Tuesday, March 15, 2016

Of Tarriffs and Free Trade

See http://americastradepolicy.com/did-the-smoot-hawley-tariff-cause-the-great-depression/#.Vuf9mjHBSog:

[T]he stock market crash that had begun in the last week of October 1929, some eight months before Hoover signed the Smoot-Hawley tariff.

{Arguably] the stock market collapse was caused by overproduction in the 1920s. During World War I a number of countries, including the U.S., had greatly expanded agricultural production; as Europe recovered from the war and its agriculture production reached earlier levels,production worldwide exceeded consumption and prices fell around the world. Farmers had gone into debt during the boom times, investing in new equipment and land, and were hard hit when prices fell.

[More people were buying on credit, and] many Americans had been buying stocks on margin and when the stock market collapsed, they saw their equity plummet and they stopped buying goods and services;

[T]he Federal Reserve. Between 1929 and 1933, the money supply contracted by one-third, and as a result many companies couldn’t get loans.

[E]conomists argued that the [Smoot-Hwley] tariff increases would raise the cost of living, limit our exports as other countries retaliated, injure U.S. investors since the high tariffs would make it harder for foreign debtors to repay their loans, and damage our foreign relations.

[T]the stock market started anticipating the act as early as December 1928 and it fell over the next year as the legislation to raise tariffs looked likely to pass and rose when it seemed the legislation might fail.

[Some economists] point out that exports only accounted for some seven percent of the U.S. gross national product in 1929 and the decline in U.S. exports in the ensuing years may have been caused by the depression itself and not solely by tariff retaliation. Some note that the U.S. had also enormously raised tariffs in 1922 and that this did not cause a depression.

MY COMMENT: Properly used, tarrifs threatened or imposed on a t for tat basis would be more a negotiating ploy [for making best deals] than a pre-set trap with no escape. T for tat tends to be the best strategy in most variations of the prisoner's dilemma game. https://slashdot.org/story/04/10/14/134202/Tit-for-Tat-Defeated-In-Prisoners-Dilemma-Challenge

The way the U.S. has been trading with China is not t for tat, but stupid patsy. Whatever we have been doing, it is not free trade. You cannot do free trade with a partner who is playing stick 'em up.

The price of the "cheap" commodities we get as a result of our "free trade" with environmental despoilers and people farmers is very expensive, when you add up: industries lost, despots enriched, domestic representatives corrupted, political payoffs laundered, cronies empowered, pollution exported, people enserfed and embittered, godliness reviled, and faithlessness promoted. We are nurturing the beast that is growing in power and intention to devour us. When we engage in "free trade" with politically unfree nations (Commie and Muslim), the "cheap" stuff we are getting in return is about as cheap as the free stuff that Bernie hawks is free.

Trump may talk abot 35% tariffs, but that is negotiating ploy. That ploy is serious, but only if the other side persists in perfidy. The goal is to restore free trade by demonstrating willingness to return t for tat.

Without demonstrating will to defend national integrity, bullies soon see to it that there is no nation to defend. Faithless bullies, protestors, cronies, commies, dopers and pervs never stop pushing and taking until they sense steel.

Stalin's name was based on steel. Sadam's was based on confrontation. Obackstab's, Crimeton's and Burnfree's seem to be based on flexible perversion, treason, and historical illiteracy.

Re: "Other countries never pay the increased tariff price only the consumer does."

True. But "the consumer" is a composite character, composed, for examples, of fluxes of hedgers and American workers.

The price of cheap foreign commodities is the loss of American jobs, to the benefit of hedging cronies. America's economic and political freedom are being hedged out, in exchange for cheap commodities.

Adding insult to injury, after transferring American industries overseas, hedgers, instead of putting now cheaper American labor to work, bring in the cheapest foreign labor. This is reducing workers worldwide to a lowest common denominator -- economically and politically. It leads to a NWO/OWG that is in essence a two class society (of Morlochs and Eloi).

Moreover, it adds a political component to its economic effects: That is, it fundamentally changes America from a representative republic to a representative republic in name only.

The problem is this: How can America remain economically competitive without sacrificing its republican form of governance? How can the political freedom and dignity of ordinary American workers be protected from the one-two, good cop-bad cop combination punches of cronies and commies -- who are both bent on the destruction of republics and the erasure of national boundaries?

There is no simple solving mechanism. Tarriffs are not in themselves a magic bullet. Protecting American workers from foreign competition is clearly not a magic bullet. But looking for ways to facilitate a better game of t for tat is probably an important ingredient. The thing about t for tat is this: As technologies and means for analyzing information unfold, the game never stops. Competent visionaries are forever necessary, and old lessons must keep pace or they will drown their proponents.

We should not tax domestic business. We should not tax domestic exports of commodities. We should tax domestic outflows of money. We should not tax foreign inflows of money (provided they are not for lobbying). (Billions in money held abroad would be repatriated.) We should tax foreign inflows of commodities. Rates should not be static. Rates should be dynamically based on a general but non-symmetric form of t for tat.

We should not tax personal income. We should tax personal consumption and all forms of lobbying. We should tax gifts to charities and foundations as forms of taxable consumption. We should have a retail tax on personal consumption, and a yearly progressive tax on personal consumption. All lobbying should be charged as a taxable personal consumption to the account of whomever was the agent that authorized it. Tax revenues should be applied mainly to the maintenance and development of infrastructure by returning them to the States.

Whatever the t for tat stratagems we may deploy, they need to take more into account than economic health. They need to consider: To what extent do we really want to improve the economic health of nations that are politically motivated to seek to undermine or destroy us, or to use rogue nations and elements for that purpose? That is a factor that needs to be weighed by representatives of the people at large. Not by puppets for faithless cronies. That is why economic policy has to help deter the rise of a non-relateable, all powerful class of oligarchic aristocrats with its dhimmification of useful idiots and sloganeering jihadis. As things stand, our faithless political leaders tend to sell both us and our military secrets and technologies to bribing agents abroad, with payments laundered through "charitable foundations."

You may just as well argue that the Roaring 20's led to overproduction that gave us the 30's.

It is true that the OWG people (who do not want to lose their position for destroying our republic and holding Americans under their thumbs) will anticipate Trump. They will try to discredit him by screwing up the pain. This will not be to protect the economy. It will be to protect their positions.

But this kind of thuggery will have to be met in kind, t for tat. Just like with the socialist thugs, Americans need to impose t for tat against the crony thugs. I suspect Donald has some measures in mind.

We will either have a country and a republic, or we won't.

Our elites think we're idiots and that we need to be kept as such. They read us bedtime stories about living happily ever after with "free trade." But these elites are not loving parents. They are crony swindlers.

If all countries behaved as enlightened unicorns so that politically equal human freedom and dignity were availed everywhere, then there could be such a thing as free trade. Outside uniforn land, free trade is too often a chimera. For a service fee, America's corporatists play free trade with America's marbles with other nations that do not practice free trade. Free trade is an imaginary fairie for playing bait and switch with ordinary Americans. A way for connected crony corporatists to sell out America's resources on the cheap to foreign masters of monetary manipulation and political kickbacks.

A lot of crony-commie trolls have grown fat and powerful while lurking in ambush under the bridge. They need to be exiled, but that cannot be done without confronting them. They will *howl, protest, plunder, and sabotage. Still, they must be removed if the republic is to be salvaged.

(*In Obama's poetry, these trolls may be more like apes. Apes that "howl, bare their fangs, dance, tumble in the rushing water, musty, wet pelts glistening in the blue.")

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