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Friday, March 16, 2018

Mailvox: government and tariffs

Zaklog the Great poses a trivial objection:
So, Vox, what would you say to someone who hasn’t studied economics enough to seriously parse through these arguments, but has observed that, almost without exception, the government is a terrible way to get things done? There seem to be very few things the government is capable of doing effectively, and therefore, the idea that managing the economy is one of those very few seems doubtful.
  1. Tariffs are no more "managing the economy" than any other form of taxes are. Falsely equate the two demonstrates that you are engaging in dishonest rhetoric rather than honest dialectic. 
  2. Getting what done? Governments have historically done a better job of defending borders than any other form of organization, and are certainly a damned sight better at it than international corporations, which, by the way, are government-created entities. Tariffs are a form of border defense, in more ways than one.
  3. Tariffs are considerably less intrusive, and cause less economic disruption, than any of their three primary alternatives, income taxes, consumption taxes, and wealth taxes. If you believe that government is a terrible way to get things done, why would you rather have it interfere on a holistic and daily basis with the economic activity of every single domestic citizen rather than on a far less frequent basis with the cross-border shipments of a limited number of foreign corporations?
  4. Tariffs don't require effectiveness, and domestic governments have proven to be far more susceptible to control by the will of the people than international corporations.
  5. Even if one assumes government corruption and inefficiency, it is still preferable to convey legal advantage to manufacturing companies that employ large numbers of people in a tariff system than to financial companies that do not in a free trade system. (Courtesy of Jack Amok.)
Satisfied? Note that if you are not contemplating the question of tariffs in light of their various alternatives, you are not engaging in either honest inquiry or discourse. This is not a hypothetical debate about funding governments through the voluntary contributions of unicorn farts. It is the actual real-world U.S. economy that is under discussion here, not the Austro-libertarian Platonic ideal of a unicorn fart economy.

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62 Comments:

Blogger ReluctantMessiah March 16, 2018 11:41 AM  

Why would you rather have it interfere on a holistic and daily basis with the economic activity of every single domestic citizen rather than on a far less frequent basis with the cross-border shipments of a limited number of foreign corporations

This was exactly what I was thinking. Tariffs mean less government intrusion in individual's lives. Something libertarians should be all for.

Build the economic wall!

Blogger Chase March 16, 2018 11:42 AM  

The government in America since the 1960s has been unable to get things done. It is not endemic to government, it is our multicultural, Jew-established hell-hole society that is unable to get things done. Look at Denmark, look at China. I don’t think anyone imagines the Chinese government can’t do anything.

Blogger Jack Amok March 16, 2018 11:42 AM  

5. If you assume corruption, a corrupt government tariff scheme will funnel money to domestic manufacturers. A corrupt free trade scheme funnels money to globalist bankers and foreign countries.

Blogger VD March 16, 2018 11:47 AM  

5. If you assume corruption, a corrupt government tariff scheme will funnel money to domestic manufacturers. A corrupt free trade scheme funnels money to globalist bankers and foreign countries.

That is true as well. I will add and rephrase in my style.

Blogger Zaklog the Great March 16, 2018 11:58 AM  

It certainly sounds reasonable. I’m not trying to be a pedantic jerk here. I’m just trying to get a real understanding of this based on principles I understand. And yes, a functional, sane government can and should defend borders. I’ll have to think about the idea of tariffs as a form of that.

Unfortunately, our government for most of my lifetime has been neither functional nor sane, so that is the framework I’m approaching this from.

Blogger Nate March 16, 2018 12:01 PM  

It should be remembered that no one argues that tariffs are super awesome things. They are nearly tools. How they are used is what matters

Blogger Noah B The Savage Gardener March 16, 2018 12:06 PM  

"That to secure these rights, Governments are instituted among Men..." - U.S. Declaration of Independence

Government's primary purpose is to protect the rights of its citizens but they will reliably fail if overtasked. The modern perception that governments can't do anything effectively arises from the fact that government is attempting to do far too many things.

