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> Tariffs - Good or Bad or What?, Global economic showdowns
AuthorMusician
post Sep 22 2018, 02:18 PM
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Even when the iron ore/taconite (the mineral, not Tuesday's dinner) miners I grew up among wanted tariffs to counteract cheaper foreign steel, I thought it was a bad idea. But hey, maybe looking at it without prejudice might change my mind . . . or reinforce initial impressions?

Tariffs - are they good ideas in a global economy or bad, or what?
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Mrs. Pigpen
post Sep 22 2018, 11:09 PM
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QUOTE(AuthorMusician @ Sep 22 2018, 09:18 AM) *
Even when the iron ore/taconite (the mineral, not Tuesday's dinner) miners I grew up among wanted tariffs to counteract cheaper foreign steel, I thought it was a bad idea. But hey, maybe looking at it without prejudice might change my mind . . . or reinforce initial impressions?

Tariffs - are they good ideas in a global economy or bad, or what?


Short answer is: it depends.
From a security standpoint, there are some things you don't want your nation to become completely dependent.
Also, the global economy is not a free market...countries subsidize. In some cases (solar panels, aluminum, and steel come to mind) nations subsidize to the point they take a loss and no one else on the global market is able to compete. So they have a de facto monopoly.
If/when nations have a de facto monopoly via subsidization, and the item is important enough that we don't want to have to rely on others to produce/extract/manufacture, I think tariffs might be appropriate in those cases.

As a sort of related side note....anyone aware we now produce more oil than Saudi?

This post has been edited by Mrs. Pigpen: Sep 22 2018, 11:12 PM
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Trouble
post Sep 23 2018, 02:36 AM
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Tariffs - are they good ideas in a global economy or bad, or what?

That is a huge subject. Broadly speaking, I mildly supported some aspects of tariffs because I noticed how globalism was affecting interior states differently than coastal ones. But much of my distress comes from the current administration's execution of the how. No articulation, no follow through, just a push or more to the point "just because" has become the operative phrase.

QUOTE(Mrs.Pigpen)
Short answer is: it depends.
From a security standpoint, there are some things you don't want your nation to become completely dependent.
Also, the global economy is not a free market...countries subsidize. In some cases (solar panels, aluminum, and steel come to mind) nations subsidize to the point they take a loss and no one else on the global market is able to compete. So they have a de facto monopoly.
If/when nations have a de facto monopoly via subsidization, and the item is important enough that we don't want to have to rely on others to produce/extract/manufacture, I think tariffs might be appropriate in those cases.


And that is where the gripe begins. Which is to say why did the initial NAFTA agreements allow supply side bubbles to shield certain localities from the full impact of trade?

QUOTE(Mrs.Pigpen)
As a sort of related side note....anyone aware we now produce more oil than Saudi?


Yes and sort of. The bigger news are the gasps of people watching in anticipation as the pin known as credit is about to burst the fracking bubble. The numbers we see now are not the numbers we will see over the next three years for a multitude of reasons.

This post has been edited by Trouble: Sep 23 2018, 02:37 AM
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Mrs. Pigpen
post Sep 23 2018, 02:20 PM
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QUOTE(Trouble @ Sep 22 2018, 09:36 PM) *
And that is where the gripe begins. Which is to say why did the initial NAFTA agreements allow supply side bubbles to shield certain localities from the full impact of trade?


Think the answer to that question and this one are the same:
Cui bono?
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AuthorMusician
post Sep 24 2018, 02:41 PM
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QUOTE(Mrs. Pigpen @ Sep 22 2018, 07:09 PM) *
Tariffs - are they good ideas in a global economy or bad, or what?

Short answer is: it depends.
From a security standpoint, there are some things you don't want your nation to become completely dependent.

Yep, including iron/steel. I'm fairly certain that's why there are mesas of high-grade iron ore across the Mesabi Iron Range of Northern Minnesota, ore with iron content high enough to make compasses useless for navigating the woods. However, it's easy to move away from the so-called dumps and regain compass navigation. Just go in the opposite direction that N points to until it points elsewhere. Hopefully not toward another mine dump.

