Posted on 03/31/2005 10:08:53 AM PST by Right Wing It
I was recently discussing economics with a professor of mine when the subject of the WTO (World Trade Organization) came up, and to my surprise, he seemed to be supporting it. To those of you who are unaware as to the purpose of the WTO, the WTO makes it a goal to promote free trade do away with all tariffs between countries. Back to the point, he was discussing how tariffs are bad and do not allow the world market to adjust itself. I personally think he was only saying this simply as a result of a screwy lesson plan, but his presentation was quite believable in regards to making me believe that the lesson plan reflected his own personal views. If you are also unaware of the purpose of tariffs, allow me to explain.
Tariffs are a tax on imports in a country. Lets take for example two car companies, Ford (American owned and operated) and Toyota (Japanese owned and operated). Ford, being in a country in which labor is more expensive, as well as the resources needed for such a product, may take $15,000 to make. Now Toyota, located in Japan, is a product that is much easier for Japanese auto plants to produce. The labor in their country is cheaper and the resources are less expensive as well. In Japan, a Toyota car may cost $10,000 to make. Now lets say that Toyota wants to sell its product in America. Naturally, the product would sell better than the ford, and might even put Ford out of business, as their car costs much more for a product no better than Toyota. This is where tariffs come in. The United States puts tariffs on these Japanese made cars to increase the sell price in America. Instead of Toyota putting its car on the market for $15,000 and Ford for $25,000, the tariffs placed on the foreign made car result in an increased price to compensate for the tariff. In result, you have a Toyota car in America costing $25,000 and a Ford costing $25,000 as well.
Now the statement that was made by my professor was this “Tariffs turn out to be bad for everyone because it increases the cost of the product for the consumer, and it also outs the foreign country in to more debt, especially if it is already a poverty stricken third world country.” First off, I found his statement humorous, simply because I can’t recall any significant imports the U.S. makes from any African third world countries. But to continue, I thought I would for once challenge his liberal authority and trap him in his words. The conversation went a little something like this
Me: “you say that tariffs are bad, am I correct”
Him: “to an extent, yes, they are bad for the consumer… (Repeats everything he has formerly said)
Me: “Now please tell me, where do these tariffs go?” (I knew the answer, I just wanted to be the one asking questions)
Him: “well, they go to the government”
Me: “Really (inner sarcasm), okay, tell me, what does the government do with the money received from tariffs?”
Him: “Well, I would suppose it becomes divided up among branches in the government, and for governmental services”
I knew right here that I had backed him into a corner that he couldn’t get himself out of, I continued on.
Me: “governmental services, you mean like services for the people that make up that country”
Him: “Well yeah, like repairing infrastructure and such.”
Me: “wow, so you’re saying that these tariffs actually go to the government to eventually help the consumer”
Him: “Well, yeah, but… there are other ways the government makes money to provide services.”
Me: “really, from where?”
Him: “Well, Taxes”
Me: “That’s right taxes. And why do you think these taxes low? Isn’t it the tariffs placed upon the foreign made products imported into our country.”
Him: “well, partially”
Me “ Okay so you acknowledge that our taxes would be higher if we didn’t have tariffs on foreign imports”
Him: “Yes”
Me: “So maybe tariffs do end up helping the consumer, it helps the government pay for the services needed to keep our lives orderly and comfortable, at the same time keeping taxes lower.”
This was my favorite part of the entire conversation, his response to what I just said made me laugh out loud. Get this…
Him: “I think its all just personal opinion”
HA! Personal opinion? I guess liberals simply can’t admit when they have lost and argument to someone. But I didn’t want to stop there, I had more to say…
Me: “That’s just one reason why tariffs would be of use to a nation. I have another example as well if you would allow me to explain.”
Him: “(starting to get uncomfortable) Um, sure, go ahead.”
Me: “ Do you agree that a major goal of a country is to be able to support and sustain itself,?”
Him: “Well, that’s near impossible, but I’m sure tat a country wants to become self sustained over time.”
Me: “okay, now lets say that we placed no tariffs on foreign imports, wouldn’t the American companies trying to compete with the cheaper product start to lose business and eventually go bankrupt and be taken off the market.”
Him: “Well, if they weren’t able to lower their process I guess they would, but it would still be cheaper for the consumer.”
Me: “Now who works for these Ford car dealerships in America, Americans or foreigners.”
Him: “well, mostly Americans, but that doesn’t mean that there aren’t any foreigners working there as well.”
Me: “I understand that, but the majority of these workers are Americans, correct.”
Him: “correct”
Me: ”now what happens when Toyota puts Ford out of the market, who is going to be hurt, Japan who is producing all of Americas cars, or America who just went bankrupt and puts millions of employees out of business. That’s right its America that’s hurt. Now lets say this starts happening to many other companies in the united states simply because the government chooses not to put tariffs on imports. Our country would enter a drastic economic downfall and inflation would rise quicker than any other depression in the world. Bu that wouldn’t be the end, all these foreign countries would end up controlling our economy and the market that is supposed to be run by us. Probably resulting in the total and complete demise of the United States, which is exactly what these countries would love to see. So I guess that by placing tariffs on foreign imports we’re protecting our economy as well as protecting the average American worker’s job by insuring that there will always be a government to provide for him or her, to a certain extent.”
Now at the time, we also had another teacher in the class as well who was helping our teacher present his presentation, her response went a little something like this…
Her: “That’s amazing, I have never thought of it that way, You know (insert teachers name here) you have one of the brightest classes that I have ever taught, you must do a great job at educating them. Him: “well, you know…”
Well, I found that conversation interesting enough to place on my site, My over all point is that tariffs are very important in protecting our American economy, and the WTO is nothing more than a union of third world countries who wish for the countries with GDP’s higher than theirs to collapse under the stress under free trade.
Im sure everyone here knows what a tariff is and the purpose of the WTO, but this article was not written to an audience that is clued in on every economic aspect of life. you can find the original article on a seperate blog.
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