Tag Archives: politics

In praise of tariffs

In a previous post I noted that we could reduce global air pollution if we used import taxes (tariffs) to move manufacture to the US from China and other highly polluting countries. It strikes me that import tariffs can have other benefits too, they can keep US jobs in the US, provide needed taxes, and they’re a tool of foreign policy. We buy far more from China and Russia than they buy from us, and we get a fair amount of grief — especially from Russia. An appropriate-sized tariff should reduce US unemployment, help balance the US, and help clean the air while pushing Russia in an alternative to war-talk.

There is certainly such a thing as too high a tariff, but it seems to me we’re nowhere near that. Too high a tariff is only when it severely limits the value of our purchasing dollar. We can’t eat dollars, and want to be able to buy foreign products with them. Currently foreign stuff is so cheap thought, that what we import is most stuff we used to make at home — often stuff we still make to a small extent, like shoes, ties, and steel. An import tax can be bad when it causes other countries to stop buying from us, but that’s already happened. Except for a very few industries, Americans buy far more abroad than we sell. As a result, we have roughly 50% of Americans out of well-paying work, and on some form government assistance. Our government spends far more to care for us, and to police and feed the world than it could possibly take in, in taxes. It’s a financial imbalance that could be largely corrected if we bought more from US manufacturers who employ US workers who’d pay taxes and not draw unemployment. Work also benefits folks by developing, in them, skills and self-confidence.

Cartoon by Daryl Cagle. Now why is Russia a most favorable trade partner?

Cartoon by Daryl Cagle. Trade as foreign policy. Why is Russia a most favorable trade partner?

In a world without taxes or unemployment, and free of self-confidence issues, free trade might be ideal, but taxes and unemployment are a big part of US life. US taxes pay for US roads and provide for education and police. Taxes pay for the US army, and for the (free?) US healthcare. With all these tax burdens, it seems reasonable to me that foreign companies should pay at least 5-10% — the amount an American company would if the products were made here. Tariff rates could be adjusted for political reasons (cartoon), or environmental — to reduce air pollution. Regarding Russia, I find it bizarre that our president just repealed the Jackson Vanik tariff, thus giving Russia most favored trade status. We should (I’d think) reinstate the tax and ramp it up or down if Russia invades again or if they help us with Syria or Iran.

A history of US tariff rates. There is room to put higher tariffs on some products or some countries.

A history of US tariff rates. Higher rates on some products and some countries did not harm the US for most of our history.

For most of US history, the US had much higher tariffs than now, see chart. In 1900 it averaged 27.4% and rose to 50% on dutiable items. Our economy did OK in 1900. By 1960, tariffs had decreased to 7.3% on average (12% on duty-able) and the economy was still doing well. Now our average tariff is 1.3%, and essentially zero for most-favored nations, like Russia. Compare this to the 10% that New York applies to in-state sales, or the 6% Michigan applies, or the 5.5% that Russia applies to goods imported from the US. Why shouldn’t we collect at least as high a tax on products bought from the non-free, polluting world as we collect from US manufacturers.

Some say tariffs caused the Great Depression. Countries with lower tariffs saw the same depression. Besides the Smoot-Hawley was 60%, and I’s suggesting 5-10% like in 1960. Many countries today do fine today with higher tariffs than that.

Robert E. Buxbaum, March 25, 2014. Previous historical posts discussed the poor reviews of Lincoln’s Gettysburg address, and analyzed world war two in terms of mustaches. I’ve also compared military intervention to intervening in a divorce dispute. My previous economic post suggested that Detroit’s very high, living wage hurt the city by fostering unemployment.

Where does industrial CO2 come from? China mostly.

The US is in the process of imposing strict regulations on carbon dioxide as a way to stop global warming and climate change. We have also closed nearly new power plants, replacing them with cleaner options like a 2.2 billion dollar solar-electric generator in lake Ivanpah, and this January our president imposed a ban on lightbulbs of 60 W and higher. But it might help to know that China produced twice as much of the main climate change gas, carbon dioxide (CO2) as the US in 2012, and the ratio seems to be growing. One reason China produces so much CO2 is that China generates electricity from dirty coal using inefficient turbines.

