| Tuesday, June
17, 2003
Tariff and Free Trade
In another discussion group I was
eventually forced to come up with a long piece on my views on tariff. I
include it here, although it was written there as the culmination of a long
discussion, and is not quite the essay I would have written on the subject.
I rather
weary of being misrepresented so let me try to say one more time:
1
When you export someone’s job
the person remains, and there are costs associated with having exported
his job.
2
The costs are not born by the
company that benefits from the lower costs of production; they are born by
the community, which will include the customers who get their widgets at
lower prices.
3
These costs are associated
with: alienation of the worker whose job has been lost. In some cases
those are trivial. In some cases they are not, as when someone has worked
for a long time at a particular job, has become highly skilled at it, is
older and past the age of easy retraining, and lives in an area where the
worker has roots but there are few job opportunities. The costs can
include some form of welfare, some form of retraining cost, and sometimes
extreme social costs as the entire family discovers that “being a good
man and delivering a fair day’s work for a fair day’s pay” does not
result in any kind of security, and then some godless capitalist comes up
and brays that he got all he deserved and he should shut up.
4
These costs can also include
voting patterns including voting for measures that harm the economy,
including "Robin Hood" laws.
5
High tariff protects industrial
inefficiencies and can destroy entire industries over time.
6
Temporary protective tariffs
were employed by this country to help build industries
7
Tariff for revenue only vs.
protective tariff used to be one of the defining issues between Democrats
(in the South mostly) and Republicans who were perceived to represent
mostly the interests of the NAM and what has become the Rust Belt.
8
There is certainly a level of
tariff that produces revenue without having much effect on trade, and
which helps pay the costs of import inspections, protection of trade
marks, and other necessary activities of the Customs Inspectors.
a.
As an example, there are
printers in Israel who specialize in printing unauthorized and
uncontracted books of science fiction including my own, and selling them
to Costco and Wallmart in fairly large batches. Each sale of one of those
books costs the American publisher and the author money; they are
typically sold at remainder prices, often before the book is remaindered.
If these are not intercepted at the border, then the harm is done and
irrevocable, since suits against the publisher are won by default but the
publisher, whose identity is usually known to the Israeli authorities, has
gone out of business and established a new firm that ostensibly has no
connection with the old one. Raids by the Israeli police on such firms
caught in the act have been universally unsuccessful because somehow the
publisher was tipped off to the raid a couple of days in advance and
cleared all the assets out of the place after which it was abandoned.
b.
If I seem to have some
knowledge of this in science fiction it is because it happened to me and I
worked with the State Department and Customs Service when I was President
of Science Fiction Writers of America. I make no doubt it happens with
other genre, and I make no doubt that it happens in other countries other
than Israel. I am most familiar with this particular instance, but I
understand that both Taiwan and mainland China have engaged in the
practice.
c.
There are other trademarked goods imported illegally and sold as genuine.
d.
In
all cases the pirated books and knock-off trademarked goods have to be
intercepted at the borders, and the inspections cost money. Tariff is one
way to recover some of the costs of those inspections.
9
There is probably a level of
tariff which can alleviate some of the social and economic costs of job
export without being so overly protective of American Industry as to
discourage innovation and lock the industry into technological decay;
indeed it may be possible that preventing the industry from exporting the
job may force technological innovations to increase productivity. My guess
is that this level is between 10 and 15%, and ought to apply to all
imports; it is a tax on imported goods designed to balance the competitive
advantage offshore manufacturers obtain by not having to enforce EPA,
Americans with Disabilities, OSHA, and other such regulations.
a.
I am more than willing to
concede that getting rid of some of those regulations would do more good
for productivity and preserving American jobs than the tariff. I also note
that ADA was signed by Bush the Elder and he is proud of it, and is
unlikely to be repealed by any rational US Congress. The same is true of
many other such regulations. They are givens.
10
Economic models demonstrate
that the most efficient allocation of resources is generally done through
extreme competition, laissez faire capitalism with unrestricted free trade
and unrestricted immigration. These are models: no nation on earth has
ever actually tried this. The models do not take account of social and
political realities, such as the real economic costs of political
externalities like welfare, crime suppression and such like that are often
a consequence of that kind of economic environment.
11
I have never seen an economic
model that attempted to examine the real world with its social costs of
free trade and fold those into the model. My suspicion is that if you did
put in all the real costs to the community of free trade you would find
that a 10 to 15% tariff would make economic sense; but I do not insist on
that, because the social costs of alienation, and the loss of the
expectation that 'a fair day’s work for a fair day’s pay' is the
proper philosophy of life for a citizen of a republic are so severe that
the economic costs are nearly irrelevant. Republics cannot afford to have
large numbers of citizens who no longer believe that the republic looks
after their interests and is concerned for them. Alienation is real and
economically expensive.
12
In all cases defense is more
important than opulence, and you will always have interferences with free
trade for those reasons alone; and some industries are vital to the
survival of the state, and allowing all those industries to be sent
overseas and the experience in operating those industries to stagnate, can
have severe military consequences if the industry in question has been
exported to a potential enemy or a country under the effective control of
a potential enemy, or a country that can be blockaded or greatly
influenced by a potential enemy. I say this in the abstract; you may fill
in particulars if you like.
a.
I conclude that some industries
must be protected simply because their existence is vital for defense.
b.
I say no more here than was
concluded by several RAND Corporation studies some years ago. Hostile
trade as a weapon is not unknown in history although our present
leadership seems never to have heard of it.
I could continue, but perhaps
this is enough on this point.
I make no doubt there
will be discussion.
And see below.
And to repeat a warning:
Earthlink users are now getting the scam request for
"updating" their account information by furnishing financial
data. It looks VERY official. Don't do it...
And it gets worse: Earthlink managed to cancel Roberta's
account, although they assure me it will be reinstated shortly; but
meanwhile no one can access their accounts because the billing software is
being reloaded (and that may or may not have something to do with the
timing on her account being deaded; mine isn't).
And readers will get a VERY OFFICIAL looking notice
purporting to be from Earthlink that will ask for all kinds of accounting
information. DO NOT DO THAT!
And this just in:
http://story.news.yahoo.com/news?tmpl=story&u=/space/
20030616/sc_space/xprizerejectsgravitycontrolrocketgroup
I wondered if this would exist on the web. I note that in
some collections of Vachel Lindsay the poem no longer exists, even by
reference. It is certainly not PC. http://www.ipoet.com/archive/rhythmic/Lindsay/congo.html and
I don't know why I remembered it. We memorized it in high school but I had
forgotten most. Interestingly there is a defense of posting that poem on
that web site. http://www.ipoet.com/ARCHIVE/RHYTHMIC/Lindsay/Vachel.html Apparently
they felt the need to justify including it... And we have
this SECURITY WARNING from Roland
> SOFTWARE:
> Microsoft Internet Explorer 5.01
> Microsoft Internet Explorer 5.5
> Microsoft Internet Explorer 6
> DESCRIPTION:
> A vulnerability has been identified in Internet Explorer (IE),
which
> can be exploited by malicious people to execute arbitrary script
code
> on a user's system.
>
> The vulnerability is caused due to an input validation error in
the
> custom errors generated by IE, when a website returns an error
page.
> The problem is that the requested URL is included, which may
allow
> execution of arbitrary script code in the "My
Computer" security
> zone.
>
> Successful exploitation requires that a user is tricked into
visiting
> a malicious website or click a malicious link. Afterwards, the
user
> must click the link generated by the resource.
FOR entire story see Security page
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