PDA

View Full Version : China imposes up to 105 percent tariff on chicken.




Anti Federalist
09-27-2010, 02:54 PM
Oh, but god forbid we do such a thing...

FFS, "free trade" my aching ass. :mad:

China imposes tariff on chicken.

NEW YORK (AP) -- Shares of the nation's chicken producers could tumble on Monday after China said it will slap a hefty tariff on U.S. chicken imports to combat what it says are unfairly low prices.

The Chinese government said Sunday that its investigation found that U.S. chicken products are being sold at low prices which undermine the local market. New import duties ranging from 50.3 percent to as much as 105.4 percent will take effect Monday and last for five years.

http://finance.yahoo.com/news/Ahead-of-the-Bell-China-apf-1182577565.html?x=0&sec=topStories&pos=4&asset=&ccode=

specsaregood
09-27-2010, 02:57 PM
Wait a second. We are able to raise and ship chicken to China cheaper than they can produce it or get it from any other 3rd world country?

<== amazed.

oyarde
09-27-2010, 03:00 PM
Wait a second. We are able to raise and ship chicken to China cheaper than they can produce it or get it from any other 3rd world country?

<== amazed.

Yes and they are free of most major toxins . :)

specsaregood
09-27-2010, 03:01 PM
Yes and they are free of most major toxins . :)

Well, I wouldnt go that far. Maybe the chinese just want their girls to hit puberty exceedingly early and grow larger breasts. :)

lester1/2jr
09-27-2010, 03:02 PM
see Food Inc. factory farming is cheap but it's disgusting and will probaly turn us into werewolves or something sooner or later. except not just at night

Anti Federalist
09-27-2010, 03:04 PM
Wait a second. We are able to raise and ship chicken to China cheaper than they can produce it or get it from any other 3rd world country?

<== amazed.

Food is one of the last things left that we "manufacture".

Won't be for much longer though.

Pericles
09-27-2010, 03:05 PM
The wonders of "free trade".

awake
09-27-2010, 03:17 PM
Retaliate! Teach them a lesson...why stop at tariffs. If tariff/ taxation is an economic benefit than abolish the foreign products all together. Simply stop all products from entering this hemishere from any country that seems to be producing cheaper.

This is like China stabbing itself in the leg then daring the U.S. to do the same.

China is hurting itself and its citizens. The U.S. chicken can find another market to clear the difference with out acting stupid to defeat stupidity.

If by "free trade" you mean the government regulated trade than yes hate it and abolish it.


Oh, as I recall, the U.S. tariff'd Chinese tires not long ago... it is a dumb meets dumber outcome, tit for tat loose loose game.. one that can only exist under a monopoly of incompetence.

Anti Federalist
09-27-2010, 03:25 PM
Retaliate! Teach them a lesson...why stop at tariffs. If tariff/ taxation is an economic benefit than abolish the foreign products all together. Simply stop all products from entering this hemishere from any country that seems to be producing cheaper.

This is like China stabbing itself in the leg then daring the U.S. to do the same.

China is hurting itself and its citizens. The U.S. chicken can find another market to clear the difference with out acting stupid to defeat stupidity.

If by "free trade" you mean the government regulated trade than yes hate it and abolish it.

If trade "protectionism" alone was the single factor encouraging or discouraging growth and economic prosperity China should be a mirror image of North Korea.

It, of course, is not.

China knows what it is doing, it is pursuing a purely nationalistic program of economic growth for China.

It is doing so at our expense, since nobody can seem to centralize the fact that when you do nothing and produce nothing and create nothing anymore (well, besides porn, lawyers and weapon systems) as a nation, you will no longer remain free and independent as a nation.

libertarian4321
09-27-2010, 03:37 PM
This is a little surprising since US chicken can't amount to more than a tiny fraction of the chicken eaten in China.

Chinese poultry production is more than 4 times that of the USA (China is the world leader in agriculturural production, by far) and is mostly consumed locally. I would think US chicken would account for no more than a few percentage points in the Chinese market.

oyarde
09-27-2010, 03:42 PM
This is a little surprising since US chicken can't amount to more than a tiny fraction of the chicken eaten in China.