Where the CO2 is coming from: a fair amount from the US and Europe, but mostly from China and India too.

From EDGAR 4.2; As of 2012 twice as much carbon dioxide, CO2 is coming from China as from the US and Europe.

It strikes me that a good approach to reducing the world’s carbon-dioxide emissions is to stop manufacturing so much in China. Our US electric plants use more efficient generating technology and burn lower carbon fuels than China does. We then add scrubbers and pollution reduction equipment that are hardly used in China. US manufacture thus produces not only less carbon dioxide than China, it also avoids other forms of air pollution, like NOx and SOx. Add to this the advantage of having fewer ships carrying products to and from China, and it’s clear that we could significantly reduce the world’s air problems by moving manufacture back to the USA.

I should also note that manufacture in the US helps the economy by keeping jobs and taxes here. A simple way to reduce purchases from China and collect some tax revenue would be to impose an import tariff on Chinese goods based, perhaps on the difference in carbon emissions or other pollution involved in Chinese manufacture and transport. While I have noted a lack of global warming, sixteen years now, that doesn’t mean I like pollution. It’s worthwhile to clean the air, and if we collect tariffs from the Chinese and help the US economy too, all the better.

Robert E. Buxbaum, February 24, 2014. Nuclear power produces no air pollution and uses a lot less land area compared to solar and wind projects.

Lincoln’s Gettysburg address, not as bad as first thought.

Three score days ago, The Harrisburg Patriot & Union retracted its unflattering 1863 review of Lincoln’s Gettysburg address. But this retraction deserves more attention, I think, than that the editors reconsidered. The Patriot & Union was a Republican journal; it carried an accurate account of the speech, and so it’s worthwhile to ask why its editors labeled this great speech, “silly remarks”, deserving “a veil of oblivion”; “without sense.” Clearly the editors saw a serious lack that we do not see today. It’s worth asking then, what made them think it was silly and lacking in sense?

The Union & Patriot has retracted their review of this 1863 speech.

Lincoln in 1863; The Union & Patriot has retracted their review of this Gettysburg speech — in the fullness of time, they’ve come to reconsider their original review.

Lincoln spoke a few words in honor of the dead, but Edward Everett spoke on this topic for two hours before Lincoln rose. This lack does not appear to be what bothered the editors: “To say of Mr. Everett’s oration that it rose to the height which the occasion demanded, or to say of the President’s remarks that they fell below our expectations, would be alike false. Neither the orator nor the jester surprised or deceived us. Whatever may be Mr. Everett’s failings he does not lack sense – whatever may be the President’s virtues, he does not possess sense. Mr. Everett failed as an orator, because the occasion was a mockery, and he knew it, and the President succeeded, because he acted naturally, without sense and without constraint, in a panorama which was gotten up more for his benefit and the benefit of his party than for the glory of the nation and the honor of the dead.” The editors came to Gettysburg (I think) to hear Lincoln to hear things that only LIncoln could provide — his real thoughts on slavery and an update on his efforts at peace. As best I can tell, it was in these areas that they saw “a veil of oblivion.” Even so, for them to call this address, “silly remarks” there must be more going on. Here are my thoughts.

Lincoln had freed southern slaves a few months earlier by the emancipation proclamation, but no one knew their status; there had been a riot over this a few days previous. Did Lincoln claim equality for these ex-slaves, and if not, what were his thoughts on the extent of their in-equality. They were confiscated as war booty; would Lincoln return them to their owners after the war was over? If so, they were not free at all. Along with this, what was Lincoln doing to end the war? It was far from clear that the North could win in 1863. Lee had many victories, and now England had entered in support of the Confederacy. In my opinion, it was Ericsson’s Monitors that allowed the North to stop the British and win, but it appears that, in 1863, only the British navy realized that their power had been neutralized, and the south was lost.

By 1863 Ericsson was turning out two of these Monitor-type sips per month, enough to keep the British from any major port in America

The North’s Monitor, right, fights the Confederate Merrimac, left, to a draw over control of Norfolk harbor. Ericsson turned out two Monitor ships per month. In my opinion is was these ships that stopped the British and won the war.

