Protectionism Abroad and Socialism at Home

Guest Post by Ron Paul

One of the most insidious ways politicians expand government is by creating new programs to “solve” problems created by politicians. For example, government interference in health care increased health care costs, making it difficult or even impossible for many to obtain affordable, quality care. The effects of these prior interventions were used to justify Obamacare.

Now, the failures of Obamacare are being used to justify further government intervention in health care. This does not just include the renewed push for socialized medicine. It also includes supporting new laws mandating price transparency. The lack of transparency in health care pricing is a direct result of government policies encouraging overreliance on third-party payers.

This phenomenon is also observed in foreign policy. American military interventions result in blowback that is used to justify more military intervention. The result is an ever-expanding warfare state and curtailments on our liberty in the name of security.

Another example of this is related to the reaction to President Trump’s tariffs. Many of America’s leading trading partners have imposed “retaliatory” tariffs on US goods. Many of these tariffs target agriculture exports. These tariffs could be devastating for American farmers, since exports compose as much as 20 percent of the average farmer’s income.

President Trump has responded to the hardships imposed on farmers by these retaliatory tariffs with a 12 billion dollars farm bailout program. The program has three elements: direct payments to farmers, use of federal funds to buy surplus crops and distribute them to food banks and nutrition programs, and a new federal effort to promote American agriculture overseas.

This program will not fix the problems caused by Tramp’s tariffs. For one thing, the payments are unlikely to equal the money farmers will lose from this trade war. Also, government marketing programs benefit large agribusiness but do nothing to help small farmers. In fact, by giving another advantage to large agribusiness, the program may make it more difficult for small farmers to compete in the global marketplace.

Distributing surplus food to programs serving the needy may seem like a worthwhile use of government funds. However, the federal government has neither constitutional nor moral authority to use money taken by force from taxpayers for charitable purposes. Government-funded welfare programs also crowd out much more effective and compassionate private efforts. Of course, if government regulations such as the minimum wage and occupational licensing did not destroy job opportunities, government farm programs did not increase food prices, and the Federal Reserve’s inflationary policies did not continuously erode purchasing power, the demand for food aid would be much less. By increasing spending and debt, the agriculture bailout will do much more to create poverty than to help the needy.

Agriculture is hardly the only industry suffering from the new trade war. Industries — such as automobile manufacturing — that depend on imports for affordable materials are suffering along with American exporters. AFL-CIO President Richard Trumka (who supports tariffs) has called for bailouts of industries negatively impacted by tariffs. He is likely to be joined in his advocacy by crony capitalists seeking another government handout.

More bailouts will only add to the trade war’s economic damage by increasing government spending and hastening the welfare–warfare state’s collapse and the rejection of the dollar’s world reserve currency status. Instead of trying to fix tariffs-caused damage through more corporate welfare, President Trump and Congress should pursue a policy of free markets and free trade for all and bailouts for none.

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starfcker
starfcker

So, what you’re saying is that if you had been President, your policy would have been to allow China to keep reaming us in the ass? Looks like we dodged a bullet.

SmallerGovNow
SmallerGovNow

I usually agree with Ron Paul on most everything. In this case I think he’s wrong. This tariff thing is in my opinion a temporary measure to bring China, Mexico, Canada, and the EU to the bargaining table in order to remove tariffs across the board… Chip

SmallerGovNow
SmallerGovNow

Bailouts are not a problem if used as a temporary level the playing field technique while Trump works toward what is his long term goal of ZERO tariffs across the board. ZERO tariffs is not going to happen through discussion alone. Trump is playing a temporary game of chicken with China, Europe, Mexico, and Canada who have all benefited from unfair trade practices with the US. I think he’s trying to show that they need us more than we need them. My two cents… Chip

TampaRed
TampaRed

i do support trump on this because i also believe that we’ve been being bent over,and w/o any lube–
however,these tariffs do hurt the little guy the most–
i do a little bit of scrapping–scrap metal is one of the products that china has slapped a retaliatory tariff on–since the tariffs were implemented the price of scrap metal has fallen from between 7 & 8 cents/lb to yesterday’s price of 5.25 cent/lb,a helluva drop–
until the tariff war started prices had been steadily climbing for the last 18 months or so–

Ignatius J. Reilly
Ignatius J. Reilly

Reciprocal tariffs are the straightest path toward real free trade. Whatever they do to us, we do to them.

robert h siddell jr
robert h siddell jr

They will soon need the food so China is shooting their own foot.