Iron/steel might not be so important, now that polymers have greater strength and lighter weights.

But I do understand the need to keep war materials within arm's reach. What I don't understand is what tariffs would do to make this so.
QUOTE
Also, the global economy is not a free market...countries subsidize. In some cases (solar panels, aluminum, and steel come to mind) nations subsidize to the point they take a loss and no one else on the global market is able to compete. So they have a de facto monopoly.

How would tariffs stop countries/corporations from purposefully operating at a loss? Is the assumption that higher import costs will encourage domestic production? I can see that as an intellectually logical conclusion but maybe not demonstrably true in reality. What would stop the country imposing tariffs from seeking out yet another foreign supplier via corporations working their supply chains to maximize profits?
QUOTE
If/when nations have a de facto monopoly via subsidization, and the item is important enough that we don't want to have to rely on others to produce/extract/manufacture, I think tariffs might be appropriate in those cases.

I'll accept that as another intellectually logical conclusion but need verifiable examples to actually believe it to be true.
QUOTE
As a sort of related side note....anyone aware we now produce more oil than Saudi?

Does this mean American-based petroleum extractors/refiners/distributors or is this lumping together foreign-based outfits? If lumping together, then it's a false conclusion.

Nevertheless, the observation does point to energy having become a global market in which tariffs don't make sense due to the irrelevance of supply source. It all goes into a big pool, and that makes it meaningless to attempt control via tariffs on Saudi or any other country.

Take for instance motorcycles. Harley responded to tariffs by instigating plans to build the machines closer to foreign markets, thereby avoiding tariff impacts on profits. Any US-based corporation would have done the same, given similar circumstances.

Herein lies the fundamental problem I see with tariffs: Corporations will simply move production elsewhere to avoid their impacts. If the idea was to increase domestic employment, tariffs work directly against that desire. Tariffs might have made more sense before the global economy developed, but no longer. This is exactly why I thought my iron ore/taconite miner neighbors were wrong back in the 1960s for wanting tariffs. It is why after high school I decided to try college and strive towards some other line of work. Lucky for me, it became wrangling computers by the late 1970s.

I do see that the global economy could fall apart, which would make economies more local. I don't see this as necessarily a result of global war -- transporting stuff by huge container boats could become too expensive, or the purchasing power of consumers could become too weak, or localizing economies because it just makes more sense could develop.

But for now, I remain unconvinced that tariffs are good ideas as conditions currently exist. Perhaps there's a way that tariffs would encourage better local economics, maybe by accelerating movement toward systems that have little or no need for imports?

For example, if aluminum could be synthesized in a local factory, or perhaps a polymer that works as well or better, the need for importing aluminum simply vanishes. Tariffs on imported aluminum would likely be helpful during the transition period. Now substitute solar energy infrastructure for aluminum, and the value of keeping foreign suppliers out of the local market increases.

Bottom line for me right now is that tariffs won't preserve old ways of doing things but could be useful during transitions to better new ways. Without clear vision on what could be, tariffs are not only ineffective but harmful, making conditions worse than before.

This post has been edited by AuthorMusician: Sep 24 2018, 02:46 PM
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Gray Seal
post Sep 30 2018, 05:02 PM
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Tariffs are always a bad idea.

Tariffs are a tax upon its own people.
Tariffs interfere with voluntary free markets.

It is that simple. The idea that government needs to manipulate markets for the good of its people is utter hokum. Government intervening into free markets is done for the benefit of a few at the expense of the many.

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It makes no sense to me, at all, to think that tariffs improve the military defense of a county.

Let me see if I have this right: We should not buy and deplete a foreign enemy country of its resources during peace because a war breaking out will leave us vulnerable. We will be vulnerable because we have preserved our own resources and depleted theirs?

If I am basing my use of resource sources upon military planning I will be demanding all use of resources in a time of peace to be from foreign enemy countries.

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There is no monopoly if the "monopoly" exists because the price is so danged low. That is not a monopoly. That is normal market forces.