Blogger Daniel Paul Grech Pereira March 16, 2018 12:09 PM  

A more salient point might be whether or not the state acts in good faith when "getting things done" (intervening). It would seem apparent that for some time now, the majority have not acted in good faith on behalf of the nation.

Blogger 罗臻 March 16, 2018 12:12 PM  

Want to make workers really happy? All tariff revenue collected in 2018 will be used for a dollar-for-dollar payroll tax reduction in 2019.

Blogger Jack Amok March 16, 2018 12:18 PM  

That is true as well. I will add and rephrase in my style.

Thanks - I mention it because that was the last crutch supporting my old belief in "free trade." But once I realized how trade was empowering the financial class, and how utterly corrupt they were, I realized even the worst sort of crony government hacks would be an improvement.

Blogger Azure Amaranthine March 16, 2018 12:32 PM  

"no one argues that tariffs are super awesome things"

Challenge accepted.

Tariffs are super-awesome things:

#1: They're a form of justice against evil enemies.
#2: They keep the economic love in the national family.
#3: They hold the national interests together like surface tension on water.

Tariffs are super-awesome things!

Beware Nate, I will apply your counterarguments to guns-as-tools.

Blogger Zaklog the Great March 16, 2018 12:36 PM  

@9 Unfortunately for me, I live in Louisiana, which apparently has as a law (possibly in the state constitution), that any time federal taxes go down, state taxes go up. Wouldn't do a damned thing for me. Now, I don't oppose such a change on these grounds, but it wouldn't help me personally.

Blogger Azure Amaranthine March 16, 2018 12:39 PM  

"I live in Louisiana, which apparently has as a law (possibly in the state constitution), that any time federal taxes go down, state taxes go up."

Do they have a vice-versa law as well? If not, tax-ratchet much?

Blogger LES March 16, 2018 12:46 PM  

Money is not wealth. Wealth is created by manufacturing, farming, mining, fishing and forestry.

We would not allow foreign countries to harvest our crops or take our natural resources. We should not export our manufacturing.

Blogger Terry Snyder March 16, 2018 12:51 PM  

The Chinese government can do whatever the hell it pleases because it has the boot of totalitarianism on the throat of its citizens. Perhaps you'd be happier there. As I understand it, there are very few practising Jews in China... or Christians... or anything else.

Blogger Dad29 March 16, 2018 12:52 PM  

Even if one assumes government corruption and inefficiency...

Please DO!! The Constitutional language includes "imposts," which is a tax on ALL imports--sorta like a sales tax. "Tariffs" were rigged, even back then, to favor the interests which favored certain Congressmen.

Blogger Nate March 16, 2018 1:00 PM  

You're applying utopian perfection to tariffs. Tariffs that are to low to none of those things. Tariffs that are to high do none of those things.

Guns can be used to free or enslave. Hammers can be used to build or destroy.

Tariffs are no dofferent

Blogger VD March 16, 2018 1:03 PM  

The Chinese government can do whatever the hell it pleases because it has the boot of totalitarianism on the throat of its citizens. Perhaps you'd be happier there.

I probably would. The state-owned Chinese media is arguably more free and permits more open discussion than the five-corporation-owned US media.

Blogger James Dixon March 16, 2018 1:09 PM  

> As I understand it, there are very few practising Jews in China... or Christians.

Your understanding is incomplete. From Wikipedia: "2010: the Pew Forum on Religion & Public Life estimated over 67 million Christians in China,"

Blogger James Dixon March 16, 2018 1:11 PM  

> The Constitutional language includes "imposts," which is a tax on ALL imports--sorta like a sales tax.

I wouldn't be adverse to an across the board 5% tax on imports, especially if the majority of the money was used to decrease income or payroll taxes.

Blogger Josh (the sexiest thing here) March 16, 2018 1:13 PM  

Government corruption and incompetence isn't an argument against tariffs. It's an argument for broad tariffs. If the government is indeed too incompetent to enact the right levels of tariffs on the right sectors, eliminate that risk with broad based tariffs on all imports.

