Guest Post by Walter E. Williams
There are a couple of important economic lessons that the American people should learn. I’m going to title one “the seen and unseen” and the other “narrow well-defined large benefits versus widely dispersed small costs.” These lessons are applicable to a wide range of government behavior, but let’s look at just two examples.
Last week, President Donald Trump enacted high tariffs on imports of steel and aluminum. Why in the world would the U.S. steel and aluminum industries press the president to levy heavy tariffs? The answer is simple. Reducing the amounts of steel and aluminum that hit our shores enables American producers to charge higher prices. Thus, U.S. steel and aluminum producers will earn higher profits, hire more workers and pay them higher wages. They are the visible beneficiaries of Trump’s tariffs.
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But when the government creates a benefit for one American, it is a virtual guarantee that it will come at the expense of another American — an unseen victim. The victims of steel and aluminum tariffs are the companies that use steel and aluminum. Faced with higher input costs, they become less competitive on the world market. For example, companies such as John Deere may respond to higher steel prices by purchasing their parts in the international market rather than in the U.S. To become more competitive in the world market, some firms may move their production facilities to foreign countries that do not have tariffs on foreign steel and aluminum. Studies by both the Peterson Institute for International Economics and the Consuming Industries Trade Action Coalition show that steel-using industries — such as the U.S. auto industry, its suppliers and manufacturers of heavy construction equipment — were harmed by tariffs on steel enacted by George W. Bush.
Politicians love having seen beneficiaries and unseen victims. The reason is quite simple. In the cases of the steel and aluminum industries, company executives will know whom to give political campaign contributions. Workers in those industries will know for whom to cast their votes. The people in the steel- and aluminum-using industries may not know whom to blame for declining profits, lack of competitiveness and job loss. There’s no better scenario for politicians. It’s heads politicians win and tails somebody else loses.
Then there’s the phenomenon of narrow well-defined large benefits versus widely dispersed small costs. A good example can be found in the sugar industry. Sugar producers lobby Congress to place restrictions on the importation of foreign sugar through tariffs and quotas. Those import restrictions force Americans to pay up to three times the world price for sugar. A report by the U.S. Government Accountability Office estimated that Americans pay an extra $2 billion a year because of sugar tariffs and quotas. Plus, taxpayers will be forced to pay more than $2 billion over the next 10 years to buy and store excess sugar produced because of higher prices. Another way to look at the cost side is that tens of millions of American families are forced to pay a little bit more, maybe $20, for the sugar we use every year.
You might wonder how this consumer rip-off sustains itself. After all, the people in the sugar industry are only a tiny percentage of the U.S. population. Here’s how it works. It pays for workers and owners in the sugar industry to come up with millions of dollars to lobby congressmen to impose tariffs and quotas on foreign sugar. It means higher profits and higher wages. Also, it’s easy to organize the relatively small number of people in the sugar industry. The costs are borne by tens of millions of Americans forced to pay more for the sugar they use. Even if the people knew what the politicians are doing, it wouldn’t be worth the cost of trying to unseat a legislator whose vote cost them $20 a year. Politicians know that they won’t bear a cost from sugar consumers. But they would pay a political cost from the sugar industry if they didn’t vote for tariffs. So they put it to consumers — but what else is new?
Another dumb as a rock negro parroting the company line for his own personal gain. People like this are why our country is such a mess. They get paid to lie. They don’t even have to be really good at it. Just consistent. The decline of the country you’ve watched over the last 25 years? That’s not real. You’ve imagined the whole thing. Just ask Walter. You piece of shit.
Let’s get the opinion of a real economist. “I would love to have one intelligent person explain to me why the USA would not survive economically if we went full scale isolationist- slam the borders closed, end all trade, remove our military from every foreign location, etc.
The only difference between a continent and the globe is size. The planet is a closed system with more people, there’s no movement to expand to other markets throughout the solar system because it’s closed to us (and there’s no one else there). 350 million people. That’s a huge market, but somehow it’s not enough for survival? Who came up with that argument?
The entire premise of every economist I have ever heard in the past 25 years is that human life can only exist if it continues to expand it’s population indefinitely, forever. Are these people retarded? What’s the downsize? Economic difficulties? For who exactly? Do we not already have them? Happiness? I thought we were the unhappiest, most suicidal, drugged up population on the Earth, who exactly is happy with the present system?