Chinese poultry production is more than 4 times that of the USA (China is the world leader in agriculturural production, by far) and is mostly consumed locally. I would think US chicken would account for no more than a few percentage points in the Chinese market.

At some point China is going to be consuming more of everything than they can produce ?

oyarde
09-27-2010, 03:43 PM
If I recall , we also export our chicken feet to China .

forsmant
09-27-2010, 03:49 PM
Hard to compete when your playing by different rules. Maybe we should learn a thing from China and impose some tariffs on their junk, Lead based slave made nick knacks.

specsaregood
09-27-2010, 03:50 PM
It is doing so at our expense, since nobody can seem to centralize the fact that when you do nothing and produce nothing and create nothing anymore (well, besides porn, lawyers and weapon systems) as a nation, you will no longer remain free and independent as a nation.

You reminded me of my favorite Max Keiser quote:


"If you took away fraud from the business model of America, there would be nothing left except porn and donuts". --Max Keiser

As far as China, they can do this and there is not a damn thing we can do about it. They know this and we know this. We should be damn grateful they give us all the products we currently import in exchange for worthless digital digits and paper debt notes.

pcosmar
09-27-2010, 03:53 PM
Perhaps they really don't need our chicken.

More for me. ;)

gls
09-27-2010, 03:54 PM
Oh, but god forbid we do such a thing...


You mean like how earlier this year Obama put a huge tariff on Chinese tires in order to save a couple of hundred union jobs, even though that meant much higher prices for everyone? How exactly is that fair?

awake
09-27-2010, 04:41 PM
If trade "protectionism" alone was the single factor encouraging or discouraging growth and economic prosperity China should be a mirror image of North Korea.

It, of course, is not.

China knows what it is doing, it is pursuing a purely nationalistic program of economic growth for China.

It is doing so at our expense, since nobody can seem to centralize the fact that when you do nothing and produce nothing and create nothing anymore (well, besides porn, lawyers and weapon systems) as a nation, you will no longer remain free and independent as a nation.

You say this as if the various policies of protectionism has not in fact caused the gutting of the America's productive capacity.

Kregisen
09-27-2010, 04:59 PM
I wonder how many people in this thread who keep screaming "This is unfair! Let's get tariffs too!" have taken economics.....

awake
09-27-2010, 05:06 PM
I find that the understanding of economics happens best when the example is at the individual level. If the farmer and the baker wish to make it more difficult for each others goods to be exchanged they both lose, both in productive power and wealth accumulation.

It isn't any different in country scale applications. You are only substituting tire makers and chicken farmers. The single example as noted can be absorbed with out much noticeable effect, but when all industries wish to use the government to favor its own you have accumulative destructive forces at work.

nobody's_hero
09-27-2010, 05:08 PM
I tend to agree with anti-fed. on the tariff issue. But one thing that might need questioning:

How much is poultry subsidized here in the U.S.?

I'm saying that the tariffs might not have been necessary. China is loaning our government money by the train-loads, some of which is then used by our government to subsidize U.S. agriculture.

Therefore, China may be essentially responsible for the unfairly low prices of chicken in the U.S. They should simply stop loaning us money, if that's the case.

puppetmaster
09-27-2010, 05:10 PM
chickity China a Chinese chicken,,,,,eat a drum stick and your brain stops ticking.........now i am singing that song in my head

Stary Hickory
09-27-2010, 05:12 PM
LOL that will teach them starve your own people China...get those nasty Americans!

nobody's_hero
09-27-2010, 05:13 PM
I might add that I would be buying stock in Chinese agriculture if I had any money to invest.

specsaregood
09-27-2010, 05:45 PM
I wonder how many people in this thread who keep screaming "This is unfair! Let's get tariffs too!" have taken economics.....

What, so they could learn keynesianism?

Anti Federalist
09-27-2010, 05:49 PM
You say this as if the various policies of protectionism has not in fact caused the gutting of the America's productive capacity.

