist position is that somehow this makes us poorer.
4) Lest you think my #3 is unrealistic, it is exactly true of climate. In Mexico, avocados grow most of the year. In Minnesota they don’t. Imposing tariffs on Mexican avocados is a benefit to the Minnesotans, who are forcing you to pay for their hothouses, instead of the equivalent sunshine Mexico, and we, could have enjoyed for free. Again, the costs are borne by many, the benefits accrue to a few.
5) If protectionism is good for America why isn’t it good for a single state? Why should Minnesotans not eat only their domestic produce? Can’t they make themselves so much richer by building hothouses and eating only what they themselves produce, raising their own oranges and avocados and coffee? If not, why not?
Incidentally I hesitate to say “Trump’s proposed tariffs”. This guy talks a lot, but what he says at first is never exactly what he does. It never stops surprising me that media and pundits insist on treating his statements as though they represent a considered intention on which he plans to follow through. That has never been Trump.
He might very well think tariffs are good for the economy, lots of people do, and he might even mean what he said, but there’s no knowing until he’s actually done it.
I will never find the article again (I just learned never to Google Donald Trump) but one contractor he stiffed did eventually get the better of him by playing on his vanity, and when she ran into him later he quite frankly acknowledged that was how he did things. I cannot do the story justice and I wish i could find it to link it.
After a great deal of time I did find it.
Incredible. There I am, thinking he’s called me in to discuss my unpaid bills, and he’s looking to generate more. “You want me to drop everything and fly to Vegas on my own dime?”
“Talk to my assistant. She’ll get you comped at the Bellagio.”
“Mr. Trump,” I replied, “you’re asking me for three days’ work and an airplane ticket!”
“You’ll make it back on the job,” he says airily, raising one famous eyebrow in mock rebuke at my small-mindedness.
What job? He doesn’t even own the property!
“About the outstanding invoices on our previous jobs . . .,” I said.
He dismissed me: “Clerks take care of that.”
His Vegas deal fell through before I even got back to my office; I heard it on the cab radio. He was still three jobs up on me, with no prospect of my getting paid….
…Trump conceived a yen to plant his own kisser on the billboard: the smirky pout and moussed swoopover, 20 feet tall. My operations man was appalled when I told him to proceed without payment.
But this was bait. I had the artist shave off 20 years and 25 pounds. Himself, idealized and sanctified, big as a building.
“He loves it!” said the agency man. “He wants to renew for another year!”
“Fine. Tell them to pay up. Six months’ back rent, plus the paint, plus what they owed before.”
“They’ll pay once they get the renewal.”
“Payment, then we’ll see.”
Trump is the highest form of celebrity, a meta-celebrity, famous for being famous. And he has a fantastic memory. Unthinkable for a pipsqueak like me to cross a big dog like him. But I did.
He paid the arrears. And as soon as the check cleared, I regretfully told the agency guy we’d rented the board to someone else.
“I’ll have to leave town!” he wailed. He must’ve told them he had the renewal in hand or they’d never have cut a check.
But Trump’s a professional: Doesn’t hold a grudge. I ran into him some weeks later at a charity shindig. “Ya got me, Sign Lady,” he chuckled, graciously introducing me to gorgeous, brainy Marla.
“But there’s always next time!” He waggled a stubby finger and melted into the crowd.
Frederick is the most correct here.
Raising tariffs on foreign steel allows American steel producers to raise prices – on American steel buyers. It may only be an extra penny a can in price, but it’s also only a penny a can in benefit.
I wrote a nice book on economics. Neo, if you’re interested I’ll send you a free copy. https://www.amazon.com/Profit-Bargaining-Ratio-Theory-Distribution/dp/1491089830/ref=sr_1_7?s=books&ie=UTF8&qid=1520063757&sr=1-7
My understanding of what primarily did the deepest damage in the US to the domestic steel industry was a combination of increased regulation with unrealistic timeframe for the steel industry to comply. The easiest and cheapest thing to do was offshore it.
We crunch up gazillions of shipping consumed and send the scrap to China for them.
I’m surprised Trump’s protectionism didn’t set off more alarm bells on the Right earlier. Comparative Advantage, the somewhat counter-intuitive idea that trade between two nations benefits both, was central to American anti-communism and the New World Order we established post the collapse of the Evil Empire.
We could tell nations; “Come with us and you’ll get rich”. And they would believe us because Econ 102 tells them that the US will get richer too. Just look at the Pacific Rim.
Then along comes Trump spewing zero-sum-game theories that we only heard in the USA from the far left. If you want to undermine America’s role aa Leader of the Free World then undermining Comparative Advantage / Free Trade would essentially take away the entire foundation.
But it seemed impossible. The RWIng party was predictably all behind it but the concept was even more associated with Neo-Liberlsim. And of course the Clintons. That’s one reason Putin hates her.
Trump has been spewing this crap since the Reagan Era. So it’s not like he’s a Putin puppet. But damn, he’s one Useful Idiot.
The price America pays for letting Red China destroy our steel and aluminum industries is VAST.
Knock it off with delusions that 18th Century economic nostrums are correct.
They simply DON’T describe the real world.
The goal for Red China is the destruction of rival industries — which then will permit Red China to prevail militarily.
Duh.
We’re not talking about olive oil, goose down, or Portland cement.
The key word in that statement from Freeland is “products”. Why? because Canada doesn’t make raw Steel. (Top 40 List) The Canadians, like the Mexicans, import their raw steel from China. Canada then fabricates products from the Chinese steel.
This nuanced point is almost always lost on people who discuss trade. This point of origination is also the fatal flaw within NAFTA.
