We need protective tarriffs. And we will probably have to abandon the WTO to put them in place.
We need to raise import tarriffs preferably on imports that are high tech, high manufacturing knowledge, high value, or strategic for defense. And we need to raise them and keep them up, until unemployment goes down.
There is in my opinion a fundamental flaw in our capital markets. The value of a firm to the country as a whole is probably 8 times greater than the value of a firm to it’s owner.
This is because a firm’s owner only values profits, while the country as a whole values profits, all wages both direct and indirect, and all taxes. For a typical firm direct wages probably accounts for 70% of product costs, and indirect wages probably accounts for 70% of raw materials.
The capital markets work okay as long we trade only with like minded companies that have similar wages and similar tax structures and all have free markets.
But when trading with a communist company like China, that restricts ownership and has massive amounts of cheap labor, they can buy our firms for a fraction of what they are really worth, put our people out of business, and employ their people.
It’s a massive win for them and it’s a loss for us. And we better figure out how to fight this economic war and quick. The easiest way is simply to raise tarriffs and give our economy a chance to recover. We can and should take advantage of their cheap labor, but not to the extent that it causes high unemployment here.