Spaghetti on the Wall: Tariffs and Free Trade

Tossing ideas around

Gutfeld’s the only regular viewing I do. I binge all sorts of stuff but those are short-term, no strings engagements. Dark drew me in and mangled me. I had web sites saved to Collections with family tree graphs, each character pictured in tryptic young, regular, and old, and “Spoiler free through episode…” which I dutifully double checked before reading past the banner. But that was something I did. I started it and finished it.

I watch Gutfeld every night after the rest of my household goes to bed. It’s an ongoing thing. You get used to the rotation and what sets them off, their pet peeves and well hammered nails. I don’t think Kat Timpf wants to talk about tariffs anymore.

The subject comes up and she’s already looking high and to the right. She prefaces a lot of her responses to other subjects with “Yeah… but—“ Tariffs came up the other day. She was clipped. “Yeah, but—“ The ellipses implied pause gone, “Yeah, but—.“ She’s told you once a million times that tariffs don’t get paid by the country doing the exporting. It’s like pacifism in adherence is required even when practiced unilaterally. The importing nation’s buyers absorb the cost and why are we here again and Joe Machi better move fast to dodge the eye daggers he’s gonna get if he brings up price-paid-to-access-our-domestic-market because… She’s so ready to move on to “Video of the Day.”

She ain’t wrong. The buyer’s the only one bringing money to the table. That’s why I feel really bad about saying “but,” but…

“I’m all for freedom of speech, but…” drives me nuts. I’ve told too many people too often who’ve said that that the “but” invalidates everything that comes before. It’s a common thing people like me, who put themselves forward as free speech absolutists, run up against. It’s true, though. The “but” means the preamble was padding to soften whatever censoriousness you’re into. I get it. That said, I’m all for free trade, but…

When we talk about free trade, we’re typically talking about trade unfettered by tariff. Trump threatens tariffs against other nations. If tariffs are in place there’s no free trade. That’s not contestable. But absence of tariffs is touted as free trade even though that’s not always the case. It is a prerequisite, but there’re more annoyances crawling around in the dark.

The government’s already decided that there is a threshold, costs to be paid for access to the market for domestic companies. The most obvious is labor. In order to produce in the United Sates, you have to pay a minimum hourly. In an imaginary world where all other costs are equal, why should a Kentucky company have to meet a minimum wage in order to share domestic market space with a Chinese company taking advantage of the labor forced from a bunch of troublemakers with a penchant for standing very still near picturesque buildings? The U.S. government demands a cost of domestic producers. Why should foreign competitors get dispensation?

Tariffs present their own minefield. If my Alabama factory puts out one A-team lunchbox per hour per employee - and for argument’s sake and simplified math lets say the federal minimum wage is $10 per hour even for Auburn fans - it costs me $10 per lunch box off the bat. There’s also the guy that answers the phone and supervisors and such, but cut it out. The guy that makes the lunch box costs $10 and I need to get that back. My competitor from Chuzhou either pays his half what I pay, or takes advantage of the afore mentioned motionless troublemakers. His cost for an equivalent to mine is either $5 or nada.

To make a decent profit, I have to sell my lunchboxes for a mathematically simple $100 (it’s a badass lunchbox – van shaped, natch - with hot side hot and cold side cold plus there are royalties to Stephen J. Cannell Productions.) The Chinese guy can undercut me at $95 or $90. I’m held to rules. It doesn’t matter what your opinions of them are, if I’m held to rules I’m at a disadvantage to those who aren’t.

If a tariff is imposed to bring his price up to mine, we both sell for a fair $100, but I have a problem with that. Why should the government benefit $5 to $10 in direct payments? I’m the one at risk and I’m not to keen on my government having any reason to favor a sale at my… “expense” is the wrong word and muddies my point, but you get what I mean. I don’t know how the government would favor one product over the other, but I don’t want them to have reason to get thinking about it.

We could have tariff rates that drive the price of foreign lunchboxes high enough to guarantee me an advantage. The tables have turned, but I’m going to screw that up spectacularly. If it’s set so that my Chinese competitors have to charge $110, I’m raising my price to $109. My competitors will too, and good luck with nearly impossible to prove collusion charges. I’m also going to get loud about “money flowing back into our economy” and mention schools and tax base when people ask what happened.

There are a slew of inequalities involved in bringing wares to market. Transportation costs typically favor domestic production. Rent and local taxes will differ, but higher rent should mean other advantages that justify the price. Availability of skilled workers, natural resources, etc., will never be evenly distributed, but that’s good. We want challenges, otherwise there’s no innovation. The things you can’t clever your way around through the manufacturing process are mandated by people with a monopoly on force; bayonet affixed costs.

So, I’m all for free trade. “But.”

In exchanges with states whose government have similar mandates, there’s no need to impose tariffs. Let the market be the market. That’s not the case when dealing with China and many others. We have already distorted those markets by holding our producers to a more expensive standard than that to which they hold theirs.

For those who want to take on Leviathan and raise hell about any and every thumb messing with and fouling up measurements, Godspeed. Take heart and keep mentioning that Switzerland doesn’t have a minimum wage. As it stands, our government’s a big buttinski. I’ll object and agree to tariffs on a case-by-case basis, but probably not because free trade is at stake.