The problem we have is that we are all forced to accept a paradigm that was designed to profit corporations, government power mongers, the military industrial complex, Big pharma, the prison industry, etc. What if all of our priorities were realigned?
Anyone ever heard of Cincinnatus? He was at one time the single most powerful man in the world and after he completed the thing he was asked to do, he quit and went back to his farm. HIS FARM.
So we give up Iphones and Halo and replace them with a shovel and a frying pan, how is that bad? One feeds you, the other simply distracts you.
The argument for globalization is so vapid and hollow I can’t believe people believe it.” Any idea who might have written this? It was our own Hardscrabblefarmer. November 10th 2015
Sounds like an awesome QOTD.
Nothing else is new Walter. Same old shit. But in this case it may not matter at all. Not because tariffs will bring back all those great 19th century high paying jobs but because we’ll have much worse state catastrophes to sweat now that the trumpster and pompeo are cuing up the dogs of war. The good news is that there’s a chance pompeo will turn d.c. into Pompeii. I always try to remain optimistic.
https://www.nbcnews.com/politics/elections/pennsylvania-special-election-conor-lamb-rick-saccone-n856411
Pennsylvania’s 18th Congressional District: The lyin’ lay down with the Lamb.
Another red district turns blue. It’s why they need your guns.
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Advertising works.
Q save us.
Repugs ran a terrible candidate, Unco. All politics is local. You can’t run an anti-union candidate in steel country.
I realize that and Lamb ran as an (oxymoronic?) conservative democrat but it goes to show Trump’s support of candidates may not be strong enough to win this fall against the storm of snowflakes. For whatever reason, I can’t see my photo on this system. It was of a canary in a coal mine. Don’t be overconfident is all I was sayin’. That, and if Q doesn’t save us, don’t forget to vote….
“Reducing the amounts of steel and aluminum that hit our shores enables American producers to charge higher prices. Thus, U.S. steel and aluminum producers will earn higher profits, hire more workers and pay them higher wages.”
That’s it, Walter? That’s all you could think of?
It also guarantees us a steady supply of essential industrial products should anything ever go wrong with our international relationships. What if China were to suffer some catastrophic domestic collapse or natural disaster? What if an ally became an enemy? How do you think this entire issue out and not even consider one of those possibilities? Has Mr Williams forgotten all of human history?
Self-reliance cannot be maintained when you are dependent upon someone else for your basic needs. This is the basic oversight of our time- that things remain the same, that what is will always be, that bad things can’t happen in the future because things are okay right now. It’s like the ant and the grasshopper writ large but I suppose some people didn’t have parents that read them fables when they were little. They probably read them NYT editorials.
I agree we should produce our own basics After all, one of Rome’s biggest problems was its inability to feed itself from its own land.
One thing I find missing in the tariff argument is tariffs give incentive to Americans to open businesses to take over high-priced imports. I think we should go back to tariffs on all imports. (But do away with the income take and starve the beast). One example given was sugar. What is stopping an enterprising American from starting a sugar cane farm? They could do it in some lower-U.S. states, like Florida, or in the U.S. Virgin Islands or Puerto Rico. There’s really no need to import sugar from areas outside of the U.S.’s control. You can also make sugar out of sugar beets, which can be grown in a wider area.
If companies move their businesses overseas to avoid tariffs, say, on steel and aluminum, a tariff on everything imported would take care of that because they would have a hard time selling their product at high prices in the U.S., especially if an enterprising entrepreneur starts his/her own company in the U.S. doing the same thing.
This is the part nobody gets. That’s the beauty of tariffs, as long as it’s on all imports. And that’s why tariffs were used to fund the American government to begin with and to protect American businesses and American jobs.
https://www.desmoinesregister.com/story/money/business/2018/03/08/how-trump-steel-aluminum-tariffs-could-hurt-iowa-businesses-farmers/406815002/
America as a whole with Tariffs to protect its industry and finance government, America with Free Trade and no protective tariffs to protect its industry and finance the government.
Two different places, and both within the memory of most people in the country.
Which do you find better and why?
“Two different places, and both within the memory of most people in the country.
Which do you find better and why?” That’s pretty good. We don’t have to go isolationist. Nobody serious is suggesting that. All we have to do is stop people from ripping us off. I think we got the right guys in place to do just that.
