Posted on 03/06/2018 7:48:47 AM PST by Kaslin
From Lincoln to William McKinley to Theodore Roosevelt, and from Warren Harding through Calvin Coolidge, the Republican Party erected the most awesome manufacturing machine the world had ever seen.
And, as the party of high tariffs through those seven decades, the GOP was rewarded by becoming America's Party.
Thirteen Republican presidents served from 1860 to 1930, and only two Democrats. And Grover Cleveland and Woodrow Wilson were elected only because the Republicans had split.
Why, then, this terror of tariffs that grips the GOP?
Consider. On hearing that President Trump might impose tariffs on aluminum and steel, Sen. Lindsey Graham was beside himself: "Please reconsider," he implored the president, "you're making a huge mistake."
Twenty-four hours earlier, Graham had confidently assured us that war with a nuclear-armed North Korea is "worth it."
"All the damage that would come from a war would be worth it in terms of long-term stability and national security," said Graham.
A steel tariff terrifies Graham. A new Korean war does not?
"Trade wars are not won, only lost," warns Sen. Jeff Flake.
But this is ahistorical nonsense.
The U.S. relied on tariffs to convert from an agricultural economy in 1800 to the mightiest manufacturing power on earth by 1900.
Bismarck's Germany, born in 1871, followed the U.S. example, and swept past free trade Britain before World War I.
Does Senator Flake think Japan rose to post-war preeminence through free trade, as Tokyo kept U.S. products out, while dumping cars, radios, TVs and motorcycles here to kill the industries of the nation that was defending them. Both Nixon and Reagan had to devalue the dollar to counter the predatory trade policies of Japan.
Since Bush I, we have run $12 trillion in trade deficits, and, in the first decade in this century, we lost 55,000 factories and 6,000,000 manufacturing jobs.
Does Flake see no correlation between America's decline, China's rise, and the $4 trillion in trade surpluses Beijing has run up at the expense of his own country?
The hysteria that greeted Trump's idea of a 25 percent tariff on steel and 10 percent tariff on aluminum suggest that restoring this nation's economic independence is going to be a rocky road.
In 2017, the U.S. ran a trade deficit in goods of almost $800 billion, $375 billion of that with China, a trade surplus that easily covered Xi Jinping's entire defense budget.
If we are to turn our $800 billion trade deficit in goods into an $800 billion surplus, and stop the looting of America's industrial base and the gutting of our cities and towns, sacrifices will have to be made.
But if we are not up to it, we will lose our independence, as the countries of the EU have lost theirs.
Specifically, we need to shift taxes off goods produced in the USA, and impose taxes on goods imported into the USA.
As we import nearly $2.5 trillion in goods, a tariff on imported goods, rising gradually to 20 percent, would initially produce $500 billion in revenue.
All that tariff revenue could be used to eliminate and replace all taxes on production inside the USA.
As the price of foreign goods rose, U.S. products would replace foreign-made products. There's nothing in the world that we cannot produce here. And if it can be made in America, it should be made in America.
Consider. Assume a Lexus cost $50,000 in the U.S., and a 20 percent tariff were imposed, raising the price to $60,000.
What would the Japanese producers of Lexus do?
They could accept the loss in sales in the world's greatest market, the USA. They could cut their prices to hold their U.S. market share. Or they could shift production to the United States, building their cars here and keeping their market.
How have EU nations run up endless trade surpluses with America? By imposing a value-added tax, or VAT, on imports from the U.S., while rebating the VAT on exports to the USA. Works just like a tariff.
The principles behind a policy of economic nationalism, to turn our trade deficits, which subtract from GDP, into trade surpluses, which add to GDP, are these:
Production comes before consumption. Who consumes the apples is less important than who owns the orchard. We should depend more upon each other and less upon foreign lands.
We should tax foreign-made goods and use the revenue, dollar for dollar, to cut taxes on domestic production.
The idea is not to keep foreign goods out, but to induce foreign companies to move production here.
We have a strategic asset no one else can match. We control access to the largest richest market on earth, the USA.
And just as states charge higher tuition on out-of state students at their top universities, we should charge a price of admission for foreign producers to get into America's markets.
And -- someone get a hold of Sen. Graham -- it's called a tariff.
More Bigly Trumpian WINS.
The only thing to do is answer that question with a question, "What GOP ?"
The last time there was a glimmer of hope of actually having two parties in this country rather than two arms of one Swamp party was when Americans gave the GOP a shot due to the Contract With America masterminded by Newt Gingrich.
Democrats came up with their usual lies about Newt and the so called members of the GOP fell all over one another to shed Newt because the democrats with Clinton in the lead showed them the GOP could control and become the biggest beneficiaries from the free flowing corruption of hookers, kiddies, dope, and cash which had been controlled by democrats up to that time.
So the Republicans couldn't resist eating the forbidden fruit any more than the democrats had thus ending what had been, barely, a two party system leaving We The People with the current Globalist Uniparty running the show.
JMHo
Unfortunately for him, his credibility took a huge hit when he ran for president back in 1992.
He was running around campaigning on a promise to protect American industries ... while driving around in a Mercedes-Benz.
