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Tuesday, October 12, 2004 - 7:01pmSanction this postReply
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(Edited by Irfan Khawaja on 10/19, 4:03pm)


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Post 1

Wednesday, October 13, 2004 - 4:42amSanction this postReply
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This is a wonderful summary. I have always tried to point out the disconnect between the left's supposed championing of the downtrodden of the world and their protectionist economic policies. Unfortunately, protectionist arguments "sell well" to people who don't care to spend more than a couple of minutes in contemplation of a problem.

Post 2

Wednesday, October 13, 2004 - 5:55amSanction this postReply
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Protectionist policies do indeed sell well to unions as well as agricultural and manufacturing interests. Votes count more than ethics. And in a time when ethics and *rights* are bought and sold by politicians, it is hard to counter protectionism with free trade. It is very difficult to sift through and show the extent of harm, because the variables (govt intervention at different stages of the game) are many and complex.

John

Post 3

Wednesday, October 13, 2004 - 8:26amSanction this postReply
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John, it's true that it's hard to sort out the effects of protectionist tariffs. It's much like inflationary spending, where the short-term benefits are politically advantageous, but the long-term consequences are real and suffocating.

I live around a dying steel town whose leaders would have someone from the outside come in and save them, rather than make it easier for residents to try to save themselves. Bush's steel tariffs were the "savior" that they were looking for. The tariffs kinda, sorta, helped out the town. At least, that's what Bush's campaign fliers imply.

Meanwhile, a hundred miles away, my brother works in a steel fabrication plant, where the rising cost of steel is felt hard. It's still rising (there's a strong international demand now), but the fact remains that my brother's job has been made all the more difficult because of folks who'd rather fight foreign producers than be productive themselves!

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Wednesday, October 13, 2004 - 3:59pmSanction this postReply
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I agree that protectionism is immoral and ultimately bad for the economy, but it's easy to understand where support and sympathy for such policies come from.  Many if not most blue collar workers are hard working people who live within their means and simply just want to earn an honest living.  They take great pride in their work and their ability to fend for themselves.  I know a few such people personally. If I ran a mill of some sort, I know I would have a hard time laying off loyal employeess who had stayed with my firm for many years and don't have many other marketable skills.  Arguments about economic theory typically fall on deaf ears to these people.


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Thursday, October 14, 2004 - 8:27amSanction this postReply
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Whoops, I should have been more specific. My brother works on the shop floor, not in the office! And it's incredible what he can build with his hands. He's even designed and built his own home. He never ceases to amaze me.

The best businessmen that ever lived all spent some time doing blue-collar work. That's the sort of experience that you can't pick up in business school.

It's true that most workers don't have the time to see how protectionism takes their incentive to work out of their hands. If the favors fall their way, they don't see a reason to prepare for the coming burst in the bubble. And if they lose out, then they still manage to survive, but they might end up supporting protectionism that favors them, either at the ballot box or through their company's or union's politicking.

Protectionism distorts the economic value of certain types of work. But if workers really do value their productive skills, couldn't they be persuaded that the ideal political and economic system would accurately reflect the real value of their work? I wish I could put it in simpler terms than that.

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Thursday, October 14, 2004 - 5:22pmSanction this postReply
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(Edited by Irfan Khawaja on 10/19, 4:03pm)


Post 7

Saturday, December 3, 2016 - 2:12pmSanction this postReply
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It is worthwhile to read this article given that tariffs appear to be on the Trump agenda.  I had thought that tariffs were a legitimate tool to use against countries that encourage the violation of patents  and copyrights, but a quick read of the article reminds me that the proper way to deal with counterfit goods is to seize them and go after the thieves.



Post 8

Sunday, December 4, 2016 - 3:00amSanction this postReply
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I have seen arguments against trade with China because of its record of human rights violations, i.e. it technically has a nation of slaves at its disposal and consequently cannot possibly participate on a level playing field with the United States.  Counter-arguments contend that not encouraging China toward a global market economy, and then using trade agreements as leverage to encourage more humane actions by its government, simply encourages the Chinese rulers to dig their heels into the ground and become more totalitarian and hostile and a global military threat.  There is also the factor of China agreeing to purchase United States bonds in exchange for trade with the United States (as I understand the current situation).  I concede my total lack of familiarity with geopolitics, but the author of this article addresses none of these relevant factors.  I would like to see these factors addressed.