America was most productive and most free under a system of tariffs much heavier than what they are now.

It is no surprise that the periods of "bust" and decline are associated with "free trade, no tariff policies, Smoot Hawley notwithstanding.
http://www.princeton.edu/~pkrugman/tariff_history.png

Kregisen
09-27-2010, 05:54 PM
What, so they could learn keynesianism?

Tariffs is such a simple issue, it's talked about in entry level econ courses. Way before you get into the keynes/hayek arguments.

erowe1
09-27-2010, 05:57 PM
Just because the Chinese government hurts its own people this way doesn't mean we should tolerate our government doing the same to us.

specsaregood
09-27-2010, 05:59 PM
Tariffs is such a simple issue, it's talked about in entry level econ courses. Way before you get into the keynes/hayek arguments.

Fair enough. do they go into detail at all about how tariffs affects an economy with a commodity backed currency vs. an economy backed by a fiat debt note with an unlimited credit limit?

oyarde
09-27-2010, 06:37 PM
Well , I guess if I am a chicken exporter maybe I would have to look into the market in China for pork , turkeys etc

oyarde
09-27-2010, 06:39 PM
May even be an oppurtunity for turkey feet .

oyarde
09-27-2010, 06:43 PM
If there turns out to be a slight shortage in chicken supply , maybe cornish hens , geese , quail , pheasant ?

wormyguy
09-27-2010, 06:44 PM
Given that we subsidize our chickens, it should even out.

Vessol
09-27-2010, 06:53 PM
Reading the OP..is today backwards day?

erowe1
09-27-2010, 07:40 PM
I wonder how many people in this thread who keep screaming "This is unfair! Let's get tariffs too!" have taken economics.....


What, so they could learn keynesianism?


Tariffs is such a simple issue, it's talked about in entry level econ courses. Way before you get into the keynes/hayek arguments.


Fair enough. do they go into detail at all about how tariffs affects an economy with a commodity backed currency vs. an economy backed by a fiat debt note with an unlimited credit limit?

If what you're getting at, Specsaregood, is that you think Austrian economists who advocate free market approaches to monetary policy are at all likely to favor tariffs, then you are mistaken.
http://search.mises.org/search?q=trade&site=default_collection
http://cafehayek.com/trade

If you are aware of exceptions to this rule, please share them.

newyearsrevolution08
09-27-2010, 07:44 PM
I will soon be doing home grown animals anyways

soon I will be "mostly" free from store bought goods.

I could care less about chicken tariffs myself

----

People worry about job security - start your own business
people worry about food prices going up - grow your own
people worry about medication - GROW your own
people worry about gas prices - make your own
people worry about power prices - generate your own
people worry about their security - buy a gun or two

seems simple in my head but not the easiest to setup BUT worth working towards.

specsaregood
09-27-2010, 07:51 PM
If what you're getting at, Specsaregood, is that you think Austrian economists who advocate free market approaches to monetary policy are at all likely to favor tariffs, then you are mistaken.
http://search.mises.org/search?q=trade&site=default_collection
http://cafehayek.com/trade

If you are aware of exceptions to this rule, please share them.

Nope, I wasn't getting at anything. I could see how one might argue that tariffs might slow the bleading from this country in the short term, but in the long term nothing is gonna save us as long as the rest of the world is happy to take our debt in payment.

My last question was a serious one, is that answered in those links?

erowe1
09-27-2010, 07:53 PM
My last question was a serious one, is that answered in those links?

I don't know.

Michigan11
09-27-2010, 07:58 PM
I've been following the convo here, and am also very interested in Spec's question...

specsaregood
09-27-2010, 08:06 PM
I don't know.

Well I think its a good question. I'm not an economist by any means so feel free to help me out here. But when discussing the pitfalls of tariffs, do they explain how it works in relation to monetary policy?

I can easily see how tariffs are bad in a commodity based system or even a system that is strictly limited in terms of debt. But I can't see how one can ignore the fact that we have the ability to print limitless amounts of debt in exchange for goods. It must factor into the equation, yes?