Blogger Azure Amaranthine March 16, 2018 1:14 PM  

Yeah 5% universal tariff is fine. Could probably go 10% and barely notice.

Certain bad actors would probably need higher eventually, but best to start somewhere.

OpenID widlast March 16, 2018 1:15 PM  

"there are very few practising Jews in China... or Christians... "

There are approximately 97 million practicing Christians in China. Jews, not so much, but why would there be?

Blogger Some Guy March 16, 2018 1:31 PM  

@VD

I'm not, in any way, up for an intelligent discussion about economics. So I ask this as a genuine question from someone who would like to understand. I'm trying to figure out what the real economy is and I was wondering if you had a decent idea as to it's definition. Most economists want to hide behind GDP and other aggregate numbers that don't actually mean that much. Is there a decent definition of the real economy that could lead me down the road to understanding what numbers matter and which ones don't?

Blogger Chase March 16, 2018 1:32 PM  

This is insane. You think the average Chinese person in China is less happy than the average US citizen? Come on. Our people are addicted to dopamine via Facebook, food, alcohol, marijuana, pornography.

Does China have problems? Sure. They don’t look nearly as intractable as ours. We have epidemics/crises of:

Loneliness
Fertility
Obesity
Opioids
Spirituality
Depression

Our hollow 1st Amendment, laughable 4th amendment and incredibly valuable 2nd Amendment do not compare very well to China at the moment, “freedoms” or not.

Blogger Some Guy March 16, 2018 1:36 PM  

@25

I would argue that those things would be better handled by a functioning church. Looking at everything through the eyes of state power seems to skew most of these conversations.

Blogger Zaklog the Great March 16, 2018 1:48 PM  

@25 China is also suffering a serious shortage of women. Most young men in China have almost no hope of ever having a family. Don't be so quick to assume they're that much happier or more secure.

Blogger heyjames4 March 16, 2018 1:54 PM  

Azure Amaranthine wrote:Yeah 5% universal tariff is fine. Could probably go 10% and barely notice.

Certain bad actors would probably need higher eventually, but best to start somewhere.


The anti-Federalist papers include an essay claiming that a request for a 5% impost was the excuse used to convene the Philadelphia convention of 1787. The essay also claimed that many post-Revolution Americans would have been willing to go that far on federal taxation, but not as far as the convention ended up going.

Blogger Nate Winchester March 16, 2018 2:43 PM  

There are approximately 97 million practicing Christians in China. Jews, not so much, but why would there be?

Out of a billion+ people, that's not many.

Blogger Azure Amaranthine March 16, 2018 2:53 PM  

"Out of a billion+ people, that's not many."

Because 30m growth (~45%) in eight years is slow growth.

No, it's an explosion.

"The anti-Federalist papers include an essay claiming that a request for a 5% impost was the excuse used to convene the Philadelphia convention of 1787."

An impost on which goods? And where was that money going?

Say 'em with me...

Blogger Noah B The Savage Gardener March 16, 2018 2:58 PM  

Perhaps getting a little off topic, but the current trade regime isn't free trade at all. It's just a cleverly disguised crony capitalism and loopholes for the rich. Look at the absurd protections that American sugar cane farmers enjoy for one example.

Blogger Unknown March 16, 2018 3:32 PM  

>> 5. Even if one assumes government corruption and inefficiency, it is still preferable to convey legal advantage to manufacturing companies that employ large numbers of people in a tariff system than to financial companies that do not in a free trade system. (Courtesy of Jack Amok.)<<

Point 5 alone has it for me.

Blogger Cetera March 16, 2018 3:39 PM  

Azure Amaranthine wrote:"no one argues that tariffs are super awesome things"

Challenge accepted.

Tariffs are super-awesome things:

#1: They're a form of justice against evil enemies.

#2: They keep the economic love in the national family.

#3: They hold the national interests together like surface tension on water.

Tariffs are super-awesome things!

Beware Nate, I will apply your counterarguments to guns-as-tools.


This may be my most favorite thing I've ever read on VD's blog, ever. No offense to VD.