In essence Canada is a brokerage for Chinese manufactured material, and NAFTA is the access trade-door exploited by China for entry into the U.S. market. More on that in a moment. First watch Justin from Canada explain his country’s position.
From Colo’s link.
Do you get it NOW?
Canada is the #1 exporter of steel to the USA — but doesn’t manufacture steel at all.
Similar stats are true for Turkey.
These nations are Red China’s brokers// agents — it’s the Long Con.
Their profits must be FAT.
You just KNOW that palms have been greased.
We can’t injure an industry that does not exist.
I promise you the profits are not all that fat. A few years back, a ton of Chinese cabbage sold for more than a ton of Chinese steel. There is a lot of overcapacity in China.
Some of this is due to SOEs. However, that’s not the full story. In China, local leaders and party officials are measured on GDP growth in their jurisdiction during their term. That’s how they get promoted. The system is a bit different now, but overcapacity in the steel market isn’t a result of the new system. It is a result of the old system.
To get their promotion, local mandarins do whatever they can to attract business. Free land. Reduced utility rates. Favorable loans from local banks. Lax enforcement of environmental standards. Basically, doing everything possible to juice the stats. That worked at first, but they created a bubble. And they’re paying the price.
Why do you think China is so desperate to build out the Belt and Road infrastructure project? They’re trying to make lemonade out of lemons. I mean, I will take a picture and post it on my blog, but some sidewalks are clogged with rental bikes. Because metal is so cheap. These bikes make pennies and hour, and that’s only when they’re in use. No one right now knows if these bike sharing companies will actually turn a profit. It’s a gamble.
Now, you’re right about one thing. Dumping is bad. Especially when it is done to destroy native industry in the hopes of cornering the market and then hiking prices. Which is why we are already penalizing them. I’m all in favor slapping tariffs on countries that act as middlemen, but not for economic reasons.
@blert:This nuanced point is almost always lost on people who discuss trade. This point of origination is also the fatal flaw within NAFTA.
The reason no one cares is because it doesn’t matter why we’re getting cheap steel. To the American business that need steel, and their consumers, it means nothing where it comes from. If a domestic producer was cheapest they’d happily go with that.
Again, the protectionist logic is that cheap steel make us poor somehow, and therefore free steel, absolutely free, should make us even poorer, but in that case they cannot explain how free steel makes us poor but free sunlight does not.
@dexiansheng:Dumping is bad. Especially when it is done to destroy native industry in the hopes of cornering the market and then hiking prices.
This has never been successfully pulled off. No one who has ever done this has ever even made the money back.
China “dumps” steel on us because their people have far more than they can use, and their people want things we produce in exchange. To the extent that their government is robbing their own people to pay for more steel, we are benefiting from their economic stupidity.
China is robbing its own people to pay us to take steel cheaper than we make it ourselves. We are getting the benefit from the “dumping”.
The reason China is “dumping”, is concentrate the benefits of steel production in the hands of a few Chinese at the cost of the other Chinese less well connected.
Which is exactly what protections are trying to do here.
There is ONE huge problem with having industries like steel or aluminum disappear from the U.S.
That is – we can’t be reliant on nations for steel or aluminum in war time.
But war may not last years in some future war with the Clinton/Obama regime providing technology to Russians to produce HIGH SPEED ICMB’s (Mach 20). Hello !!! That can reach the U.S. in a few minutes.
We can’t even knock them out of the sky before hitting us.
Leftists are evil.
The easiest way to think about foreign trade is to think about local trade. If it’s ok for New York to do business with New Jersey, then it’s ok for the U.S. to do business with a foreign country.
Take it down to a block by block level.
Imagine you grow vegetables in your garden, and your next door neighbor grows chicken for $4.00 pound, in her yard (Let’s call her Mrs. Doors). The neighbor across the street also grows chickens (Let’s call her Mrs. Cross) for $2.00 pound. Now the next door neighbor says to you “I can’t compete with the cross-the street, she takes money out of her savings to pay for her chickens and they’re too cheap. I think you should only buy my chickens, and if you buy her chickens, you’ll have to pay $4.00. That will make our side of the block richer.”
Who is really benefiting from this? This doesn’t even consider that you’d have a harder time stretching your grocery budget, and would have to buy less (with a corresponding decrease in business for those American industries).
If this were the steel industry, Mrs. Doors would of course be hiring more people. But those employees would be paid by everyone else in America, not the Chinese. Prices go up on all steel commodities, cars, construction, shipping and delivery. There is less budget to spend on other things, and creates a general decrease in buying and selling of everything. If this policy made financial sense, then we’d be doing it for every state, cutting off trade between states, cities, neighborhoods.
It only makes sense from the standpoint of conflict. If you are intentionally trying to hurt the guy across the street – and willing to suffer the consequences of it. Or, if you believe that U.S. steel workers can’t possibly engage in any other productive line of work.
Another word about steel production and war:
In war it is important to be able to produce your own defense, as locally as possible. If you look at WWII, the general strategy of Marshall and Eisenhower was to stall while America built up its military industry. They knew America didn’t have the military to fight back, but that industry could produce it. The first 2 years (including the entire Africa campaign) were basically stalling until the Normandy invasion forces could be built up.
Now in WWII, it wasn’t necessary for the United States to have an immense stockpile of tanks and planes. It was only necessary to have enough to hold back the Nazis until we could build them. A huge effort went into retooling U.S. industry.
In the modern world, we don’t need to be able to turn out 100 new tanks a day. What we need is the ability to hold off an attack until we can retool our industry to do so.
