Does your supermarket own part of your income? [TARIFFS ARE DUMB]

Trib Live ^ | Tuesday, Aug. 23, 2016 | Donald J. Boudreaux

[expat_panama]

You work and get paid. To whom do your after-tax earnings belong? Do they all belong to you or does some portion of them belong to the neighborhood grocer whose store you patronize? Who should have first dibs on the money you've earned: you or the auto dealer who sold you the last car you bought?

In both cases the correct answer indisputably seems to be “you.” But not so fast. Typical discussions of trade policy imply that the answers are “the grocer” and “the auto dealer.”

When politicians promise to raise tariffs on imports, they are promising to penalize you for spending too little of your money on products sold by domestic suppliers. The presumption is that domestic suppliers of steel, of textiles or of tires are entitled to a portion of your income. And if you, by buying goods from foreign suppliers, refuse to turn over that portion of your income to domestic suppliers, you must pay a penalty.

Clearly, supporters of tariffs believe that certain domestic producers have a higher claim on some portion of your income than you have.

Does there exist a legitimate justification for this belief? I think not, for none of us supposes that when we patronize a merchant we thereby encumber ourselves with an obligation to continue to patronize that merchant indefinitely.

Suppose that a new supermarket — call it “Jack's” — opens up nearby. Upon your entering Jack's for the first time, the owner informs you that a condition of your shopping at his store is that you must continue, each and every week from here on in, to spend at his store an amount of money that equals the amount of money that you'll spend on your first visit to the store. Would you accept? Surely not.

While nothing in law or ethics prevents Jack from demanding those terms, you'd find it intolerably burdensome to saddle yourself with such a legal obligation.

In fact, while it would be valuable for Jack to secure such a legally enforceable promise from you, he doesn't demand it because he knows that you'd not grant it. Or Jack knows that he'd have to offer to you something remarkably valuable in return, such as his contractual commitment to always charge you prices dramatically lower than those charged by rival supermarkets.

So in reality the deal is that by shopping at Jack's supermarket, you incur no obligation to continue to do so. If Jack wants your continued patronage, he must earn it.

Eventually an even newer supermarket opens just outside of town. This one's owned by Jill. Jill's selection is better and her prices are lower than Jack's. So you start shopping at Jill's supermarket.

Unhappy with your choice, Jack successfully lobbies the city council to slap a special tax on you for every dollar's worth of groceries that you buy from Jill's. You're penalized by the state for spending your money as you choose. The implicit premise behind this special tax is that Jack has a right to a portion of your income.

There is no difference whatsoever between this special tax and a tariff on imports.

Donald J. Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.

[j.argese]

Yes. It's preferable to tax citizens.

More inanity from the crony captialists, otherwise known as fascists.

People are looking behind the curtain, Mr. Crony Capitalist.

[Gaffer]

Yes, we do not live in Utopia.

And as you say particularly with reference to steel making, it is no secret that China virtually ignores energy pollution in its production, nor does it follow similar policies other western civilized countries do with respect to employment.

[Political Junkie Too]

we get good stuff at a cost that can not be matched by domestic producers

The question is whether that good stuff comes from child labor or subsistence workers who live in polluted rice patties, or from companies who are regulated for air, water, and working conditions, who pay extra for national social benefits, who get their raw materials from other equally regulated businesses.

-PJ

[MrEdd]

An idiotically constructed and dishonestly presented piece of garbage.

[Eric Pode of Croydon]

I personally think tariff impositions should be looked at on a case by case basis

Exactly wrong, provides the greatest protection from competition not where it is needed, but to those who have the most political clout.

If there must be tariffs, they should be across the board.

[Eric Pode of Croydon]

I personally think tariff impositions should be looked at on a case by case basis

Exactly wrong, provides the greatest protection from competition not where it is needed, but to those who have the most political clout.

If there must be tariffs, they should be across the board.

[Gaffer]

Everybody is an expert. Okay.

[impimp]

I think tariffs are bad in all cases. I am agree trade globalist. I see you brought immigration into this even though they are different issues. The free trade globalists will win this argument as we don’t want to turn the USA into North Korea.

[Eric Pode of Croydon]

or from companies who are regulated for air, water, and working conditions, who pay extra for national social benefits, who get their raw materials from other equally regulated businesses

Oh great.

"National social benefits" is possibly the most communistic phrase I've ever heard from a supposed conservative on this board.

One thing for damn sure, with EPA/EEOC/OSHA/FDA/NLRB extending their powers more every year, we'll never export so much as a machine screw ever again.

I suppose you think it would be wonderful for the world's prosperity if every country had a regulatory bureaucracy as intrusive as ours?

[Eric Pode of Croydon]

I support truly free trade. I'm no more a supporter of things like the TPP than are Sanders and Trump.

My trade policy would be something like:

1. Country X's businesses may sell anything they like in the USA without interference.

2. The USA's businesses may sell anything they like in Country X without interference.

3. The USA may embargo trade from any country which refuses to comply with (2.)

[Enlightened1]

Globalist horse$hit!

We had tariffs from the inception of our free republic in 1787 until late 1996 with the passing of NAFTA. As a matter of fact it was tariffs that funded the Federal government. Hence, there was motive to let people and business within the United States be free to generate more tax revenue for the Republic. Under the previous trade system that the Globalist hate the United States became a super power. We became number one in many things. Today we still have true free trade between the States.