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If a country wants to subsidize goods going to my country I say, "Bring it!" I like lower prices. Now if my country is doing that, I am ticked off and demanding it stop this. Why should I suffer so those in a foreign land can be better off?

If you want prosperity there is not a better means than putting creating money on a spreadsheet and getting goods in exchange.
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Hobbes
post Oct 1 2018, 02:55 AM
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QUOTE(Gray Seal @ Sep 30 2018, 11:02 AM) *
Tariffs are always a bad idea.

Tariffs are a tax upon its own people.
Tariffs interfere with voluntary free markets.


No, they aren't. You have a false assumption...that being that there IS a voluntary FREE market. The current tariffs being enacted, which are the reason for this thread, are designed to move back to a free market.

Absent the tariffs, yes, it may be a good idea for consumers...but consumers need money to buy goods, and if they aren't working because of unfair trade practices, they have no job. ie, there is a tax either way.
QUOTE
It is that simple. The idea that government needs to manipulate markets for the good of its people is utter hokum. Government intervening into free markets is done for the benefit of a few at the expense of the many.


No, it isn't that simple...pretty much nothing ever is. You are again assuming there IS a free market, which is a false assumption, which is why these tariffs are being enacted.

You seem to be arguing the text book examples and concepts. Nothing is ever as simple and straight forward as it is in the text books, and the text books don't even really talk about tariffs that are being enacted to CREATE a free market---they focus on long term, protectionist tariffs. Which isn't the scenario here.



QUOTE
It makes no sense to me, at all, to think that tariffs improve the military defense of a county.

Let me see if I have this right: We should not buy and deplete a foreign enemy country of its resources during peace because a war breaking out will leave us vulnerable. We will be vulnerable because we have preserved our own resources and depleted theirs?


This depends on the 'resource' and the ability to spool up immediately to use it. Consider the problem if, for example, Great Britain had depended on Germany for all of its planes. That indeed would have posed a problem when war broke out, would it not? And wars are likey to begin, and end, much quicker now than they did then.

QUOTE
If I am basing my use of resource sources upon military planning I will be demanding all use of resources in a time of peace to be from foreign enemy countries.


Depending on the above, I agree with this to a degree.
-------

QUOTE
There is no monopoly if the "monopoly" exists because the price is so danged low. That is not a monopoly. That is normal market forces.


I agree with this. The Supreme Court has, on several occassions, disagreed.


QUOTE
If a country wants to subsidize goods going to my country I say, "Bring it!" I like lower prices.
Again, in this scenario, I agree. But what about barriers the other country enacts making it impossible for us to sell our good there? We get no benefit from that, nor, really, do consumers in the other country. Why not take steps to reduce those artificial barriers to our goods?

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Gray Seal
post Oct 1 2018, 04:09 PM
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It is true that there are no absolute free markets and many where the freedom of choice is greatly cutailed. Anytime there is government intervention in a market the market is less than it could be.

You put forth an idea that when a market is not completely free, it may be a good idea in some instances to move even further away from a free market.

If you realize the fact that free markets is the best means towards economic standing then how can it be that moving further from a free market will be a good thing? Such a notion of squashing choice as the best means towards more choice is obviously wrong.

In my life, there was a similar wrong line of thinking about nuclear weapons. The presented line of things was this: Lots of nuclear weapons is a bad idea (nuclear winter). If we want there to be fewer nuclear weapons we must have a massive build up in nuclear weapons in order to convince the other side to have less. The logic is confused and it is not logical.

-------

QUOTE([b)
Hobbes[/b]]Absent the tariffs, yes, it may be a good idea for consumers...but consumers need money to buy goods, and if they aren't working because of unfair trade practices, they have no job. ie, there is a tax either way.


I do no agree with your thinking here. As tariffs drive up prices, there is less money for other purchases. Driving up the price for everyone so that a few can have a better paying job does not bring overall benefit. Artificially raising price will bring more inefficiency into the market. It is an overall harm to have tariffs.

There are always jobs in a market. Unfair trade practices does not stop someone from working.

Unfair trade practices does harm markets. Having even more unfair trade practices does not now make tariffs good. Tariffs are still bad.

