Fallacies of Tariffs
A Libertarian Court?
The latest decision of the US Supreme Court was so focused that they lost sight of not only the forest because of the tree, but they also lost sight of the tree as their eyes were stuck to the bark. Saying they are being myopic even comes up short. The Court is not the only one at fault here. The Trump Administration made faulty assumptions and did not make a vigorous defense of their position, as they presumed the Court would rule in their favor. At the same time, Congressman Bacon has staked out a very extreme libertarian position on tariffs.
The largest problem is tariffs simply are not much of a revenue source for the Federal Government in the 21 century. The last time such revenue was the dominant source of revenue was 1862, during the Civil War. The revenue was not enough and President Lincoln introduced an income tax. From this time forward, tariffs were about protectionism, not revenue.
By the 20th century, the Federal Government became further removed from tariffs. In 1913, the 16th Amendment was passed, creating an income tax system. To add, Congress gave more power to Presidents to enact tariffs such as the Reciprocal Tariff Act of 1934 (https://en.wikipedia.org/wiki/Reciprocal_Tariff_Act) and the Trade Expansion Act of 1962 (https://en.wikipedia.org/wiki/Trade_Expansion_Act). The focus of on tariffs as revenue is a bit absurd.
The free trade worked because most of the trade at the time was with European powers and colonial empires who shared same values on labor conditions. During this period, Omaha became a major hub for call centers. Dial any 800 phone number, and you were likely connected to someone in Omaha.
However, free trade faced new challenges with the collapse of the Soviet Union and China’s joining the World Trade Organization and the emergence of over 80 countries seeking trade. To add, the digital age came about with the internet and smartphones. The information age removed barriers. Omaha lost those call centers to places like the Philippines where the work week is 48 hours, and overtime pay is less than time-and-a-half. Also, their minimum wage is a fraction of what Nebraska’s minimum wage is.
There are other problems as well, such as secular sterilization. To list the items: abortion, homosexuality, contraceptives, transgenderism, and pornography, as well as a hatred for the normative straight man, has made posterity nearly non-existent. When I say posterity, I mean fornicating and having kids. Absent more kids, the end result are labor shortages which forces work out of the United States. The Biden Administration tried to correct this with massively permissive immigration, but it completely backfired. Yet, government entitlements continue to grow with not enough workforce to fund them.
The Trump Administration has not explained the magnitude of the problems in the digital economy. In the USA, a product can be made for one dollar with a mark up of 20 percent retail, result being $1.20, but the same product in another country can be made for 50 cents, and be marked up 100 percent, result being $1.00. Which product do you buy? Which company do you invest in? Who wins?
Supreme Court Justice Neil Gorsuch wants Americans to trust legislative bodies but how well is that working out? The US debt is over 38 trillion dollars with a deficit exceeding 1 trillion dollars. Interest on the debt exceeding military expenditures. The Federal Government is partially shut down. I can tell there is a lot of tree bark in Gorsuch’s eyes.