Free traders base their "proof" on idealized models that don't reflect reality. They go back to variations on Ricardo's concept of comparative advantage as their evidence. On paper, it makes sense, if country A is better at producing X and country B is better at producing Y, why not have such a division of labor? The problem with this simple model is that it assumes that capital of country A and B remains in its respective country so that each goes on producing what they're most efficient at. What it doesn't consider is a scenario where cheap labor or other low overhead costs leads to a large-scale flow of capital from A to B, so that B winds up producing both X and Y while A is left with a service/finance sector economy and little else.
Free trade advocates also consistently ignore any and all empirical evidence from history that contradicts their models. They claim that tariffs and trade protection lead to economic stagnation. OK, that's a valid hypothesis, so let's test it against reality: the US economy was "protectionist" for much of the 19th Century, precisely the time during which we experienced the fastest relative growth in GDP in our history, and the time where we overtook the UK and the rest of Europe as the world's manufacturing superpower. So much for tariffs and trade protection leading to stagnation.
As every other country has proven, we don’t have to look favorably on goods coming in from other countries. We have every right to support our own industries.
We sure do.
The IT side of this is often overlooked in free trade discussions. It's one thing to impose tariffs on manufactured products and raw materials, but it's damn near impossible to do anything to restrict the flow of information through electronic means.
The GOP is afraid of everything.
Government shutdowns
Not being liked by the media
Deportations
Obamacare repeal
Won’t prosecute anyone in the Obama admin because they’re afraid it will look political
Afraid Democrats will call them mean
etc.
etc.
etc.
All they do is run scared
"Comparative advantage" today is being driven by the fact that developing countries don't incur the overhead production costs that developed countries do.
The most obvious examples of this are labor forces that operate in slave-like conditions (and sometimes outright forced labor), as well as the fact that industry in developing countries doesn't have to worry about containing their industrial waste (unlike us, Chinese industries just dump their toxic waste raw into rivers or onto the ground). Furthermore, the industries in many developing economies are state-subsidized. As a result, their steel and aluminum mills can afford to overproduce at cost or even at a loss thanks to government funding, and then dump that metal onto us to undermine US domestic production.
Republicans used to be skeptical of free trade, open borders, and nation-building foreign policy. Now they're trying their hardest to outdo the Democrats on all of the above.
The reason the GOP fears tariffs is that the Great Depression was blamed, probably falsely, on the Hawley-Smoot Tariff of 1930. Jack French Kemp was always pounding on that idea to show why he opposed taxes. Now we remember Kemp too for constantly referring to “my friend Al Gore” in their little 1996 “debate.”
Why we need our own steel industry kept healthy:
https://qanonposts.com/images/0d688fb6941033c3ba9e2b5a0241be38126373145b4784c157bcf72c38d152ec.png
Article from Reuters today—Kobe Steel-Japan- has been falsifying specs for almost 50 years.
To me, a tariff is a risk well worth taking.
“From Lincoln to William McKinley to Theodore Roosevelt, and from Warren Harding through Calvin Coolidge, the Republican Party erected the most awesome manufacturing machine the world had ever seen. “
Oh, I see Pat is just giving the Obama version of “you didn’t build that”. Sorry to tell you Pat but the Republican Party didn’t build anything. These were the predecessor to the Country Club Republicans.
The US is still the world’s manufacturing powerhouse:
Only China exceeds the US total output but only then at 1/3 the per capita output.
Low taxes, cheap energy, and minimal regulation are the only things US manufacturers need. Republicans do not need to build or protect. They just need to get out of the way.
Is Boeing "state-subsidized" if they generate a lot of their revenue from U.S. defense contracts that aren't open to foreign bidders?
Why Is the GOP Terrified of Tariffs?
Because of the 1929 and onward depression. Mostly caused by FDR in the later years but it did not help there was the Smoot–Hawley Tariff Act
From the link below: The consensus view among economists and economic historians is that the passage of the Smoot–Hawley Tariff exacerbated the Great Depression,[16] although there is disagreement as to how much. In the popular view, the Smoot–Hawley Tariff was a leading cause of the depression
https://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act
Because it’s a tax increase on most consumers and will probably cost more jobs than it saves or creates. That’s why the GOP is afraid of tariffs.
A trade war is not to be feared, bought fought to win.
No, but a state-subsidized industry does enjoy a trade advantage, at least in a short-term. If a state-subsidized company can produce at cost or at a loss while being propped up by the government, it can undersell foreign competition. The advantage is political and strategic as much as it is economic.
Sometimes the overproduction gambit works, sometimes it fails. The Saudis tried flooding the oil market to put US frackers out of business, in the long run their overproduction hurt their economy more than it did ours.
“and then dump that metal onto us to undermine US domestic production. “
Let’s not forget the advantage of currency pegging and devaluation.
As an example, China keep their currency pegged to the dollar at a rate that is estimated to be 35-40% below what it would be if it was free floating.
That’s a HUGE artificial advantage.
So, we have Comparative Advantage, Absolute Advantage and Artificial Advantage...something the classical economists never even considered. In their era, gold and silver were absolutes.
We again find ourselves in a Mercantilist world, with every country seeking advantage over the other. And ALL seeking the largest and richest market in the world.
And the USA has unilaterally disarmed while being picked clean.
It’s the largest transfer of capital stock in the history of man, and committed Free Traders refuse to see it.
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