Ep. 129 Trump’s Tariffs Are Bad (and So Is Krugman)

14 March 2018     |     Tom Woods     |     14

Trump’s tariffs are bad economics, so Krugman isn’t entirely wrong, but his cheerleading for some of the well-known trade agreements needs the gentle correction we’re known for on this show….

Krugman Column

Oh, What a Trumpy Trade War!” (March 8, 2018)

Contra Columns

FLASHBACK: When Jesse Jackson Praised President Trump For ‘Being Inclusive’,” by Paul Bois
The Social Function of Futures Markets,” by Bob Murphy

Krugman Articles

Krugman on TPP (says free trade deals involve special interests):
TPP Take Two” (October 6, 2015)

Krugman wants 25% surcharge on Chinese imports:
Taking On China” (March 14, 2010)

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  • https://www.facebook.com/david.rogers.hunt David_Rogers_Hunt

    The FLASHBACK: When Jesse Jackson Praised President Trump For ‘Being Inclusive’ audio was priceless! Please do that more often!

    The media reminds me of the jerks in high school who would do everything they could to provoke you into a fight,… and then cry out Why did you do that for? after you make the least bit of effort to defend yourself. I don’t like Trump,… but the way the entire establishment media has come after him continuously for his entire first year, during which his administration is under continuous investigation for suspected collusion with the Russians to win the election,… and he is putting up with it. He doesn’t like it, and is not afraid to say so. But HItler, Trump ain’t. By this time, in a Killary administration, all of her loose ends would have been entirely eliminated by this time, no doubt.

    I think these tariffs are a terrible idea,… but he is being seen as fulfilling yet another campaign promise.

  • http://2vnews.com 2VNews

    Unilateral free trade; best option.

  • Tasos Obscure

    I don’t understand why libertarian economists always approach trade today from the assumption that the markets are competitive when there’s anything but that. There are a few big companies satisfying any given class of products we want, if they can make it cheaper abroad and import it with low tariffs they will just leave leaving an employment gap. From the way I see it, it’s literally unfair competition from countries that have lower wages, less regulation and licenses, making it even more prohibitive to compete. I welcome people to tell me why that’s not the case by the way.

    • Matt Hartley

      a tariff of foreign imports in the X industry can be expected to help the X industry, and increase employment in the X industry. Nobody denies this. What libertarian economists say is that literally everybody else is hurt by the tariff.

      • Tasos Obscure

        The problem is that if the companies leave the country in today’s corporatist environment and their products remain through imports, there is nothing that will replace these jobs, be it a new company in the same or different market because of the usual culprits of tax, licensing and the rest. This is absolute destruction of the population’s well being that is bound to not go down well. Best case scenario these people will receive welfare, but isn’t that worse since their productivity is now zero? Any benefits that the rest of society has received then seizes to be.

        • Matt Hartley

          >isn’t that worse since their productivity is now zero? Any benefits that the rest of society has received then seizes to be.

          Sure, in the extreme, everybody in the domestic X industry is unemployed, and the output of the domestic X industry goes from, say, 1000 units to 0 units. Does this mean that society has 0 units of X? no, because society is now getting, say, 2000 more units of X from foreigners at half the price, making society 1000 units better off.

          The entire reason the tariffs are being pushed is because China is dumping goods on the market and we just have too much stuff going around, driving prices down. Therefore we need to reduce the amount of stuff in the country in order to protect domestic production.

          • Tasos Obscure

            I completely agree with you with the economics but my issue is the social and long term political effects that seem quite dire. I will enumerate some very general ones that seem very likely.
            1) Since the supply of jobs decreases, welfare populations increase, giving more influence to government and politicians in people’s lives in general.
            2) Even larger incentive of the most productive people to not have children due to taxation.
            3) Even larger divide in the lifes of high and low income people. Not because of income, but because of lifestyle.
            4) Is it really a good idea to give influence and wealth to countries like china? They literally have forced labor camps as prisons.
            5) Competition has to be perceived as fair, some industry that gets adversely affected from outsourcing because of selective political action(lower tariffs) is bound to create animosity.
            6) All of the above will create a political climate very much against libertarian ideals and I would argue already has.

            I really don’t care about wealth inequality, but we have to take into consideration the people who live with welfare largely doing nothing all day long that can vote and how they view the world.

          • Michael Thompson

            Tasos all of your questions are based on false premises. I’ll just take one example: “There are a few big companies satisfying any given class of products we want..”
            Stop what you are doing right now and look around the room you are in. If you took a photo of that room you could EASILY track down at least 10,000 companies that you have never heard of that contributed to the things in that room.
            A simple iPhone has OVER 753 of them! And that does’t include the transportation companies or the book keeping companies for those 753! (https://consumerist.com/2016/08/05/it-takes-dozens-of-companies-to-make-your-iphone/)
            As for the “…supply of jobs decreasing..” that would be another false premise. I have started multiple companies in my life and each time I HOPE to get run out of business cause then I can hire those people who ran me out to do what we were doing and then move my crew up the production ladder!
            Don’t EVER count on government or their policies. As I have told people for decades government is simply a tool for the Intelligent and powerful to exploit the less so. It’s always been that way and it always will.