By having a small steel industry, we still remain capable of expanding it. By not producing steel, we’re keeping a reserve of natural resources for producing steel (much like we’ve done with keeping oil reserves for the military – the Strategic Petroleum Reserve). Nor is there a reason the U.S. can’t horde a stockpile of steel already refined and ready for manufacture.
Also on the defensive front:
It should be noted that the United States currently possesses approximately 1500 nuclear warheads, enough to level basically all of our enemies’ cities and military bases.
We also have the world’s largest stockpile of small arms (2nd Amendment) – already distributed throughout a massive population of 300,000,000 people.
In sum, it is unlikely that the defense of the United States requires us to continuously and artificially prop up the profits of a handful of steel tycoons.
Targeted tariffs are a useful tool to compensate for environmental, labor, and monetary arbitrage that undermine the function of markets to regulate supply, demand, and pricing.
I wish you would elaborate on that in more specific terms.
Tim Turner:
As I said, I’m not sure what I think of this tariff thing, but I think it’s a false argument to say that if the tariffs were successful in “artificially propping up” the steel industry, the only benefit would be to “the profits of a handful of steel tycoons.”
I’m under the impression that steel workers actually get something out of the deal too.
In addition, during those first two years of WWII when the Allies were “stalling” in order to get the armaments up to speed, there was a huge amount of death and destruction—as well as occupation of most of Europe by the Nazis—that might have been prevented by greater readiness.
Of course, war in the 21st Century will be different. But unless there’s an all-out nuclear war—in which case it all might be moot—it seems to me we will still need more conventional armaments and steel could come in very very handy. For example, that could occur if there’s an invasion of a NATO nation, or any other war in which we might have an interest and want to intervene in some way, including the humanitarian.
Yes, steel isn’t just about “defense” but as an aggressor may take out bridges and isolate an entire population, nations must be able to build quickly in many areas.
Nations can’t do everything at once so prioritization would be a necessity but we could at least have the capacity to meet the needs of the worst case situations such as a New York City.
Risk management (my field basically as an Information Security Officer) helps people recognize things in complex and gray terms. While a TIM TURNER might look at things as benefitting a single CEO (not an entire sector, employees, or even the restaurants near a steel company), companies in this day in age must look at how to constantly look at all factors including the environment, safety, diversity, how their social score card looks to investors and stakeholders and another country’s steel company may not have to contend with ANY of that.
Capitalism is not evil Tim. Capitalism really is free markets which ensures that decisions are made by everyone – not just the government. Picking an choosing winners or losers in the market place by government has a poor track record, stifles innovation and risk taking and plays too much of a role in today’s United States.
People aren’t interested in misery.
When Bush did the steel tariffs, Walter Williams said that, for every steel industry job saved, iirc, fourteen other jobs were lost. Those would have been downstream; jobs requiring steel whose increased price caused the potential customer not do do whatever it was.
But those jobs are diffused across the country and economy. They are not represented by unions, lobbyists and congressmen. For practical purposes, they are invisible, unlike the concentrated steel industry.
Richard Aubrey:
I agree. Those not represented by the unions and lobbyists are the “Forgotten Man.”
The idea of tariffs is certainly popular among the Dumb Trumpkins–the Cousin Eddies of the Right–who have come to dominate, if not taken over, the comments section of the Instapundit blog. It’s amazing because Glenn Reynolds, “Instapundit” himself, is a very rational libertarian, but most of the commentariat over there seem to be poorly educated yokels who think freedom and a free market good ideas, basically, as long as people do what the Trumpkins want them to do and with the coinsequences the Trumpkins like. Not to mention that a disturbing number of them are Jew-haters who apparently think free trade is a plot by the Elders of Zion to wipe out “real” Americans.
What is occurring is the opposite,of the tax legislation, which increased the disposable income of the majority of Americans. These tariffs are actually a tax on all Americans purchasing goods incorporating steel and/or aluminum, as prices are raised to incorporate the rising costs of the metals. We will thus have less income to use for other purposes. It’s like the Corn Laws in Victorian England.
I can see by the posts that MOST are still stuck with 18th Century economic nostrums.
In the real world every player knows that they are bunk.
Taiwan has absolutely NO competitive advantage for semi-conductors or laptops.
By government subsidy, Taiwan simply took over those segments.
Korea did the same with TV — and flat screens. Korea had absolutely NO competitive advantage their either.
The world simply DOES NOT conform to the nostrums posited here.
The American steel industry does NOT have monopoly or oligopoly price-setting power.
It’s being ATTACKED by a nation that is seeking monopoly status or oligopoly domination — no different than the OPEC cartel.
Those protesting these defensive tariffs are de facto in the same economic camp as OPEC — but are too naive to appreciate it.
( Importing OPEC crude was killing the American economy. Breaking OPEC caused the price of oil to collapse 50%. All during OPEC’s reign know-nothings were stating that it was all for the best, that America was saving its oil for the time when it would really be needed, three generations from now.)
They’ve never run a world scale industrial enterprise, and have never played economic combat at such a scale.
They sound off like Community College professors, small-shots spouting centuries old orthodoxy — that the Big Boys KNOW does not hold, is false.
Nostrums about trivial trade guilds in barely industrial Britain have absolutely no bearing on how the game is played in the 21st Century.
What Red China is doing would be a felony under the Sherman Anti-Trust Act if she was a domestic player.
Yet still, we have posters dreaming that nations can’t or won’t game the system.
Dream on.
You’re looking at Economic Combat. It is not engaged in for profit — just domination.
