NAFTA, GATT, free trade and tariffs

[Alex Linder]

42 Comment by Tom Piatak on 17 September 2009:

Mr. Seiler:

In its heyday, protectionism did not create an army of bureaucrats. The federal government financed by the tariff was small and unobtrusive. The federal government did not begin to grow until we replaced the tariff with the income tax as the principal source of revenue for the government, a move advocated by American free traders, and the decline of the tariff has hardly caused a decline in government. Whatever the theory, in practice, free trade has produced more government in this country, and the great cities that rose to prominence behind tariff walls–such as Cleveland (where I live) and Detroit (where my parents and sister live, in Oakland County)–are eclipsed by the great cities created by government, including, preeminently, Washington, the richest metropolitan area in America.

[Alex Linder]

40 Comment by John Seiler on 17 September 2009:

Over on TakiMag.com’s blog, Mr. Piatak wrote on Sept. 16: “Both Paul Craig Roberts and John Derbyshire keep reminding us that the government sector is prospering while the rest of America suffers. Further support for this view came today in a Reuters article, noting that Washington, DC is the preferred home for wealthy young people. In fact, of the 50 counties in the United States with the highest percentage of people aged 25-34 making over $100,000 per year, sixteen of them were in the Washington area, and only two counties not near Washington or a state capital made the top ten. In the past, the key to wealth was manufacturing, which often arose in proximity to natural resources or waterways. Today, the key to wealth is proximity to government. ”

[Alex Linder]

46 Comment by Clyde Wilson on 17 September 2009:

Esteemed Mr. Piatak at #42. There is a contradiction in your observation. The tariff as a source of government revenue and the tariff as protective of domestic industry work in contrary directions. It was traditionally free traders who wanted the tariff as the support of the government. Under real free trade it is a fair consumption tax. “Free traders” advocated the income tax as a remedy and rectification after decades of “tariff protection” had drawn wealth from the farmers to the plutocrats. Not to mention the plutocrats’ vast direct and indirect subsidies from the government and their complete control of the currency and credit of the country. I would certainly prefer subsidising an industrialist who actually makes something to subsidising a bureaucrat, but in either case it is robbery by legislation.

[Alex Linder]

53 Comment by Clyde Wilson on 18 September 2009:

#47. The language about protection of manufactures in the early law was merely an appeal to “incidental protection.” The purpose of the tariff was revenue, sufficient to eliminate the need for any other taxes. Obviously, past a certain point, an increase in the tariff results in a decrease in the revenue, since the purpose of a “protective tariff” is to reduce imports and shift consumption to domestic manufacturers, who are thereby guaranteed sales and a margin of profits up to the cost of the tariffed import. The tariffs were revenue tariffs up until 1828, when, after intensive lobbying and bribery by the industrialists, along with intense propaganda about “Americanism,” a near 50 per cent tariff was instituted with a long list of items individually tariffed as designed by the industrial lobbyists for specific advantages. Except that raw materials and specilised products imported by the industrialists were EXEMPt from any tariff. Very obviously such legislation is partial and counter to free enterprise. Among other things it discourages new competitors, foreign or domestic, to established tariff-protected corporations. “Tariff protection” inevitably means bribery and deception in the design of complex legislation.

What is now falsely called “free trade” is just another example of the evil inaugurated by the tariff protectionists of the 19th century. If one believes that free enterprise is generally the most fair and productive form of economic activity, then one may assume that the tariffs of the 19th century actually retarded American expansion, great as it was because of the energy of the people and the great natural resources. How can charging everyone higher prices lead to greater prosperity? It can only shift money from the consumer to the protected producer.

[Alex Linder]

54 Comment by Clyde Wilson on 18 September 2009:

The notion that tariffs were designed to protect American labour has always been a fraud, a propaganda ploy for public consumption. At the same time that the Lincolnites put in the “protective tariff” that lasted until FDR they also passed a contract labour law by which the government facilitated bringing in gangs of low-paid labour from Europe and China. If one wanted to protect American labour then it was necessary to control immigration, which labour leaders then understood. The industrialists also spearheaded abolition of slavery in the South because they believed that cotton could be produced more cheaply with “free labour.”

At the same time they pushed for giving away as much of the public lands as possible for free, mostly to themselves, because land sales were the second largest source of government revenue. Decreasing the revenue from lands gave an excuse for increases in tariffs and other taxes to benefit the plutocracy.

The history of American state capitalism goes back a long way and to restore Harding/Coolidge protectionism is too superficial a remedy.

[richyrichard]

The purpose of a tariff is to force consumers to buy domestic. This is accomplished by raising the price of imported goods.

The purpose of uniform duties and imposts is to raise money for the government for the purpose of maintaining ports of entry, not to fatten the Treasury.

