...tariffs make society overall worse off...
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Someone help me out with this. It’s been a long time since I saw in economics classes.
Philosophically speaking, if you are a nation with all (or almost all) natural resources, as well as an adequate labor force, tariffs are not bad for society. The way I see it, even though prices may inflate, comparatively, due to the reducing in cheap consumer goods, on the opposite side of the coin those tarifs insulate your mean standard of living from the drain that occurs when all your labor and production is exported, because it forces your economy to internally satisfy it’s own demand with it’s own supply.
Is there a practical reason why this perspective is incorrect?
I’d like to know this as well.
Google “comparative advantage and economics”. Then you will see how free trade helps us. Then you will see how the USA has no comparative advantage in many products and how it would be foolish to manufacture these things in the USA.
Philosophically speaking, if you are a nation with all (or almost all) natural resources, as well as an adequate labor force, tariffs are not bad for society.
“Having” resources is not the issue. Being able to acquire and use them with less expenditure of time and toil is. Would residents of California or Texas, resource-rich states, have a higher standard of living if they erected substantial tariffs against the residents of the other 49 states?
The way I see it, even though prices may inflate, comparatively, due to the reducing in cheap consumer goods. On the opposite side of the coin those tarifs insulate your mean standard of living...
One’s standard of living is what one can and does buy with the resources, substantially time and the specific skills one has. Allowing imports to come in tariff-free (the contrary to your “tariffs”) simply means more producers, domestic and foreign, to compete for consumers’ money. That must be good for consumers.
It is true that domestic firms must compete harder for consumers’ business (as, arguably, they should). It is also true that some domestic workers will lose jobs or have their pay cut to try to keep these firms in business. But most Americans don’t work in firms like this. As of May, 2019, manufacturing employment was 12,839,000. Total employment was 155,539,000. So most workers would be in the position of paying higher prices to allow a much smaller number of workers to be able to compete less. It is unlikely this would be good for the American standard of living,
...from the drain that occurs when all your labor and production is exported.
On labor, see above. Most people are not doing work where jobs are being exported, and never have. On production, without question manufacturing employment has declined substantially since 1980. But manufacturing as a share of GDP has not been affected nearly as much.. How do we reconcile these things? Facing more competition, not all of it foreign, American manufacturers have been continually forced to figure out ways to get more, with fewer workers. In this they are like many other economic activities (farming, e.g.)
...forces your economy to internally satisfy it’s own demand with it’s own supply.
What consumers “demand” depends on price charged, and features of the product offered, relative to the alternatives. It is not a fixed number, unless the government wants to decree a fixed standard of living for all. Other countries tried this; it didn’t work out so well.
To protect particular jobs at any moment in time by limiting competition to a one’s own specific area of the map is to damage consumers by limiting how many sellers can compete for their services. It is not any better for a nation’s residents than a state’s, and indeed is no more reasonable economically than deciding your family’s standard of living will go up if everything they consume will from now on be produced by members of the family.
Economies are dynamic things. This is how we live better, by competition working to better satisfy consumers in ways profit-seeking sellers have incentives to pursue.
Finally note that the argument here does not apply to the national-security argument for not depending on foreigners to provide our military and people with critical goods.