          • Tasos Obscure

            “As for the “…supply of jobs decreasing..” that would be another false premise. I have started multiple companies in my life and each time I HOPE to get run out of business cause then I can hire those people who ran me out to do what we were doing and then move my crew up the production ladder!”

            I really can’t see the false premises of my propositions. Just like you, I’m highly trained making some big bucks, I know where you’re coming from. Given the level of technology we’re at, it is true that, in general, employment opportunities span far and wide, but they are still severely restricted by government intervention or direct legislation. That’s the reason job competition is so absolutely dire in many places and freelance work is not very prominent, because people don’t have many options.

            What do you say to 10% of the population that can hold no job whatsoever in the US because of their IQ being 83 or less. What about the 25% that has an IQ or 90 or less that can only do dead end grunt work. For a large portion of the population there is no job they can do, regardless of how many companies exist, offshoring has been a big contributor to this. These populations also have very high fertility rates due to welfare and command a great portion of the political machinery through their votes. When they go to the ballot having devolved from primarily working class families to primarily single mother families the results are a disaster, not prospectively, but empirically.

            I don’t count on government policies, but we have to be realistic if we want things to go our way. I don’t refuse free trade either, my issue is procedural.

          • Michael Thompson

            My businesses are actually in construction so most of the people who worked for me where in the mid to lower IQ levels.
            I would also point out that after training them there is NO WAY you could tell the difference between their finished work and that of a certified genius (Who,I should point out, I would also have to train). 🙂
            The reason low IQ people have a hard time finding jobs is precisely because of government interference. Example: Did you know, in Indiana, it requires a doctor to burn off a wart! >.< As if it's to complex or dangerous for even a nurse to do. For those who don't know it is so easy to do my corpsman would let us burn off our own warts when I was in the Marine Corp!
            Thomas Sowell talks a lot about many of the subjects that you bring up. I would suggest watching his interviews on Youtube. It would be far me enjoyable to you then reading my responses. 🙂 Nice talking with you!

          • Tasos Obscure

            I’ve probably watched way too many hundreds of hours of sowell. Sadly sowell doesn’t believe that IQ is valid, probably because he’s not trained in statistics, therefore he would never pose the problem in the way I did since if you think that everyone is equal in every way other than culture, people that lose their jobs due to offshoring should just change their culture and compete fairly with the rest, but that’s not the case. Of course that’s a very simplistic representation of how he would explain it.

            “The reason low IQ people have a hard time finding jobs is precisely because of government interference.”
            That’s exactly my issue. Instead of making trade free first and limiting government second we should do the opposite which would be beneficial both to our cause and to the political acceptance of our cause.

    • Tyler Folger

      Libertarian economists don’t make that assumption. If a completely unhampered market economy were necessary for economic reality to apply, the discipline would be pretty useless. The fact is the market works with the situation its given to give us the best resource allocation, given those constraints. Politicians can’t centrally plan a more rational pricing for goods, even in a hampered economy.

      As for the tariff itself. The industry I work in is very sensitive to the price of steel. Our work dries up and we lay people off when steel prices increase. The tariff is not simply a trade-off between jobs and cheaper goods. It secures work for some domestic industries at the expense of other domestic industries. It’s just special pleading.

  • Sergio Marron

    Can anyone comment on Stefan Molyneux take on the tariffs?


    • https://www.facebook.com/david.rogers.hunt David_Rogers_Hunt

      Stefan Molyneux really does try to think for himself rather that just swallowing the predigested regurgitated opinions of the mind control main stream media. But, as always, the truth is in the eye of whose oxe is being gored.

      I agree that steel and aluminum production is being subsidized by the Chinese government (partially by employing domestic slave labor, but more so in just allowing largely unrestrained air pollution that commonly results from smelting metals from raw ores). But should we object if others want to sell us products at a subsidized lower cost?

      The idea that most all manufacturing of metals from raw ores has gone to China (somewhat less so to India) is really only deeply disturbing to me if we were to go to war with China in the near future,… and could no longer buy processed metals from them. Seems fairly thin to me.

      The problem with fighting is once a fight starts, no one not involved in the original conflict knows, nor cares, who started it. Others just want the fighting to stop, period.

      The one unchosen positive duty that libertarians would seem to universally accept is If you break it, you fix it!, but is offering anyone subsidized goods under cost breaking anything? Does this raise to the standard of being a violent act requiring an appropriate violent response?

      Stefan is probably more of an empiricist than a mere rationalist, and theory does not impress him as much as immediate evidence of what’s happening now in fact over what we would all prefer were happening. This is very brave, and often admirable, but I have to wonder if pragmatism in the moment may not be betrayal of principle in the long run.

      Because there is very convincing evidence that illegal aliens are collecting welfare while overwhelmingly voting for more statist welfare policies,… maybe ideological libertarians have to reexamine our commitment to open borders and immigration in these circumstances.

      Is it really a good idea to use the law to stop private businesses from ostracizing those they disagree with, as in shadow banning?

      I admire Stefan a great deal,… and his point that it does little good to be ideologically pure if one dies in the meantime,… obviously has great merit. But then I think of The Smoot-Hawley Tariff and the Great Depression, and I wonder is the cure going to be worse than the disease?