Posted on 03/10/2017 8:57:25 PM PST by TBP
Being a world-class economist, my colleague Walter Williams spends much of his time asking probing questions. Here’s one that he posed to me recently by e-mail:
Don:
I don’t think there are tariffs on coffee and I know of no organization calling for coffee tariffs. I wonder why.
Great, probing question.
The answer is that there are very few coffee growers in the United States. In the U.S. states, coffee is grown commercially only in Hawaii. Coffee is also grown commercially also in Puerto Rico. The result of this small number of American coffee growers is that these growers are too small in number to form a powerful-enough interest group. But, of course, coffee is consumed massively throughout the U.S. (I’m drinking some right now, by the way. It’s from Guatemala. Yum!) The pain to consumers caused by restrictions on coffee imports would be too great relative to the gains to American coffee growers; politically it would be a bad move for most members of Congress to support protective tariffs on coffee.
Yet if Congress and U.S. presidential administrations really were, as their members often pretende, intent on apolitically using U.S. trade policy to “level the playing field” or to otherwise correct for distortions in global markets induced by other governments’ destructive policies, we likely should see U.S. tariffs on coffee imports.
I haven’t researched the matter, but I’d be shocked to discover that the governments of coffee-growing countries such as Colombia, Costa Rica, Guatemala, Ethiopia, Brazil, and Jamaica engage in none of the policies that are typically alleged to create “uneven playing fields” in global markets. If Uncle Sam really were so self-sacrificingly and apolitically intent on using tariffs and other trade restrictions to improve global markets, why does Uncle Sam not use such tariffs and restrictions in the coffee market?
The bottom line, of course, is that every trade restriction is simultaneously justified publicly as a righteous intervention against some foreign evil-doing while, in fact, it is a monopoly-power privilege granted by an unethical government to a greedy and powerful domestic interest group.
They don’t unequally tax our coffee exports because we have none.
Tariffs on food products are only good a idea if a nation can’t produce enough food for itself.
One of the big things Russia did after the Obama imposed sanctions on Russia in 2014 was to slap tariffs on food products to encourage native food production. Free trade had come close to destroying Russians ability to produce their own food thus opening the nation up to the possibility of being starved to death by an outside power. The net Result is Russia had a bigger crop of wheat last year than we did. First time since the early 1900s.
A lot of people view tariffs from a efficiency issue(Free trade is more efficient) or from a wealth issue and wages issue(Tariffs increase over all wealth in the long term by encouraging local production). I primary view tariffs from a national security stand point. If we don’t have the factories, mines, steal production, and transport to produce manufacturing goods locally, then we can be easily beaten in a war by a nation that does. Getting rid of the trade deficient is a matter of national security.
If you’ve ever studied Japan during WW2 you’d have learned that Japan had a much better Navy than we did. They had torpedoes with double the range of ours and our 9 times out of 10 our torps didn’t even explode on contact. Their pilots and crews where superbly trained and there weapon systems in every area besides radar. They had super battleships that could sank our entire fleet without taking damage. And yet they where always destined to lose because they didn’t have industrial output to fight a long war. The US lost navel battle after battle, but we recovered quickly due to our industrial base. All it took was Japan losing one battle at midway and their entire navy was crippled for the rest of the war. That’s the power of massive manufacturing.
Today we sit on the opposite side with China, a nation that can product 9 times more steal than we can. While they’re Militarily weaker than us, all it takes is them getting lucky one time and we’d never recover in a war with them. We must rebuild our manufacturing base because so we don’t we’ll end up as the late, great United States of America.
Because taxing us for drinking coffee would create a revolt.
Remember the English Tea tax?
Same can be said about tea, only one farm in the US AFAIK.
Buy fair-trade coffee, not Juan Valdez.
Every once in awhile i will drink coffee. But by and large, my generation prefers its caffeine with bubbles.
CC
I don’t know that coffee necessarily grows well in the United States. I think that tarrifs should probably be used in industries where we are competitive, not where the industry is nonexistent. Otherwise, we are unnecessarily raising the prices for consumers.
I’ve opened up to the idea of selective tarrifs in response to countries who engage in tarrifs as well.
“a revolt”
LOL.....They better take my guns away before they even try to deprive me of my coffee. There would be war.
they also tried to grow heroin poppies in Kansas back in the 1880s. Too labor intensive.
But all fifty-seven states drink coffee. Including Hawaii.
Therefore, taxing coffee drinkers to keep a few Hawaiians from having to find a more useful occupation would be a dumb political move.
The playing field notwithstanding, I want my cheap coffee!
What about other goods? Do you want them to be cheap too?
I had heard that in Ethiopia it is a CAPITAL OFFENSE to smuggle out live seeds.
Generally speaking, I prefer cheap stuff to expensive stuff, if the quality is the same.
Domestic producers of expensive stuff should either have to get the cost down or find something else to do. It should not be an option to go to Congress for legislative relief.
That's how capitalism works. That's why capitalism works. Domestically or internationally.
Tariffs make goods more expensive.
Tariffs used to be how the USG was financed. But not anymore.
Tariffs are taxes, and we now have plenty of those.
Taxes *uck *alls.
You can buy an arabica coffee plant in a one quart pot on the internet for less than $20
Manufacturing is also strategic because it has a great multiplier effect on the economy. Building cars in the US (even by a Toyota or Honda) does a lot to boost the broader economy by creating jobs in tools, raw materials, office equipment, construction, and parts.
On the other side, there are very good reasons to not tariff goods where the cost differential (vs. imports) is too great.
Tons of retail jobs would be lost if we tariffed clothing from Malaysia and China. Companies like Nike, Old Navy, and the Gap would go out of business. Being able to source clothes at 10% of the retail price allows these retailers to staff their stores.
Back to coffee... imagine all those Starbucks baristas who would be out of work if coffee prices were raised.
(Then again, most baristas are Lefties, so maybe a high coffee tariff is not such a bad idea :- ) /sarc
US coffee growers lack the political clout of sugar beet farmers who have for decades succeeded in pushing up the price of sugar in the US through import quotas and tariffs. US sugar prices are so high that in the 1980s soft drink manufacturers turned from using sugar to much cheaper high fructose corn syrup in their US marketed products. Ironically the corn farmers by pushing up the price of corn through the great ethanol boondoggle are also raising the price of high fructose corn syrup. US taxpayers are thus being doubly screwed when they put sugar in their morning coffee.
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