Archive for Steel Tariffs

FEE Article from 1994

Posted in For Free Trade with tags , , , , , , , on March 22, 2018 by cavalier973

An excerpt:

The experience of the most free-trading nation on earth, Hong Kong, clearly illustrates this point. With no natural resources, except its people and one of the world’s finest natural harbors, but with complete free trade, Hong Kong has witnessed an increase in its per capita income over twenty-five fold and an increase in employment of over twenty times within a short span of forty years. Today, its per capita income is greater than that of the United Kingdom, of which it is still a colony. This stellar economic performance has been achieved while the population of this largely barren island-peninsula colony increased from around 300,000 to six million over this period.”

Another excerpt, more relevant to today’s environment:

“Restricting steel imports destroyed jobs. It is estimated that in the 1980s, steel restraints protected 17,000 jobs in the whole industry, while they cost 54,400 jobs in steel-related industries, for a net loss of over 35,000 jobs. Higher steel costs added to the burden of steel-using industries that were trying to compete against foreign manufacturers. Thus, for example, expensive steel raised the cost of building cars in Detroit and promoted Japanese auto imports.”

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“‘Marxist’ Free Trade”

Posted in For Free Trade, Uncategorized with tags , , , , , on March 7, 2018 by cavalier973

So, President Trump is indulging his neo-mercantilist demons, by proposing that a 25% tariff be imposed on foreign-produced steel, to “protect American steel companies”.

Were it simply a measure by the President to raise revenue for the government, it wouldn’t be quite so exasperating, but the claim that an increase in taxes somehow helps the American economy, and Americans in general, is maddening.

If one reads the sites of the Neo-Mercantilists/Protectionists, one may run across the phrase “Marxist Free Trade”. The idea behind the phrase is that an unfettered market leads to Marxism, based on something Karl Marx said, claiming some such nonsense.

In reality, it is the Neo-Mercantilist/Protectionists who let the communist camel poke its nose under the tent flap, by promoting a policy of government intervention in the economy to raise the income of a certain group of Americans by requiring all Americans to enjoy a lower standard of living.

If President Trump had been honest and proposed, for example, legislation that resulted in people earning $35,000 a year lowering their standards of living so that a small group of people can increase their incomes from $50,000 to $55,000, then people would likely give the legislation the stink eye. And yet, that’s exactly what he is proposing, but because it is couched in false patriotism, then people don’t automatically reject such a policy.

One of Trump’s advisors claimed that the 25% increase in steel prices would only result in a fraction of an increase in the cost of cans of soup, as an example. The problem is that the advisor specifically mentioned Campbell’s soup company. Such a large company may of course be able to absorb the increased cost, or pass the cost to its customers, but “players at the margin” may not be able to do so. Bob’s Soup Company may go out of business, because it is already operating a extremely low margins. With one less competitor in the soup market, we can expect the prices of soup to rise and/or the quality to be lowered. That’s how the market works. Protectionists seem to have a magical thinking about market forces, and expect that costs will be born by “someone else”, and not ourselves.

One last thing, about Free Trade generally: Free Trade is not only the economically advantageous policy, it is the moral policy, because with Free Trade a person can dispose of the product of his labor as he deems best. Protectionism requires that person to dispose of his income in ways that the Protectionists approve. This is a violation of property rights, and a form of theft.

I was happy with the Trump Tax plan that passed late last year, despite its flaws, and considered voting for him in 2020, if he ran for re-election. This tariff could negate the benefits of the tax plan, and my support.