I could see how high tariffs might slow the loss of our manufacturing base and production abilities in our current system; but not sure. It is something I have wondered about, feel free to educate.

nobody's_hero
09-27-2010, 08:24 PM
Well I think its a good question. I'm not an economist by any means so feel free to help me out here. But when discussing the pitfalls of tariffs, do they explain how it works in relation to monetary policy?

I can easily see how tariffs are bad in a commodity based system or even a system that is strictly limited in terms of debt. But I can't see how one can ignore the fact that we have the ability to print limitless amounts of debt in exchange for goods. It must factor into the equation, yes?

I could see how high tariffs might slow the loss of our manufacturing base and production abilities in our current system; but not sure. It is something I have wondered about, feel free to educate.

In essence, it's like I said earlier. China is hurting themselves. NOT because of the tariff issue (Chinese chicken farmers are going to see a massive boost in wealth following this move by the Chinese government—right before it gets taxed from them, of course, by said government), but because they keep loaning us a limitless supply of money and getting angry when our government gives it away to our agricultural sector. If they wanted to balance things out a bit, then a real solution would be to stop loaning us so much damned money.

Furthermore, the questions you've raised about our debt-based economic 'growth' model are worth attention.

Michigan11
09-27-2010, 08:46 PM
Well I think its a good question. I'm not an economist by any means so feel free to help me out here. But when discussing the pitfalls of tariffs, do they explain how it works in relation to monetary policy?
I can easily see how tariffs are bad in a commodity based system or even a system that is strictly limited in terms of debt. But I can't see how one can ignore the fact that we have the ability to print limitless amounts of debt in exchange for goods. It must factor into the equation, yes?

I could see how high tariffs might slow the loss of our manufacturing base and production abilities in our current system; but not sure. It is something I have wondered about, feel free to educate.

Bump! for others to try and address this question.

I've always been curious about this question, especially since both republicrat parties have endorsed the whole "free trade" from Friedman, almost tricking us into going along with it, when it may not work in a world based on fiat currencies.

Hope somebody has some insight.

oyarde
09-27-2010, 08:48 PM
I think if there is a tariff on anything , somebody should be able to figure out a way to exploit it .

erowe1
09-28-2010, 07:12 AM
I can easily see how tariffs are bad in a commodity based system or even a system that is strictly limited in terms of debt. But I can't see how one can ignore the fact that we have the ability to print limitless amounts of debt in exchange for goods. It must factor into the equation, yes?


I don't see why it would be a factor. Could you explain that more?

specsaregood
09-28-2010, 08:05 AM
I don't see why it would be a factor. Could you explain that more?

I'm not sure it would, but think it could. It's kinda a deep question, I'll put my thoughts together tonight when I have time to sit and think about it.

Anti Federalist
09-28-2010, 01:47 PM
///

sratiug
09-28-2010, 02:02 PM
Who knows the amount of tax Chinese producers pay per chicken produced in China?

oyarde
09-28-2010, 02:24 PM
Who knows the amount of tax Chinese producers pay per chicken produced in China?

Chicken tax ? if there are any operative liberals reading this board you just gave them an idea .

lucius
09-28-2010, 02:28 PM
How about we feed Depleted Uranium to chickens and export to China...kinda get a head-start eh?

Michigan11
09-28-2010, 06:46 PM
The free market theory, meaning trade without tariffs, was devised under the idea that money was sound. Since then money around the world is fiat.

I'm going to just state what I think may be a difference between a free market with a sound
money vs. fiat.

If a free market existed, and we used sound money, meaning tied to gold or another commodity of value, it would mean the rest of the world would most likely be using it as well or something similar of value, since bad money chases out good money.

So in other words, a compartive example of only using "fiat" currency, would be as if everyone was using the same "fiat" currency to exchange goods(which we don't have at the moment).

Imagine a one world government existing today only using dollars through out the world as the only currency. This would be an equivalent comparison of free trade using only fiat vs. sound money.

