Karl Denninger at Market-Ticker has a proposal for an adjustable tariff depending on the amount of labor or regulatory arbitrage a company is seeking to benefit from:
The media has...pointed out that the cost of assembling air conditioners -- that is, manufacturing labor -- in Mexico is about $3/hour. Incidentally it's probably not much more for assembling cars.There are two options folks:
1. Make it uneconomic for companies to take such an action by causing the cost of labor there to reach effective parity with the cost here, in which case the offshoring of labor will disappear
OR
2. Accept a $3/hour wage here in America as the labor rate to assemble air conditioners in Indiana.
The logic and math on this is pretty simple; if a company can have labor performed for $3/hour they will not pay $20/hour. Nobody in their right mind will. The problem is that you can always find a third-world ****hole where the rate of labor is $3/hour or less.
As such you either drag your wage rate down to that price or you make it uneconomic for companies to do this sort of thing.
The same is true for environmental laws. It costs money to not dump your toxic waste into the water, air or on the land. If you can place your factory in a location where such dumping is not illegal and does not lead you to go to prison then you will do so and thus the "cost" of producing that good or service appears to fall.
It did not, however, actually go down. Instead the producer shifted the cost onto the people who live there in that environment without their consent.
The answer to both problems is, as I pointed out in Leverage, to impose wage and environmental parity tariffs in an across-the-board fashion. If the cost of labor in the United States is $20/hour and in Mexico it is $3/hour for comparable work then determine how many man-hours go into assembling an air conditioner, multiply by $17 and that's the tariff on said air conditioner.
If companies are in fact moving factories because it's "better" for their global supply chain or somesuch (which is the usual excuse) then this will not change their decision. They will still put the factory there and pay the tariff, since it will not disadvantage them.
However, if the real reason is that they're exploiting the $3/hour wage then the factory will either not leave at all or will come back to the United States.
Do the same for environmental parity -- if the ability to pollute in location "A" .vs. not being able to pollute in the United States provides a "savings" of $100 million a year and the factory produces 1 million things in a year then the per-item tariff is $100.
If the Donor Class agenda of integrating the US labor market into the Third World labor market in order to reduce labor cost on items sold into the US market continues, then ultimately US working class wages will clear at the level prevailing in the Third World.
It’s disgusting, command economy, central planning to have someone like Denninger sit in his ivory tower and slap taxes on products as he sees fit to achieve phony, made-up goals like “parity” or “equality.”
This is called having know-nothing know-it-alls attempt to control everything everybody does to achieve their megalomaniacal fantasies about what an economy should be. This is what Obama does with his EPA and other regulatory agencies.
Not only is making such rules evil to begin with, but EVEN IF they made some kind of economic sense at the time they were written, the economy is a shifting, dynamic enterprise. The numbers that seem right on one day will always shift into a completely different calculation on the next day. Which is why trying to put static controls on a dynamic economy results in a collapsed economy where you can’t even buy toilet paper.
Send this statist, commie BS back to DU or a Bernie Sanders forums.