Lincoln was cryptically brief when it came to slavery or peace: 271 words. About half the speech is devoted to the brave men who struggled here; the other half speaks of “the Nation,” or the “government.” Not the United States, the Union, the North, the South, but an undefined entity that Lincoln claims came into existence 70 years earlier, in 1776. Most educated people would have said that 1776 created no nation or government, only a confederation of independent states as described by the articles of confederation. Under these articles, these 13 states could only act by consensus and had the right to leave at will. To the extent that anyone held the South was bound now, it was because of the Constitution, signed ten years later, but Lincoln does not mention the Constitution at all– perhaps because most Democrats, understood the Constitution to allow departure. Also, to the extent the Constitution mentions slavery, it’s not to promote equality, but to give each slave 3/5 the vote-power of a free man. If “created equal” is to come from anywhere, it’s the Declaration, but most people understood the intent of the Declaration differently from the vision Lincoln now presented.

As far as most people understood it, The Declaration claimed the God-given right to separate from England and gain us a measure of self-rule — something that the South now claimed for itself, but Lincoln opposed. Further, we claimed in The Declaration, that British mis-management made the separation necessary, and listed the abhorrent offenses including suspension of habeas corpus, and the confiscation of property without process of law — things Lincoln was doing even now. Even the introductory phrase, created equal, was not understood to imply that everyone was equal. Rather, as Stephen Douglass pointed out in their 1858 Chicago debate, we’d created a nation “by the white man, for the benefit of the white man, to be administered by white men, in such a manner as they should determine.”

Ulysses Grant had a slave who he freed in 1859, and had control of his wife's slaves, who became free only in 1865. Lee's slaves were freed in 1862.

Ulysses Grant had a slave he freed in 1859; his wife held slaves till 1865. Lee freed his in 1862.

Where was Lincoln coming from? What was he saying that November day? It’s been speculated that Lincoln was proposing a secular religion of administered freedom. There appears to be some legitimacy here, but more I suspect Lincoln was referring to the UNANIMITY requirement behind the Declaration — by agreement all the states had to agree to independence, or we would all stay bound to Britain. If we had to unanimously bind ourselves, we must have unanimously bound ourselves to some shared vision of the union or democracy, -presumably that all were created equal. Five years earlier, William Herndon, Lincoln’s law partner, had given Lincoln a book of sermons by Theodore Parker, a Boston Unitarian. That volume includes the following section marked by Lincoln in reference to what the unanimous binding entailed: “‘Democracy is direct self-government, over all the people, for all the people, by all the people.” Whether Lincoln was now speaking in direct reference to this line, or more-likely, as I suspect, to a more general refutation of the claims of Southern separation and of Douglas’s 1858 white man claim, Lincoln’s understanding of the import of the Declaration was one that few understood or agreed with. The North still had slaves — Grant’s wife for example, and there was no obvious desire for a new birth of freedom, just an end to the war. Lincoln’s words thus must have sounded like gobbledygook to the majority of learned ears.

Based on the events and issues of the time, and the un-obvious point of the speech, I’d say the editors were justified in their ill review. Further, the issues that bothered them then, abuse of power, citizen and states’ rights, remain as relevant today as ever. Do the current editors see any import of the 9th and 10th amendment limiting the power of federal government? If so, what. Thus, I’m a bit disappointed that the Union & Patriot retracted its review of Lincoln’s short speech with nothing more than claiming to see things differently today. We stand on LIncoln’s shoulders now, and though we see the nation, and the Declaration, through his eyes, their issues remain, and the original review gives perspective on the nation as it looked at a very different time. Thus, while I understand the editors desire to look correct in retrospect, I’d prefer if the current editors would have left the review, or at least addressed the points that bothered their earlier colleagues. It’s a needed discussion. When every person thinks alike, nobody thinks very much.

January 6, 2014 by Robert E. Buxbaum, a doctor of Philosophy (in Chemical Engineering). Here is a translation of the Address into Jive. And into yeshivish. I’ve also written an essay on a previous retraction (regarding GM food). If Lincoln had a such a long address, how did he ever get mail?