Wednesday, March 7, 2018

Vox Popoli: Main Street First

This is a good sign of the God-Emperor's America First economic agenda in action. And the Main Street of America at that.
White House chief economic advisor Gary Cohn has resigned from President Donald Trump's administration.

The former Goldman Sachs president and free trade advocate Cohn, whose departure date will come in a few weeks, decided to quit after Trump announced he would impose stiff tariffs on steel and aluminum imports.... Cohn clashed with Trump's protectionist advisors on the issue of tariffs. At a meeting with steel and aluminum executives last Thursday where Trump announced the move, Cohn argued against it, warning about price increases for steel and aluminum products, according to a person in the room.
Free trade is not good for the US economy or the American public. But it is good for the financial elite that lives as a useless parasite off both as it plays the "heads I win, tails you bail me out" casino. And for those who missed my debate with economist Bob Murphy, the best thing about tariffs is the fact that they are an alternative to income taxes, a benefit that Bob even conceded during the debate.
VOX: My fourth argument against free trade is practical. Bob wrote that “the most obvious way to realize that tariffs make a country poorer is to realize that tariffs are taxes on domestic citizens, not on foreign producers”. That’s correct but that would only be true if the alternative was no taxes. That is obviously not the case now, it will never be the case, and it should be readily apparent that a nation with a government funded by tariffs will be wealthier and freer than a government funded by income taxes. Tariffs are considerably less intrusive and less economically disruptive than the personal and corporate income taxes that have replaced them. Free trade is unlikely to make a country wealthier if it replaces its tariffs with income taxes. (So to answer Bob’s question of how do politicians make a country wealthier, they do so by substituting tariffs for income taxes.)

BOB: One last thing here. Let's see. He admitted, and I think it was very telling, that Vox admitted that tariffs are taxes on US citizens. So I wasn't sure if he was going to go with me on that. He does. So again, Vox is now admitting that yes, the US government imposing taxes on US citizens make us better off and in some sense wealthier and he is just saying in comparison to income taxes. Well, fair enough, I do concede that. By the same token, Obamacare can make America richer if the alternative is socialized medicine. But, clearly, if we were debating if Obamacare makes us better off or not, I shouldn't have to be forced to use the default option or the baseline case of an even bigger government policy. So, by the same token here, when I say tariffs don't make Americans wealthier I am not saying the only other alternative is to say the income tax. So I do agree if we want to have some shared issues in the debate here, I do agree that tariffs are better than an income tax, dollar for dollar, but I still don't think it is correct to therefore conclude tariffs make us wealthier.
It's fine to hypothesize about a world with no taxes, no debt, and no government spending, but back here in the real world, we have a choice between a) income taxes, b) government debt, and c) tariffs. And tariffs are by far the economically preferable option that does the least harm to the citizenry.