Essence – Tariffs, Trade Wars, and Shooting Wars
The power to tax is the power to start a fight. It’s a lesson politicians never learn.
The income tax stands as the chief warrior trying to incite insurrection at home. while high tariffs, import quotas, embargoes, and the smuggling they generate threaten trade wars, which light the fuse to shooting wars.
Even many libertarians believe some form of traditional taxation (confiscation) is necessary to fund a minimal government, but this establishes a double standard, exempting government from moral law. If we don¹t have the right to seize wealth, we can¹t transfer that nonexistent right to government. Though state officials often act like little Caesars, they’re our servants, and who in their right mind would give a servant the authority to initiate force against oneself? In granting government a monopoly on the use of force, we can only allow it for retaliatory purposes, and only against those who initiate it. Coercive taxation should be illegal. Government must support itself through voluntary means, like the rest of us do.
Most people accept some degree of tariffs as part of the cost of doing business across national borders. Yet, the philosophy of the General Agreement on Tariffs and Trade (GATT), and its offshoot, the World Trade Organization (WTO), was to eliminate all barriers to international trade. Yes, we know the WTO is turning interventionist and trying to become a governing power. It’s becoming a political organization in the usual sense of the term: favoring certain industries and countries over others.
But GATT, which was founded after World War II, didn’t start out that way. Why were countries and corporations who are still hostile to unrestricted trade within their own borders so eager to establish it across their borders? After decades of Keynesian and Marxian brainwashing through every conceivable outlet, which included the silencing, ignoring, and smearing of free market views, how on earth did so many countries come to agree that laissez-faire between nations is the road to peace and prosperity?
Perhaps even the political leaders of that era could see a causal connection between trade restrictions and Hiroshima.
After World War I, countries dove into protectionism under the erroneous belief that restricting trade through embargoes, high tariffs, and quotas would help foster home industries and promote the general welfare.
“World commerce spiraled into a trade war in the 1920s and 1930s,” writes Robert F. Graboyes of the Federal Reserve Bank of Richmond. “One nation would impose tariffs or quotas, another would retaliate, and trade dissolved away. Economists disagree over how much this trade war deepened and lengthened the Great Depression, but they generally agree that protectionism contributed to the crisis.” [1]
And they generally agree that some countries scapegoated other nations or other people in justifying aggression. Economics professor E. Kwan Choi of Iowa State University notes that in “an effort to give an early boost to trade liberalization after the Second World War – and to begin to correct the large overhang of protectionist measures which remained in place from the early 1930s – tariff negotiations were opened among the 23 founding GATT ‘contracting parties’ in 1946. This first round of negotiations resulted in 45,000 tariff concessions affecting $10 billion – or about one-fifth – of world trade.” [2]
In 1995 GATT replaced itself with the WTO, which currently has 144 member nations. Through a series of negotiations among 102 countries during the 1970s, GATT managed to bring the “average tariff on manufactured products down to 4.7 per cent compared with about 40 per cent at the time of GATT’s creation.” [3]
Lower tariffs alone couldn’t prevent economic recessions in the 1970s and early 1980s, so governments devised other ways to protect home industries from more efficient foreign competitors. GATT’s multilateral approach gave way to bilateral trade agreements to fight the business slump, and this ultimately undermined GATT’s credibility. GATT lasted 47 years as a way for countries to reduce trade barriers.
Free trade can¹t be fostered by committees. It can only come about through a government’s commitment to let it happen. Politicians today owe favors to industry for lavish campaign support. As long as we¹re committed to interventionism, a legacy we owe to Honest Abe, politically-connected industries will push for protectionist measures. Thus we have the spectacle of President Bush unabashedly approving a 30-percent tariff on foreign steel for the alleged purpose of helping U.S. steel firms adjust to “surges” in steel imports. It will accomplish the exact opposite, giving our steel industry incentive to remain bloated and inefficient, while penalizing everyone through higher prices.
As Lew Rockwell has pointed out, look for the WTO to give the green light for retaliation. [4] May it stop short of a full-scale trade war.
References
1. The Free Trade Debate: 221 Years Running, Robert F. Graboyes,
2. The Roots of the WTO, E. Kwan Choi,
3. Choi, Roots of WTO
4. The Steel Ripoff, Llewellyn H. Rockwell, Jr
——– George F. Smith
Complement – Tariffs Can Restore America’s Greatness
Misconceptions regarding tariffs often are caused by advocates of Free Trade policies. As we have all learned to our great dismay, Free Trade is seldom Fair Trade. But the case for tariffs is inexorably linked to the domestic tax laws and policies of any trading nation. Commerce is good and should be encouraged. However, the notion of beneficial rewards for our own society based upon the current ‘real world’ practices of international business, is absent in most instances. We need to be honest and real! The natural bias in business is to seek monopolies.