So what would be the effect of a free market economy using numerous "fiat" currencies? including one that is the reserve currency of the world, and the many variations that are devaluing their own in comparison?

Does anyone see there may be a problem with having a free market using printed up fiat currencies that vary? As in the reserve prints, yet others in comparison decide to print less, holding down their value. In comparison to a world sound monetary system, it would be as if those countries were dumping their gold into the ocean or that another country were adding another metal into their gold to inflate it's value.

With such variance and without standard, how can there be truly free trade with such chaotic variances in the medium of exchange?

I could see a free market functioning under a world sound money system, but as it is today, the medium of exchange "fiat" seems to dictate more variables than the actual market of labor.

Maybe I'm off on something here, but I'm curious from others in here and what they have to say?

Zippyjuan
09-28-2010, 07:15 PM
I haven't gone through the entire thread to see if this was covered, but I believe that the Chinese tarrif on chickens was in responce to a US tarrif on steel from China. Yep- found an article. The tit for tat covers auto parts and shoes too.
http://www.dailyfinance.com/story/a-u-s-steel-tariff-heats-up-the-trade-war-with-china/19299247/

awake
09-28-2010, 08:05 PM
WHO'S "PROTECTED" BY TARIFFS?


"An American manufacturer of woolen sweaters goes to
Congress or to the State Department and tells the committee
or officials concerned that it would be a national
disaster for them to remove or reduce the tariff on British
sweaters. He now sells his sweaters for $15 each, but
English manufacturers could sell here sweaters of the same
quality for $10. A duty of $5, therefore, is needed to keep
him in business. He is not thinking of himself, of course,
but of the thousand men and women he employs, and of
the people to whom their spending in turn gives employment.
Throw them out of work, and you create unemployment
and a fall in purchasing power, which would spread
in ever-widening circles. And if he can prove that he really
would be forced out of business if the tariff were removed
or reduced, his argument against that action is regarded
by Congress as conclusive.
But the fallacy comes from looking merely at this manufacturer
and his employes, or merely at the American
sweater industry. It comes from noticing only the results
that are immediately seen, and neglecting the results that
are not seen because they are prevented from coming into
existence.
The lobbyists for tariff protection are continually putting
forward arguments that are not factually correct. But
let us assume that the facts in this case are precisely as the
sweater manufacturer has stated them. Let us assume that
a tariff of $5 a sweater is necessary for him to stay in business
and provide employment at sweater-making for his
workers.
We have deliberately chosen the most unfavorable example
of any for the removal of a tariff. We have not
taken an argument for the imposition of a new tariff in
order to bring a new industry into existence, but an argument
for the retention of a tariff that has already brought
an industry into existence, and cannot be repealed without
hurting somebody.
The tariff is repealed; the manufacturer goes out of
business; a thousand workers are laid off; the particular
tradesmen whom they patronized are hurt. This is the immediate
result that is seen. But there are also results
which, while much more difficult to trace, are no less immediate
and no less real. For now sweaters that formerly
cost $15 apiece can be bought for $10. Consumers can
now buy the same quality of sweater for less money, or
a much better one for the same money. If they buy the
same quality of sweater, they not only get the sweater, but
they have $5 left over, which they would not have
had under the previous conditions, to buy something else.
With the $10 that they pay for the imported sweater they
help employment—as the American manufacturer no
doubt predicted—in the sweater industry in England. With
the $5 left over they help employment in any number of
other industries in the United States.
But the results do not end there. By buying English
sweaters they furnish the English with dollars to buy
American goods here. This, in fact (if I may here disregard
such complications as multilateral exchange, loans,
credits, gold movements, etc. which do not alter the end
result) is the only way in which the British can eventually
make use of these dollars. Because we have permitted the
British to sell more to us, they are now able to buy more
from us. They are, in fact, eventually forced to buy more
from us if their dollar balances are not to remain perpetually
unused. So, as a result of letting in more British goods,
we must export more American goods. And though fewer
people are now employed in the American sweater industry,
more people are employed—and much more efficiently
employed—in, say, the American automobile or
washing-machine business. American employment on net
balance has not gone down, but American and British
production on net balance has gone up. Labor in each
country is more fully employed in doing just those things
that it does best, instead of being forced to do things that
it does inefficiently or badly. Consumers in both countries
are better off. They are able to buy what they want where
they can get it cheapest. American consumers are better
provided with sweaters, and British consumers are better
provided with motor cars and washing machines.