 

(Edited by Luke Setzer on 12/04, 3:42am)



Post 9

Sunday, December 4, 2016 - 3:50amSanction this postReply
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I think that describing China as having a nation of slaves who cannot compete is off-base. Chinese people in general are very entrepreneurial and value education a lot. Thomas Sowell wrote quite a bit about this, probably in Race and Culture. For instance, there are a lot of very-educated and entrepreneurial Chinese in Silicon Valley.



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Post 10

Sunday, December 4, 2016 - 4:37amSanction this postReply
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MJ observed:

For instance, there are a lot of very-educated and entrepreneurial Chinese in Silicon Valley.

I wonder why they did not stay in China.

 

Would it be fair to say that if China had a free press and other classical liberal institutions allowing more general participation in government, that would tend to raise wages and make make the playing field with the rest of the world more fair and balanced?

 

I am seriously looking for answers and not trying to be difficult here.

 

I remember quickly skimming Sowell's Race and Culture many years ago, but as I recall, he mainly focused on the cultural values the immigrants of various races bring to the United States and consequently bequeath to their descendants rather than on how they practice them in their nations of origin.  Those people had motives to move here.  If they had no advantage to moving here, they would have stayed put.



Post 11

Sunday, December 4, 2016 - 7:35amSanction this postReply
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I think we are being misdirected by the argument that such and such a country (Cuba... China, etc.) violates individual rights to such a degree, or in such a way, that we should not trade with them - that there should be a legal sanction against their slave labor, for example.  But this is our government telling us that we cannot trade with some other person or organization because of their government.  Our rights are being violated.  It is our desire to purchase what they are selling, or sell to someone over there that is being denied.   Our government should not be trying to influence the behavior of other governments except to defend our rights - not the rights of their citizens.

 

We, as individuals, don't have a right to buy stolen goods, like a fake Apple iPhone made in China, and our government can seize those phones and go after the specific parties to such a deal, but that's so regardless of where the phones are made (eg., China, Mexico, or Texas).  What makes this prohibition moral is that it is a protection of Apple's rights (an American company).

 

It should only be permissible for our government to block trade with an entire nation if we have declared war on that nation. 

 

Anyway, that's how I parse it.



Post 12

Monday, February 20 - 9:23amSanction this postReply
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Here is another thought on Tariffs.  No matter how a person parses the changes in supply and demand and changes in price that are brought about by a tariff, there is no way to avoid this central feature of a tariff: A tariff takes an amount of money out of the private sector and puts it into the government's coffers.  A tariff war means that the people in both countries are in a shrinking economy where more and more of their nation's capital is shifted to the government. 



Post 13

Monday, February 20 - 9:32amSanction this postReply
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This is an excellent article.  What I'm noting below is only a few minor quibbles and random thoughts.

 

In the article, Ed writes:

 

If a foreign country imposes a tariff on our products, our best response is not to retaliate at all. In fact, we should drop all tariffs and increase imports of the products of the offending nation. Foreigners in that country would then have a lot of paper dollars that they could use to purchase our products. We would have real foreign-made consumer goods in our possession, but would only be giving up paper currency.

 

I'm a bit uncomfortable with a couple of statements.  Mind you, these are just quibbles.  Saying that 'we' should increase imports of the products of a nation that has established tariffs, is a bit confusing because 'we' could mean that individuals should buy more... but shouldn't individuals just follow their economic self-interest?  Or does 'we' somehow refer to the government or nation as a whole, which I don't understand. 

 

Also, Ed mentions that the result of us buying a lot from them would mean they would have lots of our currency and Ed says, that would only be giving up paper currency.  But, any currency, absent  hyper-inflation, is a very valuable store of value and worth what it will buy.  (These are just quibbles because I completely agree with Ed's conclusions)

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Ed mentions that tariffs cause a misallocation of resources.  That's an important thought, and one you don't hear elsewhere.  Economics is very much about the use of changes in supply and demand and price as information - information that is used to alter decisions.  A tariff is like a trick on the economy where there is an increase in price, but it was not caused by any change in supply and demand.  Like politics, where the two most basic factors are choice and force, the same two basic factors exist at the root of economics.  When government intrudes with taxes or regulations they have used force to block choice and the allocation of resources isn't what it would otherwise have been. 



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