Today, our economic life line is regulated and determined by the axis of a corrupt State/Corporation union. The only partners in trade, is that of government and its protected enterprises. Intelligent discussions about trade policy must concede that the true value of business, exists only when the economic interest of a countries population, shares in the profits from commerce. Don’t misread the intent of this statement. There is no inherent right for equal distribution. Remember that no State or Corporation has any “rights”. Only people have “rights”.
Our deplorable record in international trade is proven with our historic balance in trade deficits. This is real money gone off shore, taken out of our economy and has profound and negative consequences. U.S. Corporations, routinely form foreign subsidiaries and move operations to remote areas around the world, for the purpose of avoiding the higher costs of domestic labor, benefits, regulations, infrastructure and taxes. But they are allowed to sell their goods back into their home economy, at market prices that have no relationship to true market costs. In essence the remaining domestic industries subsidize those firms that left our shores and set up houses overseas. Profits are good, but for them to be valid, they must be earned on a level playing field.
This is why our tax laws must correct the abnormalities in current policies and trade agreements. Real competition is desirable and needs to be fostered by removing advantageous treatment for favored companies. Our goal should not be an interdependent world trade system that is controlled by select groups of monopoly elite’s. We should strive to reinstitute national independence in manufacturing, which will guarantee national economic survivability and well paid living wages for our future generations.
Pro-Competitive Tariffs is a necessary solution to restore domestic business. Today the operating principle for international business is collusion. Governments grow in power when their cohort Corporation partners drive out domestic companies.
A standard error is that tariffs inhabit trade, and have contributed to the “winds of war”. Positive tariffs will place the tax burden where it belongs, on the foreign producer. It is a benefit to conduct trade, for there is no “right” to dump products or to sell below costs of the importing societies. Efficiency in markets should not be viewed in world wide terms, for a very simple reason. Globalists manipulate trade agreements to create cartels that they control. Every trade treaty has the same goal, to diminish the independence of national economies and force domestic consumers to become totally dependent upon foreign industries. No nation can remain free, when they are reduced to vassals of international State/Corporations axis.
The Davos crowd of an international interdependent economy wants you to accept the following: “The conclusion of the trade theory is that free trade leads to the most efficient use of world resources.”
Note the philosophy – most efficient use of world resources. In a nut shell you have the game of Free Trade exposed for its ultimate political objectives. They despise tariffs because they are effective in curbing foreign dependency.
The method to adopt for restoring a viable domestic economy would require reforms that drastically lower, if not abolish, personal income taxation – be linked to the passage of Pro-Competitive ad valorem Tariffs in the form of a national import sales tax. We all share in the goal of smaller government, less regulation and free usage of our own money. We have a mutual interest in building a domestic economy that will create higher wage scales and more retained after tax income for the greatest number of our own population. When the best jobs become government work, our society is doomed and reduced to the median world wide income levels.
Our solution of taxing at the waters edge will allow government revenue to be raised from foreign manufacturers, no matter where their corporate charter is domiciled. Our own balance of payments will move back into equilibrium. Domestic enterprises will have the effective opportunity to reindustrialize America. A key component is to have a tax code that will reduce the percentage in the tariffs upon achieving the elimination of the balance of trade deficit. The trigger in rates will be determined by the healthy recovery of domestic capacities.
Most laymen fail to appreciate the productive and desirable effect of the Velocity of Money. When commerce is vibrant, profits and wages are generated that instill high expectation, which allows for new purchases, because future earnings are secure. Free trade policies uses the velocity of the money principle to empower their cartels. Fair trade that is based upon a thriving indigenous and native economy, brings opportunity to our own communities.
Flexible Tariffs, when tempered with reforms in our own tax codes that require supra nationals and multinationals to enter a truly Free Enterprise environment, would greatly improve the likelihood of real competition. Consumers have been sold out with the promise of cheap foreign goods. Any short term discount, has the high cost of permanent loss in American employment. When one is destitute and out of work, lower prices at Walmart won’t fill the cart.
And God forbid what might happen when foreign producers decide to raise prices or withhold their production because of a political turmoil or confrontational crisis! National security does has an authentic meaning, when applied to essential segments of national needs. Open your minds – Freedom is served when you control your own economic future. Pro-Competitive Tariffs can be a step in the right direction.
——— SARTRE