Now let us look at the matter the other way round, and
see the effect of imposing a tariff in the first place. Suppose
that there had been no tariff on foreign knit goods, that
Americans were accustomed to buying foreign sweaters
without duty, and that the argument were then put forward
that we could hire a sweater industry into existence
by imposing a duty of $5 on sweaters.
There would be nothing logically wrong with this argument
so far as it went. The cost of British sweaters to
the American consumer might thereby be forced so high
that American manufacturers would find it profitable to
enter the sweater business. But American consumers would
be forced to subsidize this industry. On every American
sweater they bought they would be forced in effect to pay
a tax of $5 which would be collected from them in a
higher price by the new sweater industry.
Americans would be employed in a sweater industry who
had not previously been employed in a sweater industry.
That much is true. But there would be no net addition to
the country's industry or the country's employment. Because
the American consumer had to pay $5 more for the
same quality of sweater he would have just that much
less left over to buy anything else. He would have to reduce
his expenditures by $3 somewhere else. In order that
one industry might grow or come into existence, a hundred
other industries would have to shrink. In order that 20,000
persons might be employed in a sweater industry, 20,000
fewer persons would be employed elsewhere.
But the new industry would be visible. The number of
its employees, the capital invested in it, the market value
of its product in terms of dollars, could be easily counted.
The neighbors could see the sweater workers going to and
from the factory every day. The results would be palpable
and direct. But the shrinkage of a hundred other industries,
the loss of 20,000 other jobs somewhere else, would
not be so easily noticed. It would be impossible for even
the cleverest statistician to know precisely what the incidence
of the loss of other jobs had been—precisely how
many men and women had been laid off from each particular
industry, precisely how much business each particular
industry had lost—because consumers had to pay
more for their sweaters. For a loss spread among all the
other productive activities of the country would be comparatively
minute for each. It would be impossible for
anyone to know precisely how each consumer would have
spent his extra $5 if he had been allowed to retain it. The
overwhelming majority of the people, therefore, would
probably suffer from the optical illusion that the new industry
had cost us nothing.

It is important to notice that the new tariff on sweaters
would not raise American wages. To be sure, it would enable
Americans to work in the sweater industry at approximately
the average level of American wages (for workers
of their skill), instead of having to compete in that industry
at the British level of wages. But there would be no increase
of American wages in general as a result of the duty;
for, as we have seen, there would be no net increase in the
number of jobs provided, no net increase in the demand for
goods, and no increase in labor productivity. Labor productivity
would, in fact, be reduced as a result of the tariff.
And this brings us to the real effect of a tariff wall. It
is not merely that all its visible gains are offset by less
obvious but no less real losses. It results, in fact, in a net
loss to the country. For contrary to centuries of interested
propaganda and disinterested confusion, the tariff reduces
the American level of wages.
Let us observe more clearly how it does this. We have
seen that the added amount which consumers pay for a
tariff-protected article leaves them just that much less with
which to buy all other articles. There is here no net gain
to industry as a whole. But as a result of the artificial barrier
erected against foreign goods, American labor, capital
and land are deflected from what they can do more efficiently
to what they do less efficiently. Therefore, as a
result of the tariff wall, the average productivity of American
labor and capital is reduced.
If we look at it now from the consumer's point of view,
we find that he can buy less with his money. Because he
has to pay more for sweaters and other protected goods, he
can buy less of everything else. The general purchasing
power of his income has therefore been reduced. Whether
the net effect of the tariff is to lower money wages or to
raise money prices will depend upon the monetary policies
that are followed. But what is clear is that the tariff—
though it may increase wages above what they would have
been in the protected industries—must on net balance,
when all occupations are considered, reduce real wages.
Only minds corrupted by generations of misleading
propaganda can regard this conclusion as paradoxical.
What other result could we expect from a policy of deliberately
using our resources of capital and manpower in less
efficient ways than we know how to use them? What other
result could we expect from deliberately erecting artificial
obstacles to trade and transportation?
For the erection of tariff walls has the same effect as the
erection of real walls. It is significant that the protectionists
habitually use the language of warfare. They talk of "repelling
an invasion" of foreign products. And the means
they suggest in the fiscal field are like those of the battlefield.
The tariff barriers that are put up to repel this invasion
are like the tank traps, trenches and barbed-wire
entanglements created to repel or slow down attempted
invasion by a foreign army.
And just as the foreign army is compelled to employ
more expensive means to surmount those obstacles—bigger
tanks, mine detectors, engineer corps to cut wires, ford
streams and build bridges—so more expensive and efficient
transportation means must be developed to surmount tariff
obstacles. On the one hand, we try to reduce the cost of
transportation between England and America, or Canada
and the United States, by developing faster and more efficient
ships, better roads and bridges, better locomotives
and motor trucks. On the other hand, we offset this investment
in efficient transportation by a tariff that makes it
commercially even more difficult to transport goods than
it was before. We make it a dollar cheaper to ship the
sweaters, and then increase the tariff by two dollars to prevent
the sweaters from being shipped. By reducing the
freight that can be profitably carried, we reduce the value
of the investment in transport efficiency.

