Posted on 07/19/2019 12:48:45 PM PDT by SeekAndFind
Among the most politically potent arguments for President Trump’s punitive tariffs on your, my and other Americans’ purchases of imports from China is the claim that these tariffs are a tool for reducing Chinese theft of Americans’ intellectual property (IP).
While IP theft in China does occur, as my Mercatus Center colleague Daniel Griswold and I argue in a recent paper, this theft provides far less justification for Trump’s tariffs than is commonly believed.
First, the extent of such theft is overblown. Much of this “theft” is in fact in-kind taxation. Beijing requires that certain foreign companies seeking to do business in China share their intellectual property with the Chinese. Companies that attach a high value to the opportunity to do business in that large country often agree to these terms. But IP belonging to companies that are willing to forego the opportunity to operate in China is not stolen or otherwise acquired by the Chinese.
This in-kind tax is unfortunate. But IP acquired through it no more counts as stolen property than does cash paid in taxes to Beijing (or, for that matter, to Uncle Sam) count as stolen property.
Like all taxes, Beijing’s requirement of IP sharing discourages foreign companies from doing business in China. And so by making China a less-attractive place to invest, this in-kind tax reduces China’s rate of capital accumulation. In turn, worker productivity there grows more slowly, as does the Chinese economy as a whole.
In short, the chief victims of this tax are the people of China.
Second, Uncle Sam’s taxes imposed on Americans who buy imports from China is a poor remedy for China’s IP violations. The direct harm that these tariffs inflict on us Americans might be a price worth paying if they offered the best hope of persuading the Chinese to treat our IP with greater respect. But they don’t.
The World Trade Organization (WTO) has in place a mechanism to settle IP disputes among its member nations, which include the U.S. and China. And China’s record at complying with WTO rulings is not bad. If the Trump administration were truly concerned about reducing Chinese violations of Americans’ IP rights, its first step — before inflicting painful tariffs on Americans — would be to bring complaints of such violations to the WTO. Yet so far it has brought only one such complaint.
This fact suggests that the administration cares less about whatever actual IP theft might be occurring and more about being able to fling charges of IP theft as a convenient means of stirring up public support for protective tariffs.
Further evidence that the administration really isn’t deeply worried about China’s alleged IP theft is its indifference to Uncle Sam’s high and growing fiscal indebtedness.
If we rank the looming threats to our future economic well-being, IP theft ranks much lower than does our children’s and grandchildren’s burden of paying off Uncle Sam’s gargantuan debt — debt in the form of outstanding bonds and of unfunded liabilities, such as Social Security obligations.
But judging from their (in)actions, Trump and Congress couldn’t care less about the heavy drag on the American economy created by Uncle Sam’s continuing fiscal profligacy.
Proclamations of concern for Americans’ economic future coming from politicians who ignore an approaching fiscal reckoning — a reckoning made more difficult with each day that its approach continues to be ignored — are not to be taken seriously.
Donald Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.
This guy and his CATO drone buddy Griswold can go screw their globalist selves.
The idea is to drive China out of our trade space completely. If they don’t like that, move to Beijing.
The Chinese economy was a third world irrelevancy until the Bush family sold us to them in the early ‘90s. That was supposedly because they would become “more like us” and “less of a threat”. They became neither.
China has 1.3 billion people. They can trade with each other and the other East Asian countries and still have a great standard of living. They don’t need to be our factory.
Shit for brains liberal “professor” arguing against tariffs.
I wonder how much the Chinese government funneled to this retard in exchange for this nonsensical BS.
The poor, little oppressed Chinese are simply misunderstood!
Well China, toe the line and we’ll see. Byotches.
BULL SPIT!!
They are stealing your tech, but its not that bad really....
BS... Absolute BS...
That, there, is a bold-faced lie!
Not a very impressive article, bias of writer clearly demonstrated. POTUS wouldn’t be complaining so loudly about the Fed if he were not motivated by a desire to decrease the debt.
Pelosi and Schumer forced President Trump to sign for spending well above his desired budget by holding the military hostage.
China is not just taxing companies who do business in China when ripping off trade secrets. Actually China is setting up to take over each of those business’s niches by setting up shop themselves and using shoddier materials so they can undercut on pricing.
The writer ignores the espionage aspect whereby China positions themselves to hold America hostage.
“This in-kind tax is unfortunate.”
And so are Trump’s tariffs.
You would say that, BOUDREAUX, if it was your sweat they were stealing..................
“The direct harm that these tariffs inflict on us Americans”
Income tax rates could be reduced to compensate for the tariffs.
Would any Democrat care to talk about the “harm”?
I used to work for a guy back in the 90’s who had invested thousands and thousands of dollars into developing what then was a new idea of ‘wireless stereo speakers’. This was before Bluetooth and wifi came along.
I helped in the technical aspects, and built some of his prototypes.
He contracted with a Chinese company to build the things and they basically stole his designs.................
The THEFT is NOT "overblown.
We are under no obligation to let the IP theft continue.
The tariffs are short term and well worth the price.
Trump is simply trying to deal with the concerns raised by American intellectual property owners.
Communist “requests” for “sharing” tend not to be well-received by hard-working Americans.
The Chinese do not believe in property rights.
They steal equipment then reverse engineer it and stamp their “company” name on it. The companies are all owned/run by the communist government.
They are thieves and should be treated as such.
“First, the extent of such theft is overblown.”
In other words, Trump’s request to stop the Chinese IP “tax” is a modest one.
Hmmmm ... It’s NOT “THEFT”, it’s “IN-KIND TAXATION”. Let’s not give John Roberts any ideas. ;-)
1) The IP theft allows China to do more than just make copycat goods to sell to their inner market. It also allows them to make copycat goods to sell to the rest of the world. So China's IP theft takes away much of our export market, not just the exports to China.
2) China not only does IP theft by strong-arming American co's to turn over blueprints to sell within China. They also are the world's worst perpetrator of cybertheft. They still our intellectual property digitally.
3) China also steals a lot of IP through classic espionage efforts in a more James Bond style. They have Chinese workers work for American engineering firms and research universities, sending the stuff we make back home.
4) China also requires their tech companies to report anything they "discover" to their Communist Party owners. One of the reasons China heavily subsidizes their "national champion" (hint, not Clemson or Alabama football teams) companies is so they can compete against other companies and be in place to get our data. This is why Trump is banning Huawei.
5) Never let anyone tell you Asians are smarter than Americans. Maybe the few who come here, we probably see their brightest. But think about it. China has probably 4 or 5 times the population of the U.S., yet with all that brain power they can't even invent their own stuff? I mean, really?
It’s the way they have done business for a thousand years.................
His economic argument is valid, however he’s turning a blind eye to the actual theft that is occuring (routers that phone home all your data to China, for example).
This feels like a shill piece.
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