These Red Chinese enterprises are State Owned — often directly owned by the People’s Liberation Army.
(The CCP actually doesn’t want privately owned steel mills, and is cracking down on the practice… for environmental reasons… and for market share reasons. The local CCP authorities get a ‘cut’ of the action from their own steel mills. Why not? These players are the guys stumping up all of the money and legal authorities for plant location. They are industrial ‘angels.’)
Yes, like many Third World nations, their armies DIRECTLY OWN productive assets, MAJOR sectors of the economy, and self-fund — such funding never crossing the books of the national accounts.
Red China’s military spending is MUCH HIGHER than the official releases.
Other nations that use this military-economic model:
Egypt
Pakistan
Burma
Iran ( the IRGC owns astounding assets, monopolies )
Et. al…
Said assets are at the HEART of the national economy, every time.
The 18th Century nostrums just don’t scale up.
They don’t account for national economic combat.
The beautiful black-board theories just don’t account for externalities.
Blert:
Yep Thomas Sowell and Milton Friedman were so 18th century. And everyone just knows how efficient and competitive those state run industries of the “planned” economies (CCP, Iran, Venezuela, USSR) are and were. So we must follow the modern thoughts of tariffs and trade warriors. Oh, those are 18th century ideas too. Put the brain on hold and follow the Donald.
Economics – the dismal science.
Could the best argument for tariffs on steel and aluminum be the huge trade deficit with China which represents about 2/3 of the total? When countries like China, Japan, and S. Korea put up import impediments that act like tariffs to protect certain of their key industries, and which unfairly lock out many of our exporters, then it’s tit for tat that we protect a couple of ours.
I’m not advocating a trade war which Trump seems to want. On the other hand you have to ask yourself how many more of our industries will be obliterated in the name of “free trade?” Many of us remember when we produced televisions, shoes, most of our clothing, appliances of all kinds, toys, all of our medicines, etc. Also, it’s one thing to diversify production into a trading network of democratic countries like Canada, Mexico, and India, and another thing to move key industrial production to recently communist countries like China, whose current leadership is best described as a velvet glove covering an iron fist.
Bastiat’s Candlestick Maker’s Petition pretty well destroyed the arguments for protectionism. The theory of free trade can’t be disputed. But when the reality of fully implementing it may lead to our demise as an independent country, then maybe theory needs to be amended with some common sense.
Well, you people who wanted Trump so bad, this is what he promised. As Neo says, we’ll see what happens.
neo,
Yes, steelworkers get something too. But it comes at an increased cost in all other goods which contain or use steel. Companies buy foreign steel because it is cheap – let’s say 25% cheaper. Raising a 25% tax on foreign steel causes American steel producers to be more prosperous – but it’s paid for in 25% higher prices for steel by American consumers – cars, nails, aircraft, cost of ship building on which consumer goods for Wallmart are shipped, etc. – all of this filters down to American consumers. The end effect is a tax on all Americans which is paid to companies that make steel. Prices will go up across the board. Industries that become too expensive (because of increased steel prices) must fire workers. The case I make out in my writing is that mathematically, the loss will always outweigh the gain to the steel company employees. Because there is a general increase in prices, people buy less. So even if there is, in theory, a 25% decrease in competition, it will be met with a decrease in sales. And this costs jobs in other industries.
Yes, the stalling in WWII cost a great number of lives. It was one of the problems of professional military men between the World Wars (excellent book, “Crusade in Europe” by Eisenhower). However, having steel producers does not make a defense industry. Even fully operating steel factories need to be retooled to make tanks. Crews need to be trained to man them. Fuel needs to be stockpiled to drive them. Landing craft need to be manufactured to deliver them. Shells need to be made to fire them. Unless we are intent on having a fully readied military at all times for a war of unknown extent, how much preparation do we need? Should the nation remain at WWII level privations and rationing indefinitely in order to fight off an unknown enemy in an unknown war? While remembering, the United States already has a formidable military. Who can match us? And to top off our conventional military, we hold a nuclear deterrent.
Would our defense be stronger if we built our stockpile of tanks (before the war) with low-cost Chinese steel or with 25% more expensive American steel? In which case are we more likely to face war, with a prosperous China that sees us as a trading partner, or a poverty-stricken China with an abundance of steel for it’s own tanks?
As I pointed out above, we have a strategic petroleum reserve. A vast untapped oil field that we don’t use for commercial purposes – it’s reserved for war. Why shouldn’t we have a strategic steel reserve – why not use foreign steel for our commercial consumption so that in time of war we have a reserve of natural materials waiting?
Baklava,
I agree that Capitalism is not evil. But I fail to see how a government-regulated tariff intending to skew trade relationships constitutes a free market. I have no problem with steel makers making an immense profit – the more the better – but without forcing their fellow Americans to buy from a government-designated company please. Whose position is more free-market than mine?
blert,
I’m fine with China gaming the system. It hurts them more than us. A million Chinese laborers are struggling in underpaid government-owned sweatshops to produce cheap steel for American use. As Napoleon is attributed with saying “Never interrupt your enemy when he is making a mistake”
Blert, I think you are arguing/discussing things we aren’t saying. We haven’t evolved past war and the need to ensure we have a handle on natural resources as well as tooling industries.
Tim, I’m not even saying I’m in favor or not in favor of a tariff. I’m against tariffs in general and I think most of us are – but we have to recognize a steel plant here or gasoline produced from oil in the United States would be done with less of an environmental impact because we seem to care more, less of a human toll because we have the OSHA rules and labor rules that show we care and well, go down the list of rules making things “cost more” but show that we care.
