Posted on 07/29/2018 5:48:39 AM PDT by Kaslin
“This trade war is cutting the legs out from under farmers,” said Senator Ben Sasse (R-Neb.) on Tuesday, “and White House’s ‘plan’ is to spend $12 billion on gold crutches.”
Referring to Donald Trump’s tariff brinksmanship with China, Senator Sasse was decrying Donald Trump’s request to Congress for compensatory farm subsidies. Sasse insisted that “America’s farmers don’t want to be paid to lose” — but regardless of what farmers want, we should want free trade.
Tariffs are taxes, after all. Consumers ultimately pay for them all.
Now, Trump’s requested “crutches” may amount to nothing more than just another fine example of a bad government program leading to an additional, “compensatory” government program. Also quite bad.
Old story. Too familiar.
Or is it? Could there be more to this story than a failure of trade policy? It seems so. The very next day after Sasse’s public statement, all of a sudden anti-Trumpers found new (and startling) cause to wonder: could we be misunderestimating Trump?
Sure, the senator is right to be alarmed by the “administration’s tariffs and bailouts,” for the president is playing a most dangerous game. Trade wars are not mutually beneficial. Trade is.
And the history of protectionist brinksmanship is definitely not pretty. Sasse himself predicted that Trump’s tariff hikes “aren’t going to make America great again, they’re just going to make it 1929 again.”
Sasse was referring to the passing of the Smoot-Hawley Tariff Act of 1929, which led not only to a spooked Wall Street, but to bank failures and retaliatory protectionism from other countries.
And a worldwide depression.
And world war.
But Trump himself insists that his agenda isn’t ramped-up protectionism. Amidst all his ballyhoo about the greatness of — the sheer wonderfulness of — tariffs, we have occasionally received hints at a very different agenda. Beneath Trump’s pompous, know-nothing protectionist stance — which we have all heared in his decades-long talk-show blather as well as his campaign’s talking points and bizarre Twitter contributions — there has been this dog-whistle to the economists: that what he really wants is free trade.
And this week President Trump lowered the frequency of his transmission for anyone to hear, from ultrasonic whistle to clear clarion call. As Sasse was decrying the China tariffs and the proposed compensatory subsidies to agriculture, Trump stated that he was pushing the EU to drop all trade barriers and subsidies. And then, on Wednesday, he and the EU’s appointed top banana, Jean-Claude Juncker, publicly declared just that.
“We agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods,” is how Trump put it.
Trump also mentioned a deal for Europeans to import soy from America — which was Trump’s way of addressing the China trade situation, which had been getting worse. Indeed, this week China announced a deal with Russia to purchase soy.
So what is really going on here?
Trump has always trumpeted his love of “fair trade,” not free trade. And by this, what he has meant, apparently, is multilateral free trade, not unilateral free trade.
According to classical economics, a country would benefit from a unilateral free trade policy, even if all other countries managed their trade on elaborate protectionist grounds, with high tariffs, subsidies, and all the trappings of mercantilism. But this analysis and policy package has never interested Trump. Indeed, he has decried U.S. official trade treaties like NAFTA as favoring other countries’ producers over ours.
Tellingly, he has never talked about consumers much, and a lot of what he has said was more farrago than genius.
No wonder we have been confused. We free traders expect free trade to be promoted honestly and coherently. It’s our style.
It’s not Trump’s.
Indeed, it should be obvious by now that clarity has never really been part of Trump’s combative modus. He preaches nationalism — economic nationalism, even damn-fool protectionism — while (apparently) really seeking multilateral free trade. The EU is merely the first to hop on board. Trump expects other nations to get on board, too. Soon.
The “irony” here is this: because multilateral free trade is better for everyone in all countries — well, everyone but politicians and the rent-seeking special interest groups that push for special advantages (which somehow also benefit politicians and the political class rather than consumers and producers at large) — Trump’s nationalism is in truth a mere Trojan Horse. America could get by just fine with unilateral free trade . . . but the whole world would benefit from multilateral free trade. Not just America.
For all I know, Trump’s status as a secret free trader could even be a secret from himself. It certainly was a secret kept from me.
