San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Thursday, February 5, 2015

There Is No Free Market In The SDA

People who know nothing about economics like to talk about how the Socialist Democracy of Amerika is a capitalist country.  Capitalism is equated with the idea of the free market and it is brought up in discussions between various groups with different political agendas.  By far the biggest group of people are those who love to talk about how capitalism exploits the poor.  This group believes that income inequality and the wealth gap are direct results of a functional capitalist marketplace.  This group also believes in aggressive socialistic activity on the part of the federal government to correct the excesses of the free market.  There are others who like to speak of crony-capitalism.  Crony-capitalism is not really capitalism at all since it involves a direct connection between business and career politicians.  Under the terms of crony capitalism a business will donate large sums of money to a career politician in exchange for future legislation that will give his company monopolistic powers.  In a free market it is impossible for a monopoly to develop but under the operation of a crony-capitalistic society monopolistic business practices become the norm.
Today I am going to introduce you to a form of crony-capitalism.  By the end of today's post I believe you will be forced to conclude with me that there is no such thing as a free market in the SDA.  The economic system that we have in this country is actually a form of mercantilism.  Mercantilism is defined as, "...an economic theory and practice, dominant in Europe from the 16th to the 18th century, that promoted governmental regulation of a nation's economy for the purpose of augmenting state power at the expense of rival national powers.  It is the economic counterpart of political absolutism.   Mercantilism includes a national economic policy aimed at accumulating monetary reserves through a positive balance of trade, especially of finished goods . Historically, such policies frequently led to war and also motivated colonial expansion. The Mercantilism theory varies in sophistication from one writer to another and has evolved over time. High tariffs, especially on manufactured goods, are an almost universal feature of mercantilism policy."  That is a lot of economic mumbo-jumbo to digest.  For my purposes today I am going to focus exclusively upon the matter of tariffs.
A tariff is a tax levied by the government on imported goods.  There are many reasons given by career politicians for why they place tariffs on imported goods.  Almost all of the given reasons are lies designed to cover up the truth.  The most common reason given by career politicians for the enforcement of tariffs is to "level the playing field" in order to keep foreign producers from "dumping goods" and engaging in "cutthroat competition."  We are repeatedly informed that foreign producers are able to produce goods, that are also produced by domestic producers, at a lower price.  The reason those stinking foreigners are able to produce goods for a lower price is because they enslave their laborers in sweat shops, frequently torturing and killing those who do not produce the daily quota.  For the most part the accusations about foreign producers are untrue.  But even if they were true it would be none of our business.  That does not keep the government from enacting tariffs however.
The real reason tariffs are placed on imported goods is to protect inefficient and bloated domestic producers.  Foreigners can't vote for career politicians whereas SDA citizens can.  Guess who wins?  Career politicians promise to add a tax to an imported good in exchange for campaign contributions and votes.  It is a classic example of you scratch my back and I will scratch yours.  Who loses in this little game?  The consumers of course.  The higher prices that are paid for domestic goods as a result of the federal protections are charged to the consumers.  As is almost always the case in this immoral land, the career politicians and their lackeys make off like bandits while we end up holding the bag.
Occasionally some idiotic politician will claim that tariffs are important as a revenue raising tool for the federal government.  It is historically accurate to assert that the lion's share of federal revenues in the early years of this country came from tariffs.  That does not make them right however.  It is also accurate to assert that tariffs account for less than 1% of total federal revenues today.  Anyone who advances the argument that tariffs are needed to fund the budget is a liar.  Tariffs exist for only two reasons:  1) to keep career politicians in office and 2) to allow crony-capitalists to gain monopoly income.  Under the terms of true capitalism and in a real free market there would be no tariffs of any sort.  All countries would be free to produce and sell their goods on an open and free market, without any interference from government agencies.  Only then would honest producers be rewarded for their efforts.  Only then would consumers get a fair price for the products they purchase.
Just how bad is the tariff system in the SDA?  Go here for a complete list of SDA tariffs.  I encourage you to go to the website and poke around it for a while.  I believe you will be astounded at how many tariffs exist in this sad land.  For example, do you know that mules that are imported for slaughter are tariff free but mules that are imported as breeding stock have a 4.5% tax?  You can import all the rabbits you want but a fox will come with a 4.8% tax.  In addition, if you are not importing your fox from one of 16 favored countries, you will pay another 15% tax in addition to the 4.85% tax.  Did you know that imported Styrene-butadiene rubber (SBR); carboxylated styrene-butadiene rubber latex has a 20% tax on it but Styrene-butadiene-styrene block copolymers produced by solution polymerization (SBS, thermoplastic elastomers), in granules, crumbs or powders is tax free?
Here is another tidbit you might enjoy...footwear that covers the ankle but not the knee and having soles and uppers of which over 90 percent of the external surface area (including any accessories or reinforce- ments such as those mentioned in note 4(a) to this chapter) is poly(vinyl chloride), whether or not supported or lined with polyvinyl chloride is subject to a 4.6% tax unless you are importing it from a country other than one the 17 countries listed in the tariff book, in which case you owe an additional 25% tax.  Of course all of this changes if the footwear you are importing is not precisely defined above.  For example, if your footwear has only an 89% poly vinyl chloride surface area the tariff jumps to 37.5%, with an additional 75% tariff (making the shoe now more than twice its original price) being imposed if the shoe is not imported from one of 12 particular countries.
I know I should stop but I can't help myself.  This is so fascinating. Did you know that there is a 45% tax on imported central heating system boilers?  I guess the boilermakers union is pretty strong.  Imagine how much cheaper your boiler would be if there were no tariffs.  There is also a 45% tax on imported boiler parts.  There is also a 27.5% tax in imported rotors that are finished and ready for assembly.  That is good.  I can't stand the idea of seeing a rotor maker standing in the bread line.  There is also a 45% tax on contact lenses unless you import them from one of 15 select countries.  Last but not least, there is a 45% tax on imported upholstered seats with metal frames.  I suspect the upholsterers union, the seat makers union and the metal workers union all got together to get that tariff enacted. 
My point is simple.  If you do not believe me go to the official government website describing the tariffs in this mercantilist land and explain to me how it is that we are a country operating with a free market.  Nothing is outside the reach of government regulators.  Everything that happens in the economy is regulated for the benefit of career politicians and those who finance them.  So if you ever want to write a critique of the free market or capitalism, do not critique what happens in this country because it is neither capitalistic nor free. 

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