Williams is, as usual, spot-on. Sure, workers in the aluminum and steel industries will be better off. But the connedsumer at large pays higher prices for products using aluminum and steel. Same for sugar.
So we go all isolationist? That means that everything costs more. Can’t import cheap foreign stuff, so we have to buy the more expensive domestic stuff.
Given the multitudes of articles talking about how the consumer is tapped out, do we really want the bottom 20% or 30% to really get hostile because they can no longer afford today’s material standard of lliving?
If the free market is allowed to work, those high prices will drive competition to the business, and competition leads to lower prices. Always.
Let’s look at this on the personal level. Mr. Williams points out that the single factor in any decision making process should be “what is the cheapest product”.
Does he live in a cheap house and wear cheap clothing? Does he send his kids to the cheapest school and drive the cheapest car? Does he only eat at the cheapest restaurants and go to the cheapest doctors?
Let’s not get stupid. Some things cost more for a reason. I’d pay more for clothing if I knew it wasn’t being made with child labor. I’d rather pay more for a domestic supply of parts that aren’t produced in Asia out of inferior materials- and anyone who has ever replaced anything mechanical in the last 20 years knows exactly what I’m talking about.
It’s an argument, it simply isn’t the best argument and it certainly doe not apply to all things in all situations. And in this case it is probably the worst argument of all.
From what I’ve seen in my half-century on this cerulean spheroid: EVERYBODY WANTS CHEAP, NOBODY LIKES CHEAP.
Let’s look at it on a MORAL level. Which promotes freedom? And what unfree things is government doing to drive up the cost of everything for EVERY American business including the steel and aluminum sector?
Putting your fellow Americans out of work is the opposite of moral, and has nothing to do with liberty, douchebag.
Cleanliness, incl of arguments, is next to…nothing; it stands while everything else lies about it. To douche or not to douche…liberty’s clean, doesn’t need it, authoritarians are filthy, & gravity feeds won’t typically be adequate. Pressurewasher more like it. Maybe a sandblaster.
But there aren’t enough pressurewashers & sandblasters in the world.
“Tax-eater.” Maybe you’ve heard the term.
If a “job” must be subsidized by taxation, it’s not a job. It’s makework. Criminal, too. If it rose to the level of investment – it doesn’t — it’d be malinvestment. Taxeaters are parasites, not producers.
Human parasitism – symbolized in whatever word alchemy form – is not moral.
Incentivizing inefficiency is dumb.
Incentivizing inefficiency, waste, via force & fraud is criminal – & dumb.
Funny how the same people can see that sometimes, turn a blind eye other times. Don’t give “welfare” to these, but do give it to those.
And by “give” these ‘transfer paymenters’ mean take, by whatever means necessary – the ends’ll justify it, these sorts always insist.
The ocean is a desert with the perfect disguise above. The tariff subsidized steelworker (& all the rest) is a deserter (from truth, civility, humanity…) with the “perfect” disguise surround.
Mercenary mercantilism – a bedrock ‘principle’ of the founding criminals. John Hancock & his brigand band: this is our corner (& so the other guys tea went into Boston harbor).
Gangsters warring with gangsters.
Tea prices? Higher as a result. But hey, the gangsters all had “jobs.” (Bonus point q: Indian tea, colonial days, “globalism” right? The horror. I’m sipping Indian Darjeeling as I type…& I’ve had Carolina tea: no comparison.)
And since taxfeeders take what they take via the ‘strong arm of the law’, who they take it from goes to “pay” for Cool Hand digging the hole, refilling the hole, digging the hole, refilling the hole. “Public school” teachers, for one, of countless, examples.
Either the task would be done better, usually to include cheaper (but also higher end alternatives), via market allocation\segmentation, or it wouldn’t exist at all.
In any event, the players directly involved trade with each other, & uninvolved 3rd parties have nothing to do with it, are not stolen from to prop up gangsters pretending to be producers.
Parents & teachers would trade with each other directly, instead of stealing from, parasitizing, uninvolved 3rd parties. Same goes for the likes of Elon Musk.
I don’t owe anyone a real job, a living, let alone a foodstamp fake one. Nationality? Irrelevant. If your hand’s in my pocket, your “nationality” is criminal.
Parasites & criminals are not my fellows. None of which is to say gangsters haven’t always taken, by force, from producers & deployed some of those ill gotten gains to fellow traveler patronage. At some point, the word alchemists started referring to these various plantation schemes as “civilization.”
