Guest Post by Kurt Schlichter
I like free trade – I just don’t like snooty ideologues who won’t take their own country’s side in a trade fight. The ideal market means a willing buyer and a willing seller paying a mutually agreed price for goods or services with minimal government interference. That’s called “capitalism,” and as a business owner and someone who digs prosperity, I really like it. So why am I not wetting myself about Donald Trump’s steel and aluminum tariffs?
Cue the True Conservatives™ to tell me it’s because I’m stupid and terrible and awful. I know how they work. It was only a few years ago that I might have been with them. And they aren’t totally wrong opposing trade barriers – in the macro, free trade is a powerful engine of prosperity, the most powerful ever devised. But the key part of “free trade” is the “free” part, and they never want to talk about that when it comes to holding the foreigners accountable.
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My question, one a lot of Americans before me have been asking and that no one seems to want to answer, is “When does this free trade stuff actually start?” I mean, if we’re going to have free trade, we all understand that this involves us lowering our barriers to imports. Fair enough. We have dropped our barriers – the trade deficit is enormous. We buy from everyone. We got importing stuff down. But what about the other guys, though? We export a lot, to be sure, but is it on equal terms?
We never seem to hear much about that from the Free Trade Crew – a crew I was a part of not long ago, and with which I still sympathize. It’s a simple question – “Do foreigners have exactly the same barriers to entry to their steel and aluminum markets as the United States does?”
And if not, why the hell should we put up with it?
Again, cue the calling me dumb and economically illiterate and stuff. That’s been the default reaction of my party’s establishment whenever members of our party who believe they are being hurt by foreigners who put up high barriers that keep our stuff out while we drop ours and let the competitors dare to complain.
“Hey GOP, unfair trade practices are hurting me!”
“Shut up, economic illiterate! There’s no problem. You’re imagining it. Shut up.”
I don’t know – I am thinking that’s an unconvincing argument to those folks who actually go out and vote and who have concerns that probably could be addressed better than with hysterical dismissals clothed in insults.
Maybe you didn’t notice that our president is Donald Trump, but our Republican voters are a bit done with GOP Establishment gaslighting. It’s not just on trade. Remember the whole illegal alien thing? You know, our own voters kept expressing concern about the myriad problems illegal aliens cause our voters but our intrepid establishment undertook a dual-track strategy of denying the problems our people were experiencing while calling them racists. That sure worked out for President Jeb!.
Please clap.
Here’s the thing – foreigners are not always facing the exact same barriers to entry into the United States market as Americans are facing to entering foreign markets. Look, if a U.S. company can’t compete on a level playing field, that’s one thing. Sorry guys. But when it has to push a boulder uphill, that’s another. Sometimes it’s laws, sometimes it’s taxes, sometimes it’s products being subsidized by the local government so they can snag market share over here. Where the trade barriers are not identical, can we at least agree that this is a problem, and something needs to happen to change that?
No, we can’t agree to that, because American workers and their jobs are not the priority of the bipartisan establishment that is beholden to its corporate donors. To them, our workers are an inconvenience, a hassle, drones to be browbeaten into silence.
Well, there are consequences when you ignore the expressed concerns of a large group of Americans. One is named Donald. Trump did not campaign as a free trader – instead, he campaigned as a fair trader and promised that he would put America’s interests – not the interests of the corporate bigwigs who don’t mind sacrificing our people on the altar of their balance sheets – before anything else. Trump ran against 16 others who failed to pick up the torch, and then against a drunken felon who actively hated the Normal Americans who build and feed and fuel this country.
He beat them all. There’s a message there, and this festival of fussiness about the last-resort step Trump took 15 months into his term shows that the GOP Establishment has learned nothing from this failure either.
It’s a bad idea not to stick up for your own voters. Why is the notion that we should refuse to engage in unequal trade relations so crazy to so many people who write for the cruise shilling conservative press? Ahoy, mateys – maybe run a panel on the Lido Deck about how we ought to listen to our voters when they are hurting instead of demanding that they ignore their lying eyes.
So, if tariffs on unfair steel and aluminum competitors are a bad idea, what is a good idea? How do you propose to solve the problem, and continuing to ignore it is a NO-GO. What is your idea that results in an end state where U.S. manufacturers face exactly the same obstacles to entry into foreigners’ markets as they face entering ours?