Blogger DonReynolds March 16, 2018 4:15 PM  

Government exists to enable us to do what none of us could do for ourselves....not because it is impossible necessarily, but it would be impractical.

Public goods, by definition, are those which everyone receives (whether they want to or not). No one can be denied a public good and if it exists at all, it is "consumed" or received without being metered or measured. (National defense is a public good, as would be lighthouses, and the Border Patrol. Fire departments respond to fires within their service area, without regard to who owns the property or how many.)

Likewise, public goods are paid for by the public and those payments are called taxes.

Blogger James Dixon March 16, 2018 4:36 PM  

> Out of a billion+ people, that's not many.

No, but it's not "very few", as Terry Snyder stated.

Blogger Allen L. March 16, 2018 5:25 PM  

The one thing the government is very good at is exercising raw power. The government also picks economic winners and losers all the time, it can't help but do so.

Two older historical examples are land for the railroads and homesteading. In both cases land was arbitrarily given to others without regard to any other claims to it. Did it help the nation as a whole? I think so. A more current example is the interstate system. Whole towns died if they were by-passed but new ones sprang up in their place. One could argue that the interstate system was overall an economic boon to the nation.

Tariffs are no different, some will lose but some will win. The question is, will the result be for the overall betterment for the nation.

Blogger Thot March 16, 2018 5:27 PM  

My whole portfolio is tied up in the Austro-libertarian Platonic ideal of a unicorn fart economy. How screwed am I?

Blogger weka March 16, 2018 5:45 PM  

@Thot. You are almost as screwed as those who gamble on free trade. It might be Machiavellian, but setting up systems talhat cope with corruption and greed are somewhat antifragile.

By way of contrast, our current ideologues have pretty models made of bone China.

BTW, NZ charges 15% GST on all goods. Including at the border.

Blogger Snidely Whiplash March 16, 2018 5:51 PM  

NZ is a different case. Because of the small population, there's little expectation that NZ will ever have an efficient car industry, for example, while everyone's quality of life is directly dependent on exporting the enormous oversupply of wool and meat.
A very different situation from the US, requiring different solutions.

Blogger michimartini March 16, 2018 6:13 PM  

Compared to Europe it is.

Blogger Josh (the sexiest thing here) March 16, 2018 6:49 PM  

Likewise, public goods are paid for by the public and those payments are called taxes.

Taxation is theft

Blogger dtungsten March 16, 2018 7:07 PM  

Talk about unicorn farts probably belongs at uniconfarts.com.

Blogger Snidely Whiplash March 16, 2018 7:24 PM  

Josh (the sexiest thing here) wrote:Taxation is theft
Everyone thinks that until the Mongols come over the hill.

Blogger SciVo March 16, 2018 8:13 PM  

Some Guy wrote:I'm trying to figure out what the real economy is and I was wondering if you had a decent idea as to it's definition. Most economists want to hide behind GDP and other aggregate numbers that don't actually mean that much. Is there a decent definition of the real economy that could lead me down the road to understanding what numbers matter and which ones don't?

The real economy is immeasurable (literally), because it would add DIY production of value, and would subtract destruction of value.

For example,if you used natural materials from your property to build a footbridge over a creek on a path you like to walk, that would add value; if you then paid someone to take it apart and rebuild it exactly the same, that would not. But the measurable transactions would show exactly the opposite.

Various GDP alternatives have been proposed; but I think if you just keep in mind when people are talking about policy that the measurement of a symbol of a thing is not the thing, and do common-sense gut checks -- pondering the extremes to see if the logic holds, looking around to see if people are really stressed when things are supposedly fine -- that will get you most of their utility.

Blogger Snidely Whiplash March 16, 2018 8:20 PM  

SciVo wrote:but I think if you just keep in mind when people are talking about policy that the measurement of a symbol of a thing is not the thing, and do common-sense gut checks -- pondering the extremes to see if the logic holds, looking around to see if people are really stressed when things are supposedly fine -- that will get you most of their utility.
I've long thought that any measurement analogous to GNP/GDP that doesn't subtract increase in indebtedness measures only churn, not productivity. Sometimes churn is productive, but usually it's just churn.