People lie. Chronically. Little lies, over & over, are just as bad as, & stage-setting for, the so-called “big lies.”
Confirmation bias, refusal to begin at 1st principles (often because this or that Ahab has anchored this or that proposition in your brain & so you simply must go down with that ship o’ fools), conscious\”agency” or not, is lying.
Born to lose is a song. Born to lie should be (if it isn’t).
Born to be wild is a song. Born to be domesticated should be (if it isn’t).
Domesticity & dishonesty seem to be siamese twins…or the former seems to require the latter…or maybe the latter is the real driver of the former. Domesticity does wonders for the institutionalizing of lying.
And pecu-people just wanna’ peck you…but they wanna’ feel good about themselves, as they are stealing, too. Dis(respect) & cogdis. Perversity. Pogo the mofo possum.
https://www.scientificamerican.com/article/the-political-brain/
Land of the free (gibs me dat subsidy — tariff), home of the brave (OPM liquidity courage…sweetened with a spoonful of subsidized domestic\ated sugar — @ 3x the market price – that helps the Medici go down).
Or, how cheaply liberty & freedom are sold for (dispensed with?)…not even 30 pieces of silver. 30 tsp of subsidized sugar in a big gulp’s all it takes. Ah, sweet “security.”
LCD swampwater, gravitaslessness bowing to gravity. Marianas trench, with shovel brigades in the bottom of it, contain the majority.
Under (all that) pressure ♫♪♫, lies the wet dream of stopping all free movement of people & their satellite possessions\trade goods. And if those Davy Jones Loch(er)ness monster wet dreamers can ever get everybody down there with them, then they’ll be satisfied. Sure they will.
Were the land actually free, the people actually brave, buying what you want from who & where you want wouldn’t be a topic. Instead, masses of color of law subsidized armed thugs stand in way.
If you don’t own property, beginning with your person, you are property. Hear the voices raised in approval of the plantation, the massa’s? They approve of being slaves, & if it’s good enough for them then that’s the standard that’s good enough for you, too.
Of two minds guy word-gamed it free capital flows, few days back. Oy.
Fiat isn’t actually capital – like the Trojan wasn’t a horse, or art, or a gift – & it’s as far from free as is possible to get. Gift horses & horse apples, & wooden nickels.
Tariffs are taxes. Taxes, along with all other CGS, are paid by “consumers” – not businesses, however structured. Peter pecker pipers believe circlingsucking the wagons makes for perpetual motion.
Bureaucratic tools? Yes, yes they are. Like a skeeter’s proboscis is a tool.
Fragile industries? Snowflakes are ‘sposed to melt. Are ‘sposed to evaporate. Are ‘sposed to precipitate. Are ‘sposed to move. Artificial snow in the heat of summer? Subsidized agua in the Sonora? Polar bares all – dies of exposure. Over. & Over. & Over.
Exoskeletoning “industries” guarantees atrophy. Corruption in – corruption out. False premise – false conclusion.
Since the buck’s pegged to nada, who cares if the renminbi is pegged to the buck? Does a downstream zero multiplied by an upstream zero pass for a dx? Same old new math, that.
Capital should be free. But it ain’t.
Trade should be free. But it ain’t.
People should be free. But they ain’t.
Some “realists”’ll tell ya ain’t is reality & ought is fantasy – & that oughta’ tell ya’ what ya’ need to know about those “realists.”
Status quo apologists. Just stick to the script-wheel, gerbils.
Realpolitik: Machiavellians leading moo•kiavellian’s around by their inner Machiavellian snouts.
Central banks\states. Just so. A chicken little central banker in every pot & a stately horse head in every bed…& the fractals of fuckery spools up & scales out from there.
Kiss the ring. Don’t ask, don’t tell, for whom it tolls, clappers. Just keep ringing it til it cracks, yet again. & give it a cool lie of name, like “liberty.” & put it on display in a shithole’d (largely) town like Philly.
Don’t ever learn, don’t ever progress, just keep bein’ yourselves. A Trojan horse is a Trojan horse o’ course, o’ course. Just keep having the same conversations & loopin’ the same convolutions. You’re the majority & the perception of the highest ‘parliamentarily participating’ headcount is reality.
But asylum reality is, at best, surreality. & the lesson of McMurphy should be obvious.