The tariff has been described as a means of benefiting
the producer at the expense of the consumer. In a sense
this is correct. Those who favor it think only of the interests
of the producers immediately benefited by the particular
duties involved. They forget the interests of the
consumers who are immediately injured by being forced
to pay these duties. But it is wrong to think of the tariff
issue as if it represented a conflict between the interests
of producers as a unit against those of consumers as a unit.
It is true that the tariff hurts all consumers as such. It is
not true that it benefits all producers as such. On the contrary,
as we have just seen, it helps the protected producers
at the expense of all other American producers, and particularly
of those who have a comparatively large potential
export market.
We can perhaps make this last point clearer by an exaggerated
example. Suppose we make our tariff wall so
high that it becomes absolutely prohibitive, and no imports
come in from the outside world at all. Suppose, as
a result of this, that the price of sweaters in America goes
up only $5. Then American consumers, because they have
to pay $5 more for a sweater, will spend on the average five
cents less in each of a hundred other American industries.
(The figures are chosen merely to illustrate a principle:
there will, of course, be no such symmetrical distribution
of the loss; moreover, the sweater industry itself will doubtless
be hurt because of protection of still other industries.
But these complications may be put aside for the moment.)
Now because foreign industries will find their market
in America totally cut off, they will get no dollar exchange,
and therefore they will be unable to buy any American
goods at all. As a result of this, American industries will
suffer in direct proportion to the percentage of their sales
previously made abroad. Those that will be most injured,
in the first instance, will be such industries as raw cotton
producers, copper producers, makers of sewing machines,
agricultural machinery, typewriters and so on.
A higher tariff wall, which, however, is not prohibitive,
will produce the same kind of results as this, but merely
to a smaller degree.
The effect of a tariff, therefore, is to change the structure
of American production. It changes the number of occupations,
the kind of occupations, and the relative size of
one industry as compared with another. It makes the industries
in which we are comparatively inefficient larger,
and the industries in which we are comparatively efficient
smaller. Its net effect, therefore, is to reduce American
efficiency, as well as to reduce efficiency in the countries
with which we would otherwise have traded more largely.
In the long run, notwithstanding the mountains of argument
pro and con, a tariff is irrelevant to the question of
employment. (True, sudden changes in the tariff, either
upward or downward, can create temporary unemployment,
as they force corresponding changes in the structure
of production. Such sudden changes can even cause a depression.)
But a tariff is not irrelevant to the question of
wages. In the long run it always reduces real wages, because
it reduces efficiency, production and wealth.
Thus all the chief tariff fallacies stem from the central
fallacy with which this book is concerned. They are the
result of looking only at the immediate effects of a single
tariff rate on one group of producers, and forgetting the
long-run effects both on consumers as a whole and on all
other producers.
(I hear some reader asking: "Why not solve this by
giving tariff protection to all producers?" But the fallacy
here is that this cannot help producers uniformly, and cannot
help at all domestic producers who already "outsell"
foreign producers: these efficient producers must necessarily
suffer from the diversion of purchasing power
brought about by the tariff.)