The rigged trade command and controlsystem this professor, who never ran a business, is pushing for has been tried and it has led to the collapse of our Republic. We cannot continue to pay tarrifs to China while they pay nothing to us. It will continue to drive all businesses out of our country. Ditto the currency manipulation China does too when we are export too much to China We have tried this for 20 years now and it has turned into a disaster. Our Republic was stronger in 1996 when we were still feeling the ripple effect from the Regan tax cuts in the 1980s.

[InterceptPoint]

Since there has been not single anti-tariff post on this thread I thought I would be the first to do so. I'm a big Trump fan but he will never convince me that he knows more about foreign trade and economics than Milton Friedman. He doesn't nor do most if not all Freepers including myself.

Tariffs are tax. We pay it. You and I pay it. It may look like the Chinese are paying it but they aren't. It's just money flowing from our bank accounts to Washington D.C.

Here is what Milton Friedman thinks:

Governmental measures constitute the major impediments to economic growth. Tariffs and other restrictions on international trade, high tax burdens and a complex and inequitable tax structure, regulatory commissions government price and wage fixing, and a host of other measures give individuals an incentive to misuse and misdirect resources, and distort the investment of new savings. What we urgently need, for both economic stability and growth, is a reduction of government intervention, not an increase.

Source: Capitalism and Freedom, by Milton Friedman, p. 67 , Nov 15, 1962

[Enlightened1]

Globalist horse$hit!

We had tariffs from the inception of our free republic in 1787 until late 1996 with the passing of NAFTA. As a matter of fact it was tariffs that funded the Federal government. Hence, there was motive to let people and business within the United States be free to generate more tax revenue for the Republic. Under the previous trade system that the Globalist hate the United States became a super power. We became number one in many things. Today we still have true free trade between the States.

The rigged trade command and controlsystem this professor, who never ran a business, is pushing for has been tried and it has led to the collapse of our Republic. We cannot continue to pay tarrifs to China while they pay nothing to us. It will continue to drive all businesses out of our country. Ditto the currency manipulation China does too when we are export too much to China We have tried this for 20 years now and it has turned into a disaster. Our Republic was stronger in 1996 when we were still feeling the ripple effect from the Regan tax cuts in the 1980s.

[xzins]

Such a dumb article. Why? Because it is pure advocacy of globalism.

We are either a team in this nation or we have joined the globalist team.

If we are a national team, then we certainly do give first look at our own domestic suppliers. We certainly do make sure we are providing everything within our own borders that is necessary to our independence and security. We make our own food. We build our own ships, planes, machines. We provide our own technology. And we support our own team first.

Let the globalists hawk their foolishness about owing our grocer money. What they are actually trying to do is to drive YOUR sovereignty, your security, and YOUR wage down to global levels.

Reject it. It’s foolishness.

[Enlightened1]

So are you wealthy than Donald Trump? Yet you are implying you know more about money than Trump.

We had tariffs from the inception of our free republic in 1787 until late 1996 with the passing of NAFTA. As a matter of fact it was tariffs that funded the Federal government. Hence, there was motive to let people and business within the United States be free to generate more tax revenue for the Republic. Under the previous trade system that the Globalist hate the United States became a super power. We became number one in many things. Today we still have true free trade between the States.

The rigged trade command and control system this professor, who never ran a business, is pushing for has been tried and it has led to the collapse of our Republic. We cannot continue to pay tariffs to China while they pay nothing to us. It will continue to drive all businesses out of our country. Ditto the currency manipulation China does too when we are export too much to China We have tried this for 20 years now and it has turned into a disaster. Our Republic was stronger in 1996 when we were still feeling the ripple effect from the Regan tax cuts in the 1980s.

[Mr. Douglas]

We’ve recently learned something interesting: There is very little stuff that you HAVE TO buy. When I dumped TV in 1997, it was for a lot of reasons, and I’ve enjoyed the fruit of that decision ever since. But there was one result that I didn’t see coming, and it was a VERY good one: My consumerism plummeted.

When you don’t get pummeled with advertisements designed by psychologists to convince you to want, or believe you need items, you can’t help but shift your thinking. Sure, you still want things, but usually things you really DO need, or maybe something you’ve seen and you’d like to have it because it suits your needs and you think it’s cool (that’s how I came to own a Scion FR-S).

But once you divorce yourself from the U.S. consumer culture, life becomes MUCH less expensive.

Just to amplify: TV commercials tell you of all the ways you will get sick to the point that you live in a bit of a state of fear and find yourself medicating or insuring yourself to death. This becomes really clear when I mention on FR that we have no health insurance and we are almost 63 (my wife and I). To those that watch TV and eat all the foods it advertises and buy all the fear about getting deathly ill, this sounds like madness. but for us, we know God created us in biological machines that are very self sufficient and, although it is possible that something could happen to it, the chances are much more rare than most TV viewers believe, especially if you are eating what you grow yourself or you pick up from the amish market. And if you break a leg or cut yourself badly, it’s still just a few hundred dollars to repair. Meanwhile, we’ve saved ~$41k after tax dollars since we abandoned health insurance at obamacare’s inception. Part of that is due to eliminating TV.

[Eric Pode of Croydon]

I don’t think I know more about money than Trump, but Milton Friedman knew more about liberty than does Trump.

[Political Junkie Too]

That meant social security and other deductions that employers pay.

-PJ