Posted on 03/08/2018 10:37:31 AM PST by reaganaut1
Europe places a 10% tariff on our cars, why can’t we place a 10% tariff on their cars? Seems only fair to me.
The Saudis just recently crashed the price of crude oil with the goal of putting American frackers out of business. The attempt failed but only after it almost destroyed the emerging American fracking industry and forced many frackers into bankruptcy.
The Saudis and OPEC countries then tried to buy up as many bankrupt fracking operations as they could - as well as much of the transportation and refining infrastructure, so perhaps the days of predatory trade practices are not as remote as you seem to suggest.
Furthermore, older economic assumptions and models need to adjusted for the rise of communist economic superpower looking to rapidly industrialize it's once non existent economy using aggressive and often predatory export policies.
In China, economic policy is considered war by other means and the Chinese are using their export policies to build up their economies while simultaneously destroying the economies of their competitors.
Additionally, in Communist China there are laws against large foreign transfers of currency and the only way for most Chinese to own private property is own a manufacturing facility. A huge fraction of Chinese manufacturing companies are set up with the primary goal of sheltering income in only available vehicle for sheltering assets as private property.
Like the old pre Reagan tax reform American tax shelter schemes, these companies are actually structured to sell products at acceptable losses and lose money to shelter assets in the only safe harbor.
It is impossible for American companies to compete with Chinese manufacturing companies intentionally structured and chartered to sell products at a loss
Classical text book and academic economic theories simply do not account for the new realities we face. Classical economic analysis also does not take into account massive, crippling budget deficits driven, to a large degree, by welfare and disability payments made to the 14 million or so able bodied American workers driven out of the labor pool by Obama era policies.
Regardless, the problems we face with the destruction of key American industries are strategic in nature and we simply cannot allow out steel and aluminum industries to be wiped out by foreign competition regardless of any stand alone economic analysis that does not factor this into account.
While basic and fundamental economic principles have not changed, the parameters and calculus of the economic analysis has changed radically due to the huge and rapid economic transformations we have seen in the world economy.
Hawthorn is right. Schools and universities are steeped in Leftist Keynesian, anti-free-market doctrine, assimilated by the unwary and gulible. But the fact is monopolies are a product of the subsides and bribes of the federal government, the REAL Robber Barons.
The self-correction of pricing and innovation in the open competition of supply and demand in the free market will mitigate such foolishness. As usual, government is the culprit of our economic woes, then, as now.
>> The Saudis just recently crashed the price of crude oil with the goal of putting American frackers out of business. The attempt failed but only after it almost destroyed the emerging American fracking industry and forced many frackers into bankruptcy <<
It was a foolish Saudi policy, and it failed. So the classic principles of economics win again.
>> perhaps the days of predatory trade practices are not as remote as you seem to suggest <<
Oh, there will always be fools around the world — fools who will believe that “predatory pricing” is a good strategy. But whatever gains they might make will be temporary at best.
>> It is impossible for American companies to compete with Chinese manufacturing companies intentionally structured and chartered to sell products at a loss <<
To the extent that they are doing such, they are hurting themselves, while they are helping the customers who buy the output of the companies you mention.
But in terms of our “trade deficit” with China, it doesn’t necessarily matter. Even if China followed strict free-market policies, with a rational tax system, they’d still produce a gazillion items that we’d want to buy from them rather than from domestic producers. It’s called “compartive advantage.” No theorem in all of economics — or indeed of all social science — has been more rigously analyzed in terms of pure logic, nor has any such theorem been more thouroughly tested with empirical, real-world data.
Anyway, if you don’t understand the principles and logic of comparative advantage, it’s not my job to teach you. But I think you’d benefit from reviewing your textbook from Economics 201-202, plus a rereading of the works of Adam Smith, David Ricardo and Thomas Sowell.
>> While basic and fundamental economic principles have not changed, the parameters and calculus of the economic analysis has changed radically due to the huge and rapid economic transformations we have seen in the world economy <<
Nice words. Pat Buchanan could not have phrased this erroneous declaration more eloquently.
But I’ll take my economics lessons from the likes of Alfred Marshall, Milton Friedman, Tom Sowell and Walter Williams, rather than from Friedric Engles, Ross Perot, the DNC and the AFL-CIO
Echoing what Hawthorn is saying, economic laws of supply and demand, like the laws of gravity, do not change because our politics, or technology, or “what we believe” changes. Certain unchangeable laws remain regardless of what people might choose to believe.
Unfortunately, to the degree economies come under the iron hand of globalist politics and banking, to that degree the world will suffer greatly from these world organizations who, like the socialists and communists, continually ignore and violate basic economic reality, leading to shortages and starvation - all needlessly.
A sovereign nation, like the U.S. does not have to knuckle under political globalist insanity (make sure you distinguish the voluntary cooperation of the free market and free trade which creates wealth from political globalism which creates poverty). To the degree the U.S. economy remains free from government intervention and meddling, to that degree, America will thrive even when the world goes dark under political globalism.
I guess you figure if someone points out that a particular exception to the norm had many factors other than just economic policy making into an exception you can't handle the idea that those things in no way alter the economic point but do alter the fact that such economic points apply to the exception in a way that can't be compared to other places that do have productive industry and resources.
Believe what I want? Ok, I believe the facts which are that the economic policies in Hong Kong are not a comparison to make when discussing the US or any other nation because a great deal of economic and political leverage was applied on their behalf that would have never been there to help them had it not been for the political interests of three outside players meshing.
Without that outside political and economic power exercised on their behalf at no cost and with very little in the way of encumbering agreements in return for that outside aid, they would have had no economy to defend with tariffs or much income to tax with an income tax, either.
Now, Bismark's Germany copying what had been US economic policy, that's a good example. Hong Kong, too much of an exception due to it being more a creation of outside political forces than a nation in the normal sense of the word.
Have a lovely little day
I would say, if country wants to do that to their people and economy, it doesn't mean we should. Regardless of boneheaded government decisions of other countries, we come out ahead when we keep our end of the marketplace free. Freedom means things are not always "fair". But freedom means the American consumer whether end user or OEM, buys the best product at the best prices. Parts for OEM products in turn are made at the best prices. A multiplier effect. America and its economy wins.
In the meantime, that stupid country has just penalized its consumers which has a multiplier effect where the parts are sold to EOM companies. Their economy will suffer and sooner or later, they will relent or will cease to be much of a player in the competitive markets.
Also in the meantime, if we're making superior products, there are other demand destinations. Our net gain is much better than if we penalize ourselves with tariffs.
What would you say if a particular country taxed all our stuff at 200%, then just had free reign in our country?
"Free reign" is not exactly accurate, right? Consumers choose which products have "free reign" based on quality and price. A country whose government continually meddles in their economy and businesses will struggle over the long term to produce such products. Just look at America. Our government has crippled our productivity and ingenuity, lessening the demand for our products. Nevertheless, America wins but allowing the world's best products for the best prices regardless of what that country does to itself.
Our net gain is greater by keeping the market free on our side of the fence than by imposing tariffs. And our net gain will be MUCH greater if instead of extending more government interference with tariffs, rather abolish the list of government intrusions that has caused noncompetitive American products and American businesses to flee our shores in the first place.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.