David Erickson
David Erickson

Ron Paul is right. Our tariffs hurt us more than they hurt our trading partners, regardless of whether or not they are imposing tariffs on us. Peter Schiff (who understands economics even better than Ron Paul) explains very well why this is so in in podcasts. Also, why isn’t anyone questioning why the president can unilaterally impose tariffs without any action from congress? (Hint: It is a combination of bad laws passed by congress – no surprise there – and an abuse of “national emergency” by the president.)

Stucky

I know RP is talking about tariffs. But, American imposed sanctions aren’t helping us either.

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America’s Addiction to Sanctions Is Digging Its Own Grave

“When you go the route of sanctions, you should dig two graves. One for your rival’s economy, and one for your own.”

The best way to think about the role of sanctions in American foreign policy is to regard it as an addiction.

Think about it. The inability to change the behavior of even the most rinky-dink nations must be enormously frustrating to those at the helm of the world’s lone superpower. This leads, not surprisingly, to the search for ways to assuage this sense of failure and reassure Americans of their perpetual global dominance. Sanctions fit the bill perfectly. First, because they can be sold as an alternative to war. Opponents of sanctions can thus be portrayed as either warmongers or pacifists, depending on their political profile. Second, since no meaningful measures of success or failure are ever discussed, success is entirely in the eye of the beholder. Thus, whatever happens can be attributed to sanctions —if it suits the government. Politicians can hardly be faulted for the eagerness with which they embrace sanctions. They offer the perfect escape from the real, but tedious, world of diplomatic negotiation.

Eventually, however, the political “high” provided by sanctions wears off. The nastiness of the world intrudes, and once again politicians become desperate for another fix. Friends try to warn Americans that Washington’s increasingly erratic behavior is beginning to hurt them as well, but how can they understand the burdens that America must bear as Leader of the Free World? Eventually, as Americans’ view of the world shrinks to the confines of the Washington Beltway, nothing but their own media-driven reality matters. Sanctions now provide the only semblance of calm, the only relief that politicians can rely on, and so resort to them becomes habitual.

If you want to see how such addiction plays itself out, look at Ukraine. To cement its 2014 “civilizational choice,” and punish Russia for annexing Ukrainian territory, Ukraine has stopped buying natural gas directly from Russia, suspended popular Russian payment services and Russian banks, blocked access to Russian social websites, television, and commercial sites, banned the import of Russian books, suspended commercial airline flights, and is now considering ending all railway traffic to Russia. In reality, of course, all these services continue since there is a high demand for them in Ukraine, only now at a much higher cost to Ukrainians.

Through all of this, Russia remains Ukraine’s primary investor (technically it slipped into third place last year, behind Cyprus and the Netherlands, but both are known to be safe havens that Russians use to mask their investments). Yet, because Ukraine refuses to engage in any normal trade with its neighbor, the government is quite literally running out of money, having only 5 percent available for current account payments, compared to last year.

Obviously, the United States is not as dependent on Russia as Ukraine is, but even this truism is misleading. Although America is much wealthier, and will probably not run out of money, Americans live in an interdependent world in which what one country does in the Middle East can be repaid to it in Eastern Europe, the Arctic, or even in cyber or outer space. Moreover, one should consider the profits that American companies (and hence all Americans) have lost by not investing in Russia during the decade when it was more profitable than China, and its stock market was the hottest in the world. In fact, America’s own stupendous 21 trillion deficit could not have been achieved without the help of sanctions.

https://russia-insider.com/en/americas-addiction-sanctions-digging-its-own-grave/ri24524

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