-------

Outside your quote and hearing/seeing media, there are some who have the idea that tariffs are a benefit for the country making them. They are not. Tariffs can help a few but it is at the expense of everyone else. They are a terrible idea. There is a parallel when thinking about minimum wage. Government mandated minimum wages can help a few. However, it is at the expense of the many. Overall, minimum wages cause harm more than good. It is the same with tariffs.

Me thinks that there are a few who wish to fool others in order to gain benefits for themselves at the expense of those who are fooled.

-------

Though it should be obvious it must be stated. Lower prices are good and make your life better. Higher prices are bad. If the general population can learn this, we will be a step towards a better world.
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Hobbes
post Oct 1 2018, 04:42 PM
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QUOTE(Gray Seal @ Oct 1 2018, 10:09 AM) *
It is true that there are no absolute free markets and many where the freedom of choice is greatly cutailed. Anytime there is government intervention in a market the market is less than it could be.

You put forth an idea that when a market is not completely free, it may be a good idea in some instances to move even further away from a free market.

If you realize the fact that free markets is the best means towards economic standing then how can it be that moving further from a free market will be a good thing? Such a notion of squashing choice as the best means towards more choice is obviously wrong.


No, it isn't obviously wrong. Again, you are making false assumptions. The point of such tariffs is to move more towards a free market. Making them...obviously right, in your perspective, given that the goal is more freedom in the market.

QUOTE
In my life, there was a similar wrong line of thinking about nuclear weapons. The presented line of things was this: Lots of nuclear weapons is a bad idea (nuclear winter). If we want there to be fewer nuclear weapons we must have a massive build up in nuclear weapons in order to convince the other side to have less. The logic is confused and it is not logical.


Why is it not logical? Simple force economics. Make the pain of an undesired action so great that the undesired action doesn't occur. Proof is in the pudding...have there been any nuclear wars under this policy? No. Would you prefer a much smaller number of nukes, and some of them therefore being used? Are you in favor of nuclear war?

-------

QUOTE
QUOTE([b)
Hobbes[/b]]Absent the tariffs, yes, it may be a good idea for consumers...but consumers need money to buy goods, and if they aren't working because of unfair trade practices, they have no job. ie, there is a tax either way.


I do no agree with your thinking here. As tariffs drive up prices, there is less money for other purchases. Driving up the price for everyone so that a few can have a better paying job does not bring overall benefit. Artificially raising price will bring more inefficiency into the market. It is an overall harm to have tariffs.

There are always jobs in a market. Unfair trade practices does not stop someone from working.


Of course they do. Please elaborate on how Canada's 300% tariff on our dairy products doesn't limit work in our dairy industry.

QUOTE
Unfair trade practices does harm markets. Having even more unfair trade practices does not now make tariffs good. Tariffs are still bad.


Which is why actions are being taken to remove those tariffs. That action happens to be tariffs, but that doesn't make the action bad. You seem to prefer inaction, and continued unfair markets, even though your entire argument is based on free markets being the ideal.

FWIW...I am in total agreement with you on protectionistic tariffs. We tried that with autos and steel. Both failed, which is generally what happens when those are enacted. But taking steps to make the markets freer and fairer? I'm fine with that. Not sure why you are against it, even though that is your stated preferred end state. You argue against tariffs, yet also argue against steps taken to remove them. It isn't...logical.

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Gray Seal
post Oct 1 2018, 06:43 PM
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Tariffs hurt the country making them. It is not one sided. Each side is harmed.

I will elaborate upon the 300% tariff on dairy from Canada. Such a tax will price US dairy products out of the Canadian market. Negating competition from the United States will cause higher prices for dairy products in Canada. Dairy producers in Canada will be better off while the rest of Canada will be worse off due to higher prices. In the United States, prices will fall as supply previously intended for Canada will increase the supply to US markets. This will result in lower prices for dairy products in the United States (but then we do have price manipulations from government in the United States messing with market response).

As prices fall, profitability will fall and some dairy producers will quit the dairy business and go into different agricultural production.