We should protect specific key industries some way. I’m not saying that would be tariffs and I really don’t think Trump is articulate enough to make any points on any topic but these are complex issues where each country already has thousands of tariffs/taxes and subsidies and we can’t act like it’s a binary choice.
So… stick to the free market (which I’m in favor of) until the free market no longer exists 🙂
Why would the free market no longer exist? Figure it out.
It’s interesting to me that blert throws around the phrase “18th century economics” like a 1960s Democrat mocking Barry Goldwater. The Trumpkins often sound like “liberals” when defending the more statist part of the Trump agenda, often using the Argument from Pity (a favorite fallacy among “liberals” ) in arguing for protectionism.
Forgot to add that, as someone (maybe someone here) pointed out, the “liberal” Hive, reflexively opposed to Trump, will likely now start sounding like the Cato Institute arguing for a free market. This, while the statist-nationalist Trumpkins sound like pre-Enlightenment neo-mercantilists and Wilsonian “Progressives.” Interesting times.
This is a negotiation step for Trump. Anyone that negotiates for a living knows that you start high to end high. This often translates into establishing an extreme position. With NAFTA negotiations on-going and the news that China has been dumping steel into the US via Mexico, that may be his intended audience for this message.
The reporting is all about Trump and the widespread hatred, particularly among the press and Left, of anything he says or does. Powerline has it right when they write “If Trump came out for a big increase in the minimum wage, the Washington Post would suddenly realize that it would increase unemployment among minority youths.”
This is a negotiation step for Trump. Anyone that negotiates for a living knows that you start high to end high. This often translates into establishing an extreme position. With NAFTA negotiations on-going and the news that China has been dumping steel into the US via Mexico, that may be his intended audience for this message.
The reporting is all about Trump and the widespread hatred, particularly among the press and Left, of anything he says or does. Powerline has it right when they write “If Trump came out for a big increase in the minimum wage, the Washington Post would suddenly realize that it would increase unemployment among minority youths.”
The ultimate purpose of all economic activity is consumption. By invoking these tariffs American consumers will pay more for their consumption of some things and have less income to consume others or to save/invest. Pure idiocy.
Stu,
I disagree. The ultimate purpose of all economic activity is to make life better.
This could be production, consumption, innovation, etc. This is where the Luddites get things wrong – life is not better with 1,000 people sewing socks vs. one machine. The 1,000 people can move on to the next problem, create a vaccine, discover, entertain, figure out how to protect the neighborhood, country, planet from evil, etc.
We are not sharks just going our way and eating and consuming. We have free will and with that free will a country with free markets does have to identify ways not to perish to nations who do not play by free market rules.
We have figured out ways to produce cleaner, with more protections for people and guess what… there is value in trying to keep that production here where we do it better.
This is not a binary issue and economics is not a hard science. National security is involved and how can we ensure the longevity of this nation without protections.
We can’t churchill/dunkirk our way out of here to Greenland on all of our friends boats that they purchased/consumed.
blert,
“Why would the free market no longer exist? Figure it out.” This isn’t a substantial debate point. There are so many logical rabbit holes that could go down. It’s the equivalent of saying “Thou unworthy masses are not capable of the high intellectual ground on which I stand.”. If you should like to debate amorphous economic phrases, then solve this riddle: All human activity is governed by a ratio of individual human benefit to expenditure : why does the drunk stop drinking?
Nor do I think “protecting the environment” is anything more than a side issue here.
Baklava,
The ultimate purpose of economic activity is to make individual human life better via consumption. Production is merely the means by which we produce the things we consume. Nobody goes out into the wilderness to build a skyscrapper and abandons it. Nobody grows a garden to throw the vegetables in the gutter.
There is no value in work without purpose.
Also, your reference to Luddites is inapropos. The Luddites believed that labor-production was the root of value in a society. They would have fully supported a tariff that kept as many hands busy doing unnecessary labor, just as they support manual labor over mechanized labor to keep hands busy.
Tim,
Yes it’s a substantial debate point. It’s like saying, we have to allow a dictator to be “freely elected” as that is the will of the people. Then to watch the dictator suspend free and open elections and freedom of the press, etc.
While you can self-destruct, you can’t make the whole country do that.
So, the debate point can be countered with – no we have the ability to stand up steel mills quickly and ensure the free flow of steel goods in the time of war because…. but you didn’t do that. You decided you couldn’t counter or that it was just a weird point or whatever you decided.
Protecting the environment is not a side issue either. It’s a cost of doing business that elevates America’s costs. Business isn’t just labor – it’s a mix of costs here in America over and above costs for other countries and we have to DECIDE if protecting the planet is a cost that should be factored in. It’s a debate point in working with trade agreements whether YOU like it or not.
The purpose of economic activity is not just about consumption. There is no consumption at levels the U.S. has without innovation and production. You make a ridiculous point about the skyscraper. What is produced and what people take a risk on producing is what there may be demand for. There is a demand for a cure for cancer for instance. The bay area has a demand for more housing and liberals are tearing at each other on this issue – fun to watch.
And dear Cathy Newman (Tim Turner) – nobody is arguing that there is value in work without purpose. Take my words in – listen, evolve. I’ve been a free market, conservative, (more libertarian leaning) since 1991. But you can’t have a free market or free elections if you don’t protect them for a whole host of reasons.
The protections I’m talking about is not even about protecting “labor”. You discount all my points and then focus on labor and consumption for some reason and can’t see that national security, environment, safety are costs that we bare because we care and we need to ensure we control specific sectors in this international market like oil, steel, and space.