I don’t know the answer, but then I am not wetting myself over these tariffs just yet. Maybe pain will work where talk talk talk has failed. If there is a better tactic that will actually achieve the goal of exactly equal footing between our workers and the foreigners, cool. I want to hear it. Tell me exactly what it is. I get tariffs. “You hurt us, we hurt you” – I get that. So do the voters. But if there’s a better idea, let’s hear it. I don’t like tariffs – give us an effective alternative.
But we haven’t heard anything but demands we unconditionally return to the unacceptable status quo, and how the economy is going to collapse because a beer can will cost another penny. Somehow, I am unconvinced about these hypothetical risks. What is not so hypothetical are the devastated communities throughout the Midwest.
Yeah, I know. But but but…
There’s always some reason we can’t stick up for our own people. There’s always some reason we can’t offend the foreigners. There’s always some principle that demands Americans who didn’t get fancy degrees like we did be the ones getting shafted.
Weird how that works. Except it isn’t working anymore. To the extent free trade has a bad name, it’s because the free traders are less concerned with actual free trade than with the purity of their doctrine. Our voters are not going to support a system where they are getting the short end of the stick, nor should they. How about we demand equal trade terms, and when we don’t get them we make it painful? Because if someone has to suffer the pain that comes with unfair trade, I vote it be the people trading unfairly.
How about you?
True free trade can only be built on a foundation of fair trade.
Trade is not Free.
Countries have executed trade that is amenable to all parties for a long, long time without having to have an official agreement.
This ‘free trade’ phrase is just a piece of political BS just like The Patient Protection and Affordable Care Act – it did nothing to protect the patient and it certainly wasn’t affordable. IOW’s, it was political BS.
At least Schlichter has the ability to rethink his positions. Most of the knee-jerk free trade absolutists are uninterested in whether unfair (to the US) trade barriers exist. No amount of evidence that the playing field is uneven would cause them to stop parroting the Econ theories they imbibed decades ago. Meanwhile Trump is securing his 2020 victory in WI, MI, OH and PA. The more opposition he faces from corporatists, the more he’ll be the champion of the worker. How dare he advocate a policy Bernie had proposed? I might listen to Jonah Goldberg or Larry Kudlow if they’d ever won an election. The very idea is laughable.
You always bring something thoughtful to the conversation Kurt. Thanks. Of course we don’t have free trade currently and actually, never have. When you hear the cry from a few, “cheap imports are hurting me”, what you don’t hear is the chorus from the many, “cheap imports are helping me”. The burden of tariffs, like any other tax, falls on the consumer. The benefit of tariffs, like any other tax, accrues to government. One often overlooked, and debatably more critical factor than imports in the loss of steel worker jobs, is increased productivity. There has been an 85% decrease in the man hours required per ton of steel since 1960. Technology in manufacturing, as in farming, has drastically reduced the number of people required to produce the same results. I don’t believe those jobs will be coming back. It might make more sense to be looking to the future rather than trying to re-create the past. In other words, where is the job market headed. Perhaps we might also consider reducing the tax and regulatory burden on industries suffering from foreign competition and explore incentives to encourage those industries to re-invest in capital improvements. This would be positive and benefit those industries, but would be a tough sell because it would prevent government from scalping consumers with a tariff.
” I don’t believe those jobs will be coming back”
https://www.wsj.com/articles/u-s-steel-to-restart-illinois-plant-operations-to-handle-demand-1520430223
Duly noted. I did said it was a belief and not a fact. However, since roughly 48,000 jobs have been lost in the industry since 2000, adding 800 doesn’t seem to justify a “the jobs have come back” claim. When all is said and done, and no matter how man steelworker jobs are added, there will be a net loss of jobs, a loss of purchasing power for US consumers and the tariffs collected will be in the US treasury. Mark one up for the home (government) team.
David, if labor is not a big cost factor any more, why does business need to move factories overseas? If automation is the future, why not automate here, and save on shipping? There is a lot of dishonesty built into those positions, and it gets more and more exposed every day. But the fundamental point is, we never voted for offshoring. And in the last presidential election, we voted against it. Are we a free country, are we a people free to choose our future? The side you are taking says, no. I disagree.
No one said labor wasn’t a big cost factor anymore. The reason for outsourcing and automation are the same; to reduce costs. A for profit enterprise, is always and everywhere, looking for the best way to do just that. In most enterprises, the most expensive input, or cost factor, is labor. I know from personal experience as an employer. If the most efficient means to reduce the “big cost factor” of labor, is to automate, that’s what companies do. If management believes outsourcing will be more efficient, then that’s what they do. Also, the notion that everyone who voted for Trump did so because they believe in tariffs or protectionism is implausible at best and certainly unverifiable. People’s reasons for voting for a candidate are never coterminous. Likewise, a more accurate indicator of what people think of cheap imports, than pulling a lever in a voting booth, is the vote every consumer casts when they spend their hard earned money.