The Canada tariff will hurt the people of Canada with higher prices. The United States producers will be harmed due to less demand for their products. The winners will be the few in the Canada dairy business who now have less competition.

------

The United States placing a tariff upon Canadian vehicles will not change the damage from the dairy tariff one iota. An American tariff upon Canadian will repeat the ill effects in the dairy business but now it will be the auto industry, too. Retaliatory tariffs solve nothing. They only add to the harm. More harm is not a move towards a free market.
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Hobbes
post Oct 1 2018, 07:59 PM
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QUOTE(Gray Seal @ Oct 1 2018, 12:43 PM) *
The Canada tariff will hurt the people of Canada with higher prices. The United States producers will be harmed due to less demand for their products. The winners will be the few in the Canada dairy business who now have less competition.


Agree. So why not try to correct it, and help achieve a fair free market for U.S. producers? This isn't about artificially propping them up, it is about making the field fair.

------

QUOTE
The United States placing a tariff upon Canadian vehicles will not change the damage from the dairy tariff one iota. An American tariff upon Canadian will repeat the ill effects in the dairy business but now it will be the auto industry, too. Retaliatory tariffs solve nothing. They only add to the harm. More harm is not a move towards a free market.


How do you know it won't? Or why would you even think that? It's pretty simple. If they decide there is less pain for them in reducing the dairy tariff in order to get the vehicle tariff removed...it will indeed impact it.

More harm is certainly a move to a free market. It creates incentive for them to act. Absent any harm...what is their incentive?
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Gray Seal
post Oct 1 2018, 09:56 PM
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The incentive has to be that they do not want to hurt their own country like they do with tariffs. Voters have to make office holder lose their positions when they support tariffs. Tariffs hurt their own country. This must be taught. Initiating our own tariffs gives the impression that tariffs are a solution, not the problem.

Politicians believe that tariffs benefit a few and the politician will gain their votes. Politicians do not think the average voters gives a hoot about tariffs. Voters have to know and they have to care if tariffs are to be stopped. The uneducated masses we have in the United States is quite daunting.
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Hobbes
post Oct 2 2018, 01:06 AM
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QUOTE(Gray Seal @ Oct 1 2018, 03:56 PM) *
The incentive has to be that they do not want to hurt their own country like they do with tariffs. Voters have to make office holder lose their positions when they support tariffs. Tariffs hurt their own country. This must be taught. Initiating our own tariffs gives the impression that tariffs are a solution, not the problem.

Politicians believe that tariffs benefit a few and the politician will gain their votes. Politicians do not think the average voters gives a hoot about tariffs. Voters have to know and they have to care if tariffs are to be stopped. The uneducated masses we have in the United States is quite daunting.


No, the incentive is that they don't want to get a lot of flak from the newly affected industries. It isn't 'voters'. It is 'loud voters'. This doesn't really impact voters in general that much.

You can already see that this tactic is working. Many countries hit with these have renegotiated their trade deals. It's working. Hence, tariffs were indeed the solution, while also the problem.
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Gray Seal
post Oct 2 2018, 02:31 PM
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You may be right, Hobbes, that most of the world is economic illiterates. Perhaps the Trump approach worked.

I tend to think progress would have been made without the pushing of bad economic ideas. I am not sure what agreements have been made and what the progress is. Anything short of free and open trade is less than it should be. A good agreement should be one page long.
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AuthorMusician
post Oct 2 2018, 04:26 PM
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QUOTE(Hobbes @ Oct 1 2018, 09:06 PM) *
You can already see that this tactic is working. Many countries hit with these have renegotiated their trade deals. It's working. Hence, tariffs were indeed the solution, while also the problem.


Maybe so, but without actual examples of this success, the argument is too vague.

I do see that NAFTA got a new name. The deal looks pretty much the same, but maybe you've seen improvement.

Last I checked, the Trump deal with China is looking more like a confrontation heading into economic warfare, and with the recent near collision of warships, maybe a brand spanking new Republican shooting war with a country that not only has nukes, but large conventional forces as well.

Let's hope that doesn't happen. It's bad enough that the world has come close to global thermonuclear war more than once without throwing temptation to fate.
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