Tim and unless you recognize the error in your ways with believing I was arguing there is value in work without purpose – you are written off as a Cathy Newman type.
Sorry you can’t discuss with somebody who is discussing on a level higher than you so you resort to erecting so you’re saying arguments.
For the rest of everyone. I’m not even “for” or “against” tariffs but I continue to read and I found these articles interesting.
https://alantonelson.wordpress.com/2018/03/02/whats-left-of-our-economy-the-case-for-trumps-new-metals-tariffs/
Here is the discussion on Bay area housing
https://alantonelson.wordpress.com/2018/03/02/whats-left-of-our-economy-the-case-for-trumps-new-metals-tariffs/
And if people wonder where I get the advice to not speak to a person who does not listen. Go to 2:50 of this video from Jordan Peterson
https://www.youtube.com/watch?v=icN-fgFaITE
Long ago, when steel imports began to cut into domestic production, one of the explanations was that countries whose industry was wiped out in WWII rebuilt with modern tech, whereas the US was still using old tech. Maybe the destruction of the industry provides an opportunity to modernize?
I also seem to recall that the modern mercantile countries had tariffs against US imports of products that they wanted to produce themselves. The US essentially funded the development of those countries at its own expense. That was all very generous, but perhaps it is time to do something for ourselves. I thought Ross Perot made some valid points in the 1992 election, he didn’t get 19% of the vote out of nowhere. It is now 26 years later, and things have gotten worse.
I didn’t realize Cathy Newman had stopped by to chat. Silly ME. Oops, I was shouting.
Jordon Peterson also has said that you should consider that you can learn something from the person you are interacting with. That cuts both ways I assume.
I always do try to learn. Better advice is: don’t be aggravated by someone who isn’t trying to aggravate you – and doubly so for someone who is trying.
If the environment were the reason, then we’d make China’s compliance with environmental regulations a part of a deal – i.e. we’ll tariff you unless you agree to these terms. That’s not the deal we’re making.
In truth, defense is also a red herring. Congressmen are more likely to vote for something they can pass off as defense.
Trump is doing it to create jobs and “bring American industry back home”, which this measure will not do.
I admit ignorance as to what this measure will achieve, or even if it is just intended as a bargaining chip. Then again, I doubt that economists, or anyone else for that matter, really knows the future that much better than I.
Tim:
Just to be clear, to me it didn’t seem you were taking the “Cathy Newman” approach with Baklava.
om, thank you. I appreciate it. I can be a devil, though I try to tread carefully. It’s an emotional issue, and easy to get hot around the collar.
Frederick,
I take your point and think it a sound one. Yes, a lot of this is about getting wealth in the hands of the right people, political supporters. That’s true for China. I think that’s also how Trump is thinking. Like I said, I think these are political questions. A lot of the times politics should be guided by economics. But not always.
I’m not saying what Trump is doing makes political sense. I think he’s making a bit of a miscalculation. I’m merely claiming that he views it as a political problem.
As to dumping, maybe it’s never worked. But food aid has had a similar impact on African farmers. And I think it gives you an interesting way to think about this problem. Suppose China was this magical place of such bounty that it gave us everything we asked for, and it gave it to us for free.
Would we be better off? In a sense, yes. But I wonder what incentives it would create. Would people still work? With their new found leisure, would they attempt to live a good live or idle away their time? Most importantly, would they still attempt to innovate or would they settle?
I’ll bite.
What was the purpose of this statement?
“There is no value in work without purpose”
Who was supposed to learn?
What was I supposed to learn?
What was it in response to?
Enlighten me.
Last chance.
Writtenv
“though I try to tread carefully. ”
Yet callously discounts safety, encouragement, and national security with single sentences.
I don’t find you careful at all. You argue things people aren’t saying and add little value doing so.
I’m still working to identify where I stand and I have read voraciously since 1991. You move me closer to tariffs.
environment. lol. not encouragement.
There are economic considerations besides price and availability. Robustness, stability, and safety come to mind. Japan supports domestic rice production, and I don’t blame them. That’s safety. The oil producing nations might want to diversify their economies because some unexpected supply might turn up, fracking for instance. Few parts of the US are self sufficient in food, what happens if transportation breaks down? What if a solar flare knocks out communications and electrical power? Short term optimization tends towards specialization, but specialists live precariously. What happened to the large mammals who used to populate the American continent?
There are many considerations that policy needs to consider, many of which I would put in the domain of economics, that are not adequately signaled by price.
What was the purpose of this statement?
“There is no value in work without purpose”
Let me explain where I’m coming from.
Quote 1 – stu (and I agree with this)
In this case, I would not define consumption as “the reckless destruction of resources without consideration for the future” as is commonly done. But rather, the classical understanding of “use” and “utility”.
Quote 2 – Baklava
What is economic activity? What is it’s purpose? Economic activity is any task performed for the purpose of satisfying desire. This means basically any human activity, but we can confine it (as some do) to things traded between humans for money.
In any economic activity, some resources are consumed, others created. (pig iron into steel, barren fields into orchards, students into art majors, a glass full of orange juice into an empty glass). Ideally, the resources consumed are less desirable than the ones created. These resources could be labor, time, brain power, steel ingots, strawberry bushes, basically anything. This is the process of production, and it includes innovation which is the production of more desirable means of production.
I believe we would probably (in general) agree that “satisfying desire” means to “make life better”. This, setting aside temporarily the self-destructive behaviors, which are generally because people find present desire more important than long-term desire.