Okay. That’s a bunch of gobbledygook that didn’t go to the heart of my questions. So let me ask a couple more. Do you think we should be a free and sovereign nation with a border, or should be ruled by transnational corporations? At the end of the day, who should make the decisions on how we conduct ourself as a nation . We the people, or transnational corporations? My idea of a good society would be people earning the means to get the products and services they need through effort, in other words, working. In the world you describe, what would be the transfer mechanism for people to get the things that they need? Welfare? Begging? Take a stab at that.
I’m not sure if you are going to value anything I have to say if you consider clear answers to your questions “gobbledygook”. International or transnational corporations are already controlling the country. Where have you been the last 50 years? I believe people should be free to live as they choose, buying from who they like, or avoiding those they dislike. I believe that along with that freedom comes the responsibility to respect other’s right to do the same and to take responsibility for our own choices such as bad investments (no bailouts), having children (no welfare), etc. I think the state, or government if you prefer, and those who really run it, are directly or indirectly responsible for most of the problems that ail us, other than those natural to the human experience. I realize that I am not directly addressing the questions you asked, regarding sovereignty and such, but I don’t consider those to be the right questions to be asking.
“I realize that I am not directly addressing the questions you asked, regarding sovereignty and such, but I don’t consider those to be the right questions to be asking.” You could answer that question quite easily. You choose not to, because it would expose the rest of your argument as garbage. You know that. I know that. And you also dodged the question about what you considered the ideal transfer mechanism for people to be able to get the products and services that they need to live. Your hero corporations like Walmart utilize welfare instead of paying a wage that would attract enough employees to do their bidding for them.
If the question you are referring to, is am I in favor of national sovereignty? Then the answer is no, I’m in favor of individual sovereignty and mutual cooperation. Those concepts are without borders. Does that mean I think we shouldn’t have borders. No, not under current circumstances. As Milton Friedman pointed out, you cannot have both open borders and a welfare state. If I missed the question you had in mind, please just sent one clearly worded one, rather than a confusing collage. Cheers
My work is done here. Next.
You are so funny. Good evening.
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David Allen you have stated the truth. Expect several don’t likes but you’re correct as you well know. Trump and his Admin know this too and we will all get through this.
There’s a national security aspect about this too. Having a continuously up-and-running steel industry is a big deal for any country’s security, even if Nancy Pelosi’s constituents can’t fathom it. I’m sure that what bothers them most is the fact that a couple hundred thousand bearded, pick-up driving, white males will earn a living-wage.
Any “conservative” against these tariffs has been ‘bought’ with corporate money.
I do apologize for putting this up over and over again but it appears that it hasn’t sunk in yet. BPS claims that the tariffs are not intended to support merikan business. They are intended to get Donald Trump re-elected. And he claims that it most surely will work. And I agree.
https://www.youtube.com/watch?v=hte0TEAo6zY&t=19s
The problem is not trade in of itself. The problem is the settlement system / method.
If all trade was settled in real money – gold, silver – there would not be any trade issues. Trade self corrects when settled in real money.
The issue will arise when trade is settled in fiat currency.
Using tariffs to try to right trade settlement is like taking a prescription drug for high blood pressure – treats the symptoms but does nothing to fix the underlying issue.
Mt2 cents.
Ugh, so many misconceptions.
1) Price isn’t the only arbiter. Having a somewhat cheaper good which only the Walton’s profit from is not better than having a good which generates jobs and income in the same place it is consumed.
2) The “free trade” the US sees in the WTO is exactly the opposite to the “unfree trade” in services. Doctors, lawyers, etc are all heavily protected against foreign competition through all manner of licensing, quotas and what not. Why is it only blue collar people that get the shaft in free trade?
There are many more.
Trump’s tariffs aren’t going to matter to anyone except as a symbol; the price of steel in American products is a tiny, tiny fraction of the cost – much as labor is a surprisingly small fraction of fast food cost. The primary value is the change in mindset: instead of the ongoing furthering of the globalist elite’s agenda, the tariffs are a very visible symbol that there’s a new sheriff in town. It doesn’t mean Trump necessarily has the every man’s interests at heart, but it is very clearly a confrontational stance in an area where the every man has been getting the shaft for decades.