San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Friday, July 1, 2016

One More Thought About International Trade

There is one argument advanced by those who believe the career politicians who rule the Socialist Democracy of Amerika should engage in trade wars with every other nation in the world that seems, at first blush, to make some sense.  The argument goes something like this.  Foreign countries populated with stinkin foreigners, who probably deserve to be bombed for failing to bow down before the Imperial Amerikan Empire, subsidize the production of goods in their country, thus allowing them to sell those goods to hapless Amerikans for lower prices than what domestic producers in the SDA can sell them for.  When given the choice of buying essentially the same good for a lower price most SDA citizens will purchase the lower priced good, thus driving domestic production out of business.  This process is called dumping and most countries that sell products to the citizens of the SDA are accused of doing it.  Since foreign countries are subsidizing the production of those goods it is necessary for the SDA bureaucrats to enforce a tariff on those goods when they are imported to make them at least as expensive as the goods produced locally.  Only by using a tariff to level the playing field can SDA industries compete with those immoral and strange looking foreigners.
I can see how a person could come to believe that argument and then be in support of tariffs.  If I was a producer of leather wallets and the Mexican government made the decision to give millions of taxpayer pesos to its domestic producers of leather wallets I could find myself out of a job.  Donald Trump's claims that Mexico is behaving unfairly (although I still do not understand how a geo-political entity like "Mexico" can have personal characteristics that allow us to describe it as "behaving unfairly") ring true to me as I receive a pink slip and find myself looking for new leather craft work.  So is it true?  Do we, the citizens of the SDA, need a bureau of professional traders to oversee all purchases and sales of goods between us and foreigners to ensure that any transaction that involves a government subsidy is properly taxed?  Let's consider that for a moment today.
Here is a link to a list of federal subsidies.  I didn't count how many categories are on the list.  The list is far too long for me to do that.  For fun I clicked on a couple of the links and each click brought up another list of rules and regulations related to the program.  Needless to say, there are thousands, perhaps millions, of subsidies paid by the federal government of the SDA.  The federal subsidy on sugar is a case in point.  It was created many moons ago to protect domestic sugar producers from the fact that people in foreign countries could produce the same quality sugar (sugar is sugar you know) without subsidies and for a much lower price.  Sensing a threat to domestic producers and the ability to purchase votes from that constituency, career politicians created an elaborate system of sugar subsidies to keep foreign sugar out and artificially prop up the price of SDA produced sugar.  SDA consumers have paid far more than the free market price for sugar for generations in order to support the sugar subsidy, maintain sugar company employment, enrich sugar producing companies and keep career politicians in office.
What is my point?  It, like me, is a simple one.  If we desire to go on a hunt for the country that has most egregiously violated the principles of free international trade by subsidizing domestic industries and then dumping the product of those industries upon unsuspecting foreign countries then we need look no further than the good old SDA.  As the world's largest economy we are also the world's greatest violator of free trade.   It is some what disingenuous, no, let me say it straight, it is downright hypocritical to complain about foreign dumping of subsidized goods when the SDA is the greatest violator of that principle in the history of the world.
We must face the fact that, other than in a few pockets of isolated people, there is no free trade anywhere in the world.  Each country protects its own companies for political gain and then blames the other countries of the world for doing exactly the same thing.  The idea that the allocation of capital in the world would actually take place according to which geo-political zone is most qualified to utilize that capital is verboten.  And if we are going to be honest, the SDA is the biggest bully, the greatest destroyer of foreign jobs and the most economically immoral country in the universe.  But hey, what do we care?  They are just stinkin foreigners.  Our jobs are more important than theirs.  Our children are more important than theirs.  So what if they starve to death. 
Trade wars have been and will continue to be waged throughout the countries of the world.  The question is how are we to respond when attacked?  The typical response given by men like Donald Trump is we must strike back, harder and more viciously than the enemy has struck us, and not relent until we have mastered them economically.  You win a trade war, according to these fools, by destroying the economies of foreign countries and making extreme profits for your own companies in the process.  What a bunch of brainless idiots they all are.
The only way to win a trade war is to surrender.  There are several reasons for why the strategy of surrender is the only reasonable recourse when attacked by a foreign country in a trade war.  Consider the fact that when a foreign government subsidizes an indigenous company to allow it to produce goods cheaper than what can be produced by companies in the SDA it is taking money from its own citizens and giving that money to SDA citizens in the form of lower prices.  Yes, you got that right.  Domestic subsidies on exported goods are nothing more than wealth transfer scams that take the wealth of the citizens of the producing country and give it to the citizens of the foreign country making the purchases.  When SDA steel producers cry out for subsidies to allow them to produce and export steel to foreign countries the net impact of that subsidy is to take money from the consumers of the SDA and give it to purchasers of steel in foreign lands.  Who has ever heard of waging a war by taking money out of your own citizen's pockets and giving it to the enemy?  It makes no sense but it is what happens.
In a trade war the foreign country comes up to you, the SDA consumer, and informs you that he is going to shoot himself in the foot and give you some cash.  How should you respond to that threat?  The way the brainwashed and economically ignorant consumers of this envy filled land typically respond is to cry out to government for protective tariffs that will ensure the dirty foreign citizen can't do what he wants to do.  How dare him want to injure himself to give you something for a lower price than you can get elsewhere!  He must be stopped.  The reasonable and proper economic response is to say, "I don't' understand why you are shooting yourself in the foot and I can see no rational reason why you should want to give me some of your money but if you really want to do that who am I to resist?  Give me your cash."
When one country responds to the tariff of another country by creating a new tariff of its own it is only a matter of time until international trade is choked off.  Choking off international trade, despite what the protectionists stupidly declare, always reduces world wealth and is always harmful to the consumers in all of the countries of the world.  If one country actually had the guts to react to all cases of alleged "dumping" by declaring an unconditional surrender and allowing itself to be dumped on by anyone who wished to do so, I believe it would not be long before the citizens in the foreign countries who are being robbed to finance the "dumping" activities would rise up in anger.  As they realized that some of their money was being taken from them and given to the already enormously rich citizens of the SDA by means of their domestic industrial subsidies I can't imagine they would not seek to throw out the bums who are running the program of wealth redistribution.  Tar and feathers would be a reasonable starting point once the angry mobs come to their senses and go after the career politicians who are stealing their money.
Let me correct something I just wrote.  I said that I believe that the citizens who are being exploited by their own governments would rise up in anger and demand changes.  That is, as I consider what I wrote, clearly not true.  These things have been going on for as long as government has existed and international trade has taken place and nobody but me has ever called for an end to them.  How quickly I forget that people are terrified of freedom and terrified of being free men and women.  Those who benefit from the subsidies (the domestic producers) don't complain.  Those who are robbed to subsidize the domestic companies don't complain because they are either too stupid or too enamored with government to know anything else.  So I am driven back to that familiar place in my mind where I conclude that the citizens of the SDA are economically ignorant fools who worship at the throne of the federal government.  That being the case, we are all getting precisely what we deserve.  Vote Trump!

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