Production is useless unless it is consumed (And again, innovation is a form of production). Consumption being the process by which commodities are transformed from potential desire into desire-satisfaction. Transforming a full glass of orange juice into an empty glass of orange juice and a full belly.
In human history, an awful lot of damage has been done to the economy by trying to produce things which are not desired. This is the basis for stimulus (paying people to make something they otherwise wouldn’t want). At least, this is how I see it, though certainly many notable politicians disagree.
This is the understanding I have. So in the first half of Quote 2, it could basically be said that you agree with “There is no value in work without purpose”. However, in the second half of Quote 2 you modify that agreement, including production as co-equal with consumption. The statement could then be read “The ultimate purpose of [production] is to make life better [without satisfying desire]”.
This later statement is basically the principal on which subsidy and stimulus are built – the idea that merely producing large quantities of something – anything – makes life better, regardless if it has any practical use, or whether those resources could have been used for something more desirable.
This is how I read your statement, so I responded with “There is no value in work without purpose”. i.e. There is no point in producing things which aren’t actually useful simply to make dollars change hands.
environment. lol. not encouragement. We all make mistakes. 🙁
I don’t dismiss these concerns (safety, environment, and national security). But they aren’t the reason Trump is making this move. Trump is doing it in order to bring jobs back to America and revitalize the economy – especially in the rust belt. But this will not work with this strategy.
I didn’t dismiss the concerns because they were irrelevant. I dismissed them because President Trump did.
If it were our concern to address those issues, then for the environment what we ought to do is impose an environmental fee on Chinese steel, and hand them that money and say “we will give you this extra money if you make your steel production more environmentally clean”. Then phase out the payments when the refineries are all upgraded. This would allow China to keep producing steel and in the long run, maintain their prices.
If our concern were to address defense, then I think we are missing several other critical concerns. I believe I addressed these in a separate post above in sufficient detail, although I could certainly elaborate ad nauseam if you asked me to.
Now as far as safety – if we are worried about war with China, then unsafe Chinese factories are to our advantage. If we are not, then we could handle it as outlined above for the environment – impose a fee (call it a tariff if you will) and return the money to China on the condition that it uses the money to improve its factory conditions.
Milton Friedman was so 20th Century. He was his own theoretician.
An appeal to authority is not that strong of an argument.
https://www.zerohedge.com/news/2018-03-04/stcyr-were-not-starting-trade-war-were-revoking-prior-agreements-preordained
Read the whole link.
We’ve got a bunch of academics who’ve never run businesses at this scale proffering theory — theory that the Red Chinese have made a mockery of.
These are basic metals… building blocks of modern society… and the high minded theoreticians here think that we can let these industries shut down entirely — which, BTW, is what Canada actually has done.
She can get away with it because Big Neighbor has her back.
Red Chinese economic warfare is setting the world up for a MAJOR war.
The Korean situation, the Taiwan confrontation and the South China Sea gambit are not at all different than Adolf’s first gambits.
That’s an externality that is repressed, danced away from.
But the worst externality is that this grand policy is reinforcing the tyranny of the Chinese Communist Party.
Up this thread, one crazy poster described China as being a FORMER Communist state. Wake up. Nothing could be further from the truth. Red China figures that they’ve got everything figured out.
They are looking to export their theory and practice of tyranny.
Our strange trade policies are what makes Beijing think (feel) that they’ve got it knocked.
Such an emotional state was the predicate for WWII and the Cold War. Remember Nikita in the kitchen?
Oh, that’s a strong argument, “but Hitler!” followed by the “Chinese are still communists!!” but the Chinese are so much smarter that those free-traders. Well, double down on failed practices from the past to set our future policy. Care to delve into the history of tariffs and their consequences?
Nope.
Free trade is not what we’re dealing with.
Your logic would have us defend Rockefeller.
It’s not a matter of Commie smarts — it’s a matter of Commie aggression — first in economics — then in state power.
> Care to delve into the history of tariffs and their consequences?
Wouldn’t that pretty much be US policy from ~1800 to ~1945? Overall, I think we did OK.
Tim, your 12:26 am post was reasonable in tone but does not recognize there is a yin and yang in everything.
Desire is not relegated only to consumption. We could all want to consume Mojitos on the beach and do nothing. Production and consumption are equal and yin and yang so to speak.
We see a lot of desire in people wanting to produce. A lot of happiness is born when people produce. I think people are less happy when all they do is consume in life.
And you wrote, “In human history, an awful lot of damage has been done to the economy by trying to produce things which are not desired. ” Yet. there is a lot of damage to the economy when a nation falls into a consumer mentality – see Europe needing labor and bringing in unskilled migrants. See America needing lettuce and bringing in “lettuce pickers” and yet I was married to a Mexican for 10 years and she hated that stereotype as she worked for the state of California for over 3 decades and thought the Democrat party was pushing slavery for agriculture today on Mexicans just like they did in the 1800’s to african americans. BTW, Not one slave holder was a Republican.
To not get off track – my point is you point to damage of producing but do not recognize it for consuming. If a person risks capital and produces something that isn’t consumed, I don’t see too much damage in that. That person lost capital. If on the other hand a nation produces less and less and consumes more and more it is almost a foregone conclusion that the nation will perish. That is true damage. We can’t lose production and have other nations produce for us.
As for one who has owned a company (signed both sides of the check), served in the U.S. Navy, and worked in the food industry – I know more clearly that there is no value in work without purpose.
I posit that it was arrogant to state as if we should learn something from that. Value your low priced consumption all you want but there are so many opposite factors at tension with one another making this gray.
It isn’t even close to black and white.