But if his boisterous, seemingly bumbling, ugly and nationalistic threats and bluster succeed in getting the world’s nation states to take down existing trade barriers and adopt a more consistent free trade posture, the protectionist win-lose jibber-jabber will vanish amidst legitimate talk way beyond win-win. It would be a situation of win-win-win-win….
And we wouldn’t get tired of the winning.
Sasse is an a$$.
So where was Sasse when farmers’ grain lost over 50% of its value under Obama?
Yeah..., tell me about all the "Price Supports" where farmers are paid NOT to grow certain crops..., never heard any stories about those payments being refused! Have you?
So they finally admit that consumers ultimately pay taxes on businesses.
https://www.fsa.usda.gov/FSA/webapp?area=newsroom&subject=landing&topic=foi-er-fri-pfi
“but to bank failures”
The bank failures had nothing to do with Smoot-Hawley, as it was passed in 1930, not 1929.
Nice try, jerks.
Trade retaliation due to S-H was responsible for maybe 5% of the deflationary pressure after 1929 but most of the problem was due to the refusal by the Fed to do their job and increase credit to the member banks that were failing. Once confidence in the Ponzi scheme was lost, the bottom fell out from under them.
In the last recession Bernanke went absolutely the opposite direction and did in fact manage to reflate the economy, but of course at the cost of massive national debt.
Without going into the larger debate of whether fiat money and reserve banks make sense, the basic systemic facts are that these things are what made the Depression, not international trade restriction.
The United States have free trade: across state lines. Does it make sense to extend that to the world at large? Only if everyone plays by the same rules, and only if the populace of the nation agrees that it’s in their interest.
Thus tariffs exist, and in general, if well managed, benefit us.
More crazy, anti-Trump ravings.
Hatred for our President just oozes out of every word these intellects write (you know, impressive sentence like “the protectionist win-lose jibber-jabber will vanish amidst legitimate talk way beyond win-win. It would be a situation of win-win-win-win….”).
Screw them and the donkey they rode in on.
Trump’s secret identity is Edmond Dantès.
7
Sasse and his croney never Trumpers are balless losers. They are having a hard time coming to grips with Trump’s art of making deals. Sad.
If he doesn’t announce his retirement from the Senate, he HAS to be primaried. One of the worst, along with McCain, Flake, Corker, Collins and Murkowski.
I believe it is 24 million acres that are in the CRP program where farmers get paid to NOT raise crops.
Sasse is a good friend of Jonah Goldberg’s—which should be all they need to know.
They snicker together about their anti-Trumpism (on Jonah’s podcasts).
I'm tired of this crap.
Trump is a smart, smooth leader who is going exactly where he wants to go and is pleasing more than half the US as he does so. No need for name-calling. He is probably the best president this country has had in my lifetime. I think I put him above Reagan at this point.
Sasshole turned out to be a real POS.
Yes he is.
The author appears to call unilateral open (non-tariffed) trade with protectionist partners “free trade”. I disagree, and so does President Trump.
The smarm is strong with this one.
Those aren’t price supports. I’m not sure there are any price supports left, maybe for sugar and peanuts.
CRP acres are under contract for 10-15 years, and are subject to many rules. Natural habitat for animals has to be enhanced, and the land is accessible to the public. CRP acres are rented for public wildlife habitat, and to slow water runoff.
Good point.
There is a long list of ways the farm industry has been favored in contrast to the other sectors. That would include subsidies for crop insurance, the food stamp program, mandate for ethanol in gasoline, reduced state and local property taxes for agricultural assets such as land and equipment, and the supply of subsidized labor through our immigration system.
For the most part, farming has become a big business while still being viewed in light of the 1930's.
My mom worked for a while in my home county’s ag extension office. One of her duties was helping the farmers who came in there register for the available government programs. She told me there was a 10’ shelf behind her desk full of the program manuals and rule books. Mom liked the job as our family had gotten to know many of the other farmer “clans” throughout the county since our family became farmers and 4-Hers in the mid-60s. She could socialize and catch up on “who’s doing what now.” Socializing...but Mom was always puzzled why so-and-so would come in that ag office and apply for “assistance”. These guys were big-time operators. What?
It dawned on her these program applications weren’t because of need. They were there “just because”, and you’d be a fool not to get yours. Mom got pretty jaded about the whole deal and quit.
Q: How to you starve a farmer?
A: Weld his mail box shut.
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