Blogger tz March 16, 2018 8:38 PM  

@37 ever heard of a diamond anvil?

Government's only legitimate purpose is to enforce common rules.

Libertarians do a sleight of hand when they describe far more despotic Dispute-Resolution-Organizations (Molyneux FDR podcast 3255 50 minutes in for about 15 minutes - cut off water! cut off electricity - it sounds like the FBIs seige of the Davidians more than any liberty).

A Hoppean "monarchy" would also have its rules.

If the rules are morally based, then importing the products of slave labor would be banned, as would such that (really) destroyed the environment. But it's all "free trade" to the amoral libertarians.

So we should fire all the $15/hr minimum wage people and replace them with a telepresence device to someone in Bangalore that makes $1/day just because we can?

Blogger Snidely Whiplash March 16, 2018 8:44 PM  

tz wrote:So we should fire all the $15/hr minimum wage people and replace them with a telepresence device to someone in Bangalore that makes $1/day just because we can?
And remember, as Josh reminds us, once we have deprived the $15/hr neighbor of work, it's immoral for us to levy a tax to support him. But it is moral to shoot him if he tries to steal bread.
Deracinated used to be an insult.

Blogger logosicon March 16, 2018 8:46 PM  

"Austro-libertarian Platonic ideal of a unicorn fart economy."

Maybe it's in the construction or the imagery in that sentence, but that made me fucking laugh. Bravo.

Blogger VD March 16, 2018 9:10 PM  

Perhaps getting a little off topic, but the current trade regime isn't free trade at all. It's just a cleverly disguised crony capitalism and loopholes for the rich. Look at the absurd protections that American sugar cane farmers enjoy for one example.

So the fuck what? Do you honestly think that is a new or original observation? Do you seriously think it has anything whatsoever to do with the discussion?

Free trade isn't bad because the USA doesn't practice it perfectly. Free trade is bad in and of itself, and the USA would be considerably worse off if it actually implemented it better.

Blogger Bobiojimbo March 16, 2018 9:15 PM  

I found Morrison's argument rather compelling, logical, and easy to follow.

I do appreciate the two posts, as they adequately argued for tariffs. Thank you, and keep up the good work!

Blogger Lazarus March 16, 2018 9:20 PM  

Economic nationalism does more for labor and the middle class than any globalist scenario can.

Trumpism does more for the proletariat than Marx ever envisioned.

Blogger Welsh Woodsman March 16, 2018 11:06 PM  

"We would not allow foreign countries to harvest our crops or take our natural resources"

What country do you live in? Its happening at an alarming rate here in the US. As I speak domestic hardwood sawmills- who refuse to export raw logs - cannot...read cannot .... get enough hardwood logs to saw due to the rapacious consumption of our raw logs by the Chinese. The chinks are now even beginning to buy US forest land. Its a huge problem with dire ramifications for the US hardwood lumber manufacturers.

Blogger Brett baker March 16, 2018 11:19 PM  

And sugar beet farmers.

Blogger Brett baker March 16, 2018 11:20 PM  

And sugar beet farmers.

Blogger Azure Amaranthine March 16, 2018 11:47 PM  

"s I speak domestic hardwood sawmills- who refuse to export raw logs - cannot...read cannot .... get enough hardwood logs to saw due to the rapacious consumption of our raw logs by the Chinese. The chinks are now even beginning to buy US forest land."

Something which also should not be possible, but it's happening because they're selling it back to us on the cheap after working it in sweatshops or the equivalent.

Particularly in this sort of circumstance, tariffs are love, tariffs are life... Chinese buying up our resource-producing land is only a symptom of the disease.

