Laffer Curve Works Again

HUMAN EVENTS ^ | Dec 28, 2005 | Jerry Bowyer

[Ghost of Philip Marlowe]

Yeah. There I go again. Comparing apples to oranges.

Oh wait. That was you. Never mind.

[Conservative Goddess]

"But the instant the WTO makes a decision the US govt cowers like a beaten dog."

Actually, this dispute has been brewing for some 30 years, the ETI dispute was just the last chapter. The WTO had previously declined to impose trade sanctions, but had ruled the DISC and FSC regimes (previous provisions of our tax code) to be illegal export subsidies....the ETI dispute, if memory serves, was the third US attempt to circumvent their previously, clearly expressed will. The last straw...and the WTO finally snapped...and I can't say that I would have acted differently.

I would however have withdrawn from this organization long ago.

Here's a very nice synopsis of the dispute: http://www.finance.senate.gov/hearings/testimony/073002rztest.pdf

[Conservative Goddess]

Actually.....it's our tax system that is causing the loss of our manufacturing base. The productivity of the American worker and the increased costs associated with transportion/increased loss or damage/increased inventory turn times offset wage differentials in developing countries. The tax code is enemy within....driving our businesses offshore.

Please see: http://www.taxfoundation.org/files/f6c39320f8909945da06abb30f781a58.pdf

[neutronsgalore]

"Yeah. There I go again. Comparing apples to oranges."

The only difference between free-trade in the 16th, 17th, 18th, 19th, 20th, and 21st centuries is how fast the trade moves, the types of goods traded, and the amount/manner of money transactions, other than that it's basically the same thing. Same goes with protectionism. Regardless of the level of technology the basic effects are identical. Those that practice well-designed protectionism (as occurred through most of American history) gain in industrial strength, especially if they also have excellent natural resources and agriculture. With nations that practice free trade most similar gains are short-term, and then they start to hollow out. Just like the United States is doing with free trade. While China practices protectionism at home and gains in industrial power, using the American market as a turbo-booster.

[neutronsgalore]

"Actually.....it's our tax system that is causing the loss of our manufacturing base."

The tax system is a small section, but the difference in manufacturing costs (labor costs especially) make up most of the loss. Labor is so cheap in Asian nations such as China that it is less expensive to use labor-heavy methods than to automate here, regardless of the level of taxation we suffer under. We could wipe out all taxes on US manufacturing here and China would still be able to undercut us and earn a profit. The level of tariffing that would be needed would be lower with a reduction in domestic taxes. The severely bloated Fed govt making effective tax reduction, especially the most desired removal of the income tax, extremely difficult.

[Conservative Goddess]

Ireland is light years ahead of the orient.......with a corporate tax rate of 12.5%.........

It's really the taxes......it's that simple.

[Ghost of Philip Marlowe]

Gee, you know what. You're right. You've convinced me. Your constant Rachel Corry screaming and indomitable, single-minded focus has finally paid off.

Let's just throw a 100% tariff on every item we import. Let's just shut down all trade. Let's just force Americans to buy American.

Hey, it flies in the face of the dozens of books on economics I've studied, but hey, you armchair economists bowing before Pat Buchanan must just know something the rest of the world does not. Please don't bother replying to this post. You are wearisome.

[neutronsgalore]

"...indomitable, single-minded focus has finally paid off."

Being single-minded on the long-term survival of our nation? You bet I am!

"Let's just throw a 100% tariff on every item we import."

Aw cmon! Even Buchanan didn't advocate that except for certain circumstances, like Airbus jets. Anything that's screwed up slowly has to be unscrewed slowly. Otherwise the shock can be just as damaging. Kind of like putting your car in reverse while traveling at 70mph on the freeway instead of taking the exit, slowing down, and then going on the on-ramp in the other direction.

"Hey, it flies in the face of the dozens of books on economics I've studied,..."

That's because those books treat the world as one giant market, totally excluding the realities of nationalism, loyalty etc... To those that wrote them nations, sovereignty, borders etc.. are obsolete concepts. The "free market" will solve all. None of which are new concepts. It's what free traders have believed for centuries and it's always failed in the long run. It creates vulnerabilities that end up getting exploited by enemies. Otherwise every nation would've long since been practicing free trade.

"...you armchair economists bowing before Pat Buchanan must just know something the rest of the world does not."

The rest of the world? Sorry, but China practices protectionism. Airbus' existence and success are the results of protectionism. It's the United States that mostly practices the philosophy of free trade and gets it's ass kicked for it. What Pat Buchanan and other "armchair economists" know is HISTORY, and it's nasty tendency to repeat itself. If you can't realize that, you might as well teach your kids (if you have any) Chinese, that way when they're sold into Chinese sex-slave camps they'll be able to understand better what acts to perform.

"Please don't bother replying to this post. You are wearisome."

I rather enjoy flaying free traders with reality, so tough luck you wimp! I never retreat from the field of verbal battle, I leave that to my opponents.

[neutronsgalore]

"It's really the taxes......it's that simple."

It's really the labor costs....it's that simple.

[Conservative Goddess]

AHA! It's the taxes....it's really that simple......

Please see: http://www.freerepublic.com/focus/f-news/1556367/posts