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I agree with eliminating corporate taxes to make US companies more competitive. I would also like to see income taxes lower and flatter.

We disagree on tariffs. During the second half of the 19th century the US built its industrial infrastructure. Tariffs were high and used to fund most of the cost of the federal government while at the same time insulating US industry from European competitors. Had the US adopted a zero tariff/no quota free trade policy, we would not have built the industrial base that allowed the US to become an economic power in the 20th century.

From an economic perspective I support tariffs for the following reasons:

1) The US market belongs to the American people, not companies, not bankers, not foreign players. A tariff can be viewed as an economic charge for the privilege of accessing the market. If the US government is going to tax US companies at a rate of 35% for the privilege of engaging in commerce in the US market, it is reasonable to charge a similar amount to foreign factories for the same access to the market.

2) Free trade is attractive in concept but the reality is many of our trading partners protect home markets and provide advantages to their exporters. These mercantilist trade policies put US companies at a disadvantage in the US market. For example, the Chinese routinely pay Chinese apparel companies a 15% export rebate. The government also ensures factories exporting receive zero interest government loans, essentially a free cost of investment capital. Not to mention currency manipulation which serves to subsidize exports. These subsidies are in essence a form of economic warfare. Tariffs are a reasonable defense to economic warfare. Why should foreign companies be permitted to subside exports to the US and have a competitive advantage due to these subsidies? Subsidized trade is not “free” trade.

3) There is a strategic interest in the US having a robust and broad manufacturing base. Today the US is extremely vulnerable to having supply of key manufacturing goods cut off and no internal manufacturing infrastructure in place to supply substitute products. Contrast the current situation with 1941 when the diverse manufacturing infrastructure permitted the rapid expansion and mobilization of the armed forces and the supply of allies globally with war materials.

4) The US government provides services in support of imports and exports. A significant amount of the cost of the Coast Guard and Customs is related to external trade (imports and exports). The US Navy protects the sea lanes globally facilitating the free movement of cargo. The Army Corps of Engineers dredges harbors and waterways facilitating the movement of commerce. The FAA supports air traffic control and airport construction projects directly benefiting international trade. GPS satellites, launched by the US government, aid navigation globally. To the extent these costs are born by the taxpayer and not the users, the users are receiving an economic subsidy. I favor the allocation of these costs to the users via tariffs or a charge on each container entering or exiting the country.

With respect to the textile industry, I agree US labor is high cost for many apparel assembly (i.e. sewing) jobs. Textiles (yarn and knitting) are a different story as the textile industry is highly automated. However textiles go hand in hand with apparel and when the apparel factories go away from a market, the textile factories follow due to loss of customers. Recognize when an apparel manufacturer closes a large sewing facility, employing large numbers of low skill workers at close to minimum wage, the local community is saddled with significant social costs. Those costs result from the closure but are not born by the company closing the facility. The company may benefit economically from the decision but the community and workers bear the cost. When a company does not bear the economic costs of economic decisions it makes, it is essentially being subsidized.

My answer to Chinese subsidies is higher tariffs on Chinese imports. How do higher tariffs on Chinese imports hurt US factories making these products? If the subsidized Chinese products continue to be sold in the US markets, the US factories will lose market share and ultimately close. What is your answer to the subsidies? As long as other countries have free access to the US market while subsidizing their exports and applying barriers to US imports US companies will be at a disadvantage. Your answer seems to be status quo — keep the US market open and if the US factories can’t compete with subsidized imports and manipulated currencies it is just too bad for the US worker and US manufacturers. We’ve had 20 years of this grand experiment and the result has been a decline in the standard of living for the average US worker for the first time in US history.

For years I believed in free trade. I was involved in lobbying the government to lower tariffs and eliminate quotas. I was involved in closing down US factories and moving production to Asia. The companies I managed benefited economically (for a time) from the decisions to outsource production. By moving production to third world countries the company benefited from lower wages. Some of the other benefits from using overseas contractors included lower costs from child labor, lower labor costs realized by working employees overtime without pay, the ability to have employees work with hazardous materials without expensive protective clothing, the cost benefit of being able to dump hazardous materials into rivers or noxious gases into the air without expensive treatment to eliminate the toxicity. One of the reasons US and European labor costs are higher than third world labor costs is government regulation that prevent companies from abusing workers and polluting without incurring the costs.