Since the tariff raises the price of imported goods in order to discourage their consumption, it is self-defeating to attempt to finance the government by tariffs. (This should be common sense.)

Tariffs are born in sectionalism, factionalism, and are either a result of partisan politics or the very cause of it. They favor one industry over another.

Tariffs are unconstitutional.

The federal budget this year is 4.5 trillion dollars. The income tax covers 3 trillion of that amount. Borrowing covers the other 1.5 trillion. What effect would 4.5 trillion dollars worth of tariffs have on our economy? Well...it might force the Dollar Stores to close and J-Mart would love that!

[Alex Linder]

The federal budget this year is 4.5 trillion dollars. The income tax covers 3 trillion of that amount. Borrowing covers the other 1.5 trillion. What effect would 4.5 trillion dollars worth of tariffs have on our economy? Well...it might force the Dollar Stores to close and J-Mart would love that!

The government is broke because guys like you want it involved in every aspect of life. If it were only involved in defense, it wouldn't be trillions in the hole.

[Kievsky]

Hey Alex,

Do you think that:

1. The US government will finally go truly broke?

and

2. What do you think will happen if and when this happens?

I think we are headed for a US version of the fall of the USSR.

[Alex Linder]

Hey Alex,

Do you think that:

1. The US government will finally go truly broke?

and

2. What do you think will happen if and when this happens?

I think we are headed for a US version of the fall of the USSR.

I don't know. I do know that Barry is a classic leftist superficialist who has never once in his life met a genuine standard. I know he has no clue what's really going on. Anytime you meet people who are chock full of enthusiasm for running the economy or managing giant populations, you are dealing with dangerous idiots. He's very much like Bushy in that he has never held a real job, so everything is very floaty and easy to him.

The position Bonner takes at the Daily Reckoning is right - you can point out all the things these guys are doing wrong, but that's not the same thing as telling exactly where and when it's all going to come crashing down or how exactly it will wind up. There are many ways it could go, but I don't think any of them are good. Our government never does the right thing, which would be returning to the gold standard and holding a going-out-of-business sale of 'public' assets and then serving death kool aid to all its timeclockers.

[richyrichard]

The government is broke because guys like you want it involved in every aspect of life. If it were only involved in defense, it wouldn't be trillions in the hole.

The government is in the hole, because those who run the government intend for it to be in the hole.

[MarkP]

....

I think we are headed for a US version of the fall of the USSR.

....

That's where it's heading.

[Proud White Guy]

Let me see, a 12 trillion dolllar debt coupled with an income of 1.2 trillion dollars stolen from the produces, leaves a debt to equity ratio of 10:1

Your pretty much bankrupt at 4:1. Start planning for your future on your own, if you think they are going to bail you out, your nuts.

The jewish bankers have another 66 trillion dollars worth of fluff debt they are going to load up on you too.

The derivatives are coming due, so bend over and grab your ankles kiddies, there isn't gonna be any vasoline this time.

The only fix is a true American currency, end of story, with no jews allowed.

[Hell Raising Woman]

The primary reason we have an illegal Mexican invasion is the NAFTA fiasco that only makes jews, corporations, and the corporations' shareholders wealthy.

The primary objective to having free trade and lack of manufacturing companies in the United States is to screw the others who don't have a lot of money. The jews and the traitors in Washington D.C. will make out like bandits when the depression hits and will get away with the looting of the U.S. without any aggressive prosecutions.

It has been documented since the year 1290 that jews have bankrupted and kept the majority of the population in any country virtually poor. This is their mode and method in destroying a nation. There are no differences today, except the jews are not actively expulsed.

[Mike Parker]

I don't think what we have now is free trade. It's more like a bizarre reverse mercantilism. Countries that serve the Jews' political agenda get to dump their crap here and take our jobs. "Rogue nations" that the Jews hate get sanctioned. IMO and contra the left, it's economics in the service of politics, not the other way around.

What makes it work is arbitrage. Asians buy low-yielding Treasury debt while US MNC's make high-return equity investments ("FDI") in Asia, for example. In a way, the US is trying to become the Jews of the world. Everyone else will produce while the US will provide them financial and legal services. The problem is that those sectors are also compelled to decentralize, and for cultural and cost reasons are staffed mostly with locals.

[zoomcopter]

I think we are headed for a US version of the fall of the USSR.

The parallels are striking. In the USSR, seven or eight Jewish oligarchs plundered billions of rubles from mother Russia. Russia was bankrupted. Here, a handful of Jewish "bankers" did exactly the same thing to America. History repeats itself, once again, and probably will continue to do so, until the Jews finally corner the entire money supply of the world.