Blogger Noah B The Savage Gardener March 16, 2018 11:49 PM  

@49 I do think it's relevant that hacks like Benji are defending trade regimes that give big businesses a competitive advantage over smaller ones (due to the fact that big business can more readily navigate the legal complexities resulting from treaties like NAFTA) because this highlights their intrinsic dishonesty. Truly free trade would be immediately and obviously disastrous, which is why none of these self-styled free market economists are advocating unlimited immigration from Africa.

"Free trade advocates" know perfectly well that free trade doesn't work, which is why they don't actually advocate it. But they are willing to support limited versions of free trade that give massive short term benefits exclusively to big businesses.

Blogger Welsh Woodsman March 17, 2018 12:14 AM  

"...because they're selling it back to us on the cheap after working it in sweatshops or the equivalent."

Some - but much less than times past. The largest percentage of what their wood manufactured products are now being consumed domestically.

Blogger Dirk Manly March 17, 2018 12:47 AM  

@52

That's another thing the Russians are doing right.. Russia prohibits all foreign companies to perform any sort of raw material extraction or production -- specifically to prevent exports of raw materials without approval from the Russian government.

Blogger bob kek mando - ( I love the smell of Autism on the internet. It smells like ... victoREEEEEEEEE ) March 17, 2018 1:48 AM  

VD
not the Austro-libertarian Platonic ideal of a unicorn fart economy.



oh, that's nice. i like that.

a Unicorn Fart currency for a Unicorn Fart economy that uses a Unicorn Fart trading system to benefit the Unicorn Fart Banking class.

good thing everybody accepts Unicorn Farts as "Legal Tender".

Blogger David Herr March 17, 2018 6:00 AM  

A fact that many overlook when considering the tariff issue is the tax imbalance between imports and exports. The holy grail of taxation is to tax everything on an equal basis. The intersection of the US income tax system, our international competitors' income & VAT tax systems, imports and exports produces a perverse result: imports to the US are often, in large part, free of income tax, whereas exports from the US are taxed twice, once by the US, and then again by the importing country. And this is before any product and/or country specific tariffs on either side of the equation are considered. For example, when Daimler Benz exports a Mercedes to the US, it does not even include the moneys received in its taxable income, since the income derived outside Germany, and it receives a rebate of all VAT taxes paid on the production of the exported car. The US distributor deducts the price it paid for the car against the money it receives from the dealer it sells the car to, as cost of goods sold. Hence, the Mercedes imported from Germany is in large part free of income taxes from any country. If the Ford sells an F-150 in Germany (I know, I know -- NOT happening!), it pays US income tax on its profit, and in Germany there will be income and VAT taxes galore. The F-150 is effectively taxed twice.
The solution to this imbalance is simple (although not easy to implement, given that a lot of apple carts get tipped over): allow US exporters to EXCLUDE revenues from sales abroad, but, crucially, DISALLOW DEDUCTIONS FOR IMPORTS (this provision may have to be phased in over 4 years). In other words, true territorial taxation - exports not included, imports not deducted. With some other reforms, this effectively is a tariff on imports equal to the business income tax rate. But all it really does is establish equality with other countries, who treat exports and imports similarly under their income and VAT tax regimes. Addressing this imbalance will go a long way to getting US trade deficits down to more manageable numbers.

Blogger Avalanche March 17, 2018 8:39 AM  

@60 "If the Ford sells an F-150 in Germany (I know, I know -- NOT happening!), it pays US income tax on its profit, and in Germany there will be income and VAT taxes galore. The F-150 is effectively taxed twice."

You left out a third tax we manufacturers pay, that most people are seemingly unaware of. At the end of each year the +@#%^&*) govt TAXES us on the value of the raw materials/parts ( and finished products) we have on hand -- then they tax us AGAIN the next year when we sell the product we made WITH those already taxed parts.

(And just a whine: damned state of Georgia actually taxes me/us on the MONEY IN THE BANK account(s) at the end of each year! "Just a wee bit of skim, dearie, you'll hardly notice it's gone!" It's infuriating!)

Blogger Pale Male March 17, 2018 9:46 AM  

Sounds like Georgia is a good state to be from.

FAR from.

Maybe Texas is more business-friendly?

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