Theft of intellectual property developed in the US is also a major issue in many countries. Why should the US allow open access to its markets to countries allowing companies to steal intellectual property?

In a perfect world we would have free trade and factories would compete on a level playing field. This is not a perfect world. While many US companies may benefit economically from subsidized imports and doing business with companies that steal intellectual property, others do not. When in the name of some abstract notion of fair trade the US government allows subsidized imports free access to US markets it penalizes US factories and US labor. If capitalism means I compete with one hand behind my back while my foreign competitor is subsidized by his government, I want no part of it. Been there, done that. The end result is the destruction of the middle class of the US and the lowering of the standard of living for US labor to that of a third world hell hole.

OK, I’ll do one more resonse, but I fear that we are in a fruitless conversation.

I am glad that you started your response in agreement that we should eliminate corporate income taxes and that you agree that it would make US corporations more competitive. It is nice to set a foundation that we both agree that less government is better for our manufacturers. Just as a point of clarification, the FairTax that I mentioned would also eliminate personal income taxes and much of the withholding taxes, but that is a discussion for a different thread.

So, then you immediately follow that with support for tarrifs as a methodology to be used for protectionism. It is rather confusing...If we have NO corporate income taxes, as we agreed above, then we will not need to have Tarrifs. We will become attractive to Manufacturers simply due to the tax advantage. I prefer to attract, rather than protect.

Now, on to your specifically numbered points:

1) The “US Market” does not belong to anyone or any government. It is nothing more than a million different transactions between individuals, all added up to some GDP number. The government, or “American people” do not own my transactional freedom to spend or not spend my earnings in any way I chose (well, leaving Obamacare aside.) The government doesn’t “allow the privelege of participating in this market.” The government only hinders the freedom within that market and therefore distorts the ability of individuals to make choices in their own best interest.

2. I believe wholeheartedly in Free Trade, however, I would also only make the ability of trading with us to mirror the abillity of trading with a trade partner. I would default to zero tarrifs, zero governmental influence and then if someone wanted to trade with us then I would simply mirror their tarrif structure. I’d wager that eventually they would reduce their governmental influence or would cease to be a viable trade partner for the American public.

3. I agree that we should want to have a very robust manufacturing economy. However, we should also globally allocate the capital and labor resources to the most efficient regions. Low skilled labor should be utilized for labor intensive manufacturing and high skilled labor should be used for more capital intensive manufacturing. I am certain that we would eventually balance globally and would again reach full employment.

3B. Think of things this way, as we have increased our government interference in all private business ventures, we have also seen a decline in our manufacturing footprint. I do not support or advocate a solution to this as being more government intrusion. Instead, I would rather reverse the actions that are causing the decline to begin with....

I don’t have time to address the rest of your points about China, many of them I agree with, however none of those points are related to why a plant in Belgium closed. (Ha, I had to make the attempt to get back to the article.)

Let me ask you one final question, since you are so supportive of Tarrifs and not offering a limiting principle behind that support, then at what point would you limit tarrifs? If your intention for tarrifs is to “protect the American market” or American labor, then what tarrif structure would be to heavy?

For example, if we are using tarrifs to protect labor, then do we increase tarrifs if UE is 10+%, have a tiered tarrif structure as UE decreases to what could be considered full employment? At full employment do we remove tarrifs? I see many dangers in protecting labor with tarrifs, but am wondering if you would consider any limit.

If it is to protect the “American Market,” then at what point does that protection become harmful to the market? Remember Russia protected the hell out of their ag industry, but the customer couldn’t find many products to buy. The East Germans protected the hell out of their auto industry, but their breakthrough product was the Trabant!

It has been proven time and again that tarrifs in the name of protection is a very dangerous game that ultimatly brngs great harm to those being “protected.” I am fine with using tarrifs to answer tarrifs, however I am using that as a carrot and not as a stick.

OK, here’s to hoping this posts....