Tariffs in the USA before WWI – care to remember that was before the US had a Federal Income Tax. Oh and then there is that Smoot-Hawley tariff experience from the 1930s, that worked well? /S
And then there are some today that posit that tariffs on steel won’t help US infrastructure (pipelines need pipe – lots of it).
https://www.rigzone.com/news/gadfly_trump_tariffs_are_a_gift_for_opec_and_russia_not_shale-5-mar-2018-153753-article/?utm_campaign=DAILY_2018_03_05&utm_source=GLOBAL_ENG&utm_medium=EM_NW_F2
Consequences? Unintended? What could concievably go awry?
Harvard discussion with Jordan Peterson. No it’s not on tariffs but there is something to this discussion that can apply here.
https://www.youtube.com/watch?v=qqi0jHn_7-I
While this discussion of the pluses and minuses of tariffs has been interesting, you’ve all been focused on the wrong thing:
https://www.cnn.com/2018/03/05/politics/trump-tweet-tariffs-nafta/index.html
ah Steve. 🙂 but a judge will wipe away the new Trump tariffs. 🙂
Baklava,
Again, I think we’re dealing with a different definition of production and consumption here. Under my operating definition, an act could be both production and consumption simultaneously – the act of painting a portrait, for example. But it is not the production part (the mere labor) of this that gives value or makes it worth while.
Indeed, great damage is done to cultures who have fallen into the Consumerist mindset, but that’s not what I’m proposing. I still believe the United States should be a productive nation, but we should not produce things at exorbitant cost just so we can do it ourselves or spite another country. We should produce what we need as efficiently as we can – and if China (or any other country) wants to help us produce it more efficiently, then I’m fine with that.
There are other things we can produce, and we should produce those. If this were to totally destroy the American steel industry, then I’d reexamine the case, and you’d likely be right in the long term. But I deeply doubt that will occur. To pursue that path, you really need a detailed breakdown of likely war scenarios, the amount of steel they would consume, and how long it would take to ramp up a dormant U.S. steel industry to produce that. Also, strategically, we should consider stockpiling cheap Chinese steel for military use in just such a crisis.
I agree that China is trying to manipulate the economy, but it’s hurting them. I see no reason to hurt ourselves in order to retaliate.
steve walsh Says:
March 5th, 2018 at 5:41 pm
While this discussion of the pluses and minuses of tariffs has been interesting, you’ve all been focused on the wrong thing:
https://www.cnn.com/2018/03/05/politics/trump-tweet-tariffs-nafta/index.html
* * *
Negotiation 101.
Baklava Says:
March 5th, 2018 at 5:04 pm
Harvard discussion with Jordan Peterson. No it’s not on tariffs but there is something to this discussion that can apply here.
https://www.youtube.com/watch?v=qqi0jHn_7-I
* * *
This is the best of the Peterson videos I have seen so far, and covers a lot of the positions he has become famous for.
This quote may not be relevant to tariffs or negotiation, but it’s Peterson’s bottom line, the summary of all his strictures in this lengthy exposition of his positions on myriads of issues, which all really boil down to one thing: taking personal responsibility.
“The fundamental dilemma of faith is whether or not you should live by the truth.” (at 59:15)
PS In all of his masterful declamations, he made one error: the etymology of slogan (at 49:52) is not Welsh but Scots-Gaelic.
early 16th century: from Scottish Gaelic sluagh-ghairm, from sluagh ‘army’ + gairm ‘shout.’
AesopFan,
That video is one that I bookmarked and I never bookmark videos.
You acknowledged this one:
“The fundamental dilemma of faith is whether or not you should live by the truth.” (at 59:15)
I’m still pondering that one. I’ve gone down the Jordan Peterson rabbit hole for about a year now and I agree this one is the best video yet. I’ve also seen women claim they were red-pilled by Jordan Peterson on YouTube and I think people like him do more good for Western Civilization than anyone like a Milo. I dislike Milo and to an extent Trump because on the whole they do more harm long term than conservatives could ever think of doing if they brainstormed how.
People like Marco Rubio, Paul Ryan, and others seem so weak as compared to Jordan Peterson or to a certain extent the sometimes disappointing Ben Shapiro. I like Ben when he can take on the Jimmy Kimmels in the health care debate but then Ben seems too busy to keep up to speed on illegal immigration issues and the harm caused..
And yes – personal responsibility. And to me that is what it is all about regarding steel, oil, etc. The nation cannot expend away the ability to produce things like oil and steel to a cheaper nation at the expense of the environment, safety, and national security. I’m free market oriented as you can get and yet will not throw away our freedom for the “ideal”.
They found the USS Lexington (aircraft carrier) 2 miles down near Australia yesterday. The steel work shows the name clearly.
https://twitter.com/hashtag/RVPetrel?src=hash&ref_src=twsrc%5Etfw
I saw this article way before the BBC or FoxNews stories and would love to give credit to the PJ Media people
https://pjmedia.com/blog/liveblogevent/mondays-hot-mic-45/entry-225363/
They refer to a book I must read now called “Shattered Sword” which is said to change the way you think about the Battle of Midway.
And on your PS note – he was referencing someone elses etymology of “slogan” I believe.
I would just like to remind the Trumpkin “economists” of what Henry Hazlitt and other real economists have pointed out numerous times, to protectionists and others: that the test of real economics (and not just apologetics for the State) is that it distinguishes between what is seen, and what is not seen. Think about it when you’re not just parroting the stuff you just learned last week and now see as Holy Writ.
Why have these sh*tty little Jihadis ……. forsaken holey martyrdom …..