On the subject of the tariff we must keep in mind one
final precaution. It is the same precaution that we found
necessary in examining the effects of machinery. It is
useless to deny that a tariff does benefit—or at least can
benefit—special interests. True, it benefits them at the
expense of everyone else. But it does benefit them. If one
industry alone could get protection, while its owners and
workers enjoyed the benefits of free trade in everything else
they bought, that industry would benefit, even on net balance.
As an attempt is made to extend the tariff blessings,
however, even people in the protected industries, both as
producers and consumers, begin to suffer from other people's
protection, and may finally be worse off even on net balance
than if neither they nor anybody else had protection.
But we should not deny, as enthusiastic free traders
have so often done, the possibility of these tariff benefits to
special groups. We should not pretend, for example, that a
reduction of the tariff would help everybody and hurt
nobody. It is true that its reduction would help the country
on net balance. But somebody would be hurt. Groups
previously enjoying high protection would be hurt. That in
fact is one reason why it is not good to bring such protected
interests into existence in the first place. But clarity and
candor of thinking compel us to see and acknowledge that
some industries are right when they say that a removal of
the tariff on their product would throw them out of business
and throw their workers (at least temporarily) out of
jobs. And if their workers have developed specialized skills,
they may even suffer permanently, or until they have at
long last learnt equal skills. In tracing the effects of tariffs,
as in tracing the effects of machinery, we should endeavor
to see all the chief effects, in both the short run and the
long run, on all groups.
As a postscript to this chapter I should add that its argument
is not directed against all tariffs, including duties,
collected mainly for revenue, or to keep alive industries
needed for war; nor is it directed against all arguments for
tariffs. It is merely directed against the fallacy that a tariff
on net balance "provides employment/' "raises wages/' or
"protects the American standard of living." It does none
of these things; and so far as wages and the standard of
living are concerned, it does the precise opposite. But an
examination of duties imposed for other purposes would
carry us beyond our present subject.
Nor need we here examine the effect of import quotas,
exchange controls, bilateralism and other devices in reducing,
diverting or preventing international trade. Such
devices have, in general, the same effects as high or prohibitive
tariffs, and often worse effects. They present more
complicated issues, but their net results can be traced
through the same kind of reasoning that we have just
applied to tariff barriers."

Excerpted from Henry Hazlett's, Economics in One Lesson

Michigan11
09-28-2010, 08:10 PM
Well I think its a good question. I'm not an economist by any means so feel free to help me out here. But when discussing the pitfalls of tariffs, do they explain how it works in relation to monetary policy?

I can easily see how tariffs are bad in a commodity based system or even a system that is strictly limited in terms of debt. But I can't see how one can ignore the fact that we have the ability to print limitless amounts of debt in exchange for goods. It must factor into the equation, yes?

I could see how high tariffs might slow the loss of our manufacturing base and production abilities in our current system; but not sure. It is something I have wondered about, feel free to educate.

Bump Again to anyone who can answer these questions....

Brian4Liberty
09-28-2010, 08:12 PM
Oh, but god forbid we do such a thing...

FFS, "free trade" my aching ass. :mad:


+rep ;)

sratiug
09-29-2010, 12:13 AM
Chicken tax ? if there are any operative liberals reading this board you just gave them an idea .

We have the National Pork Board, established by federal law and requiring a $1 per pig payment from farmers to support the National Pork Board. Talk about government pork. Chickens are probably organized too.

Every American product has an effective internal tariff imposed by internal federal taxes. I'm guessing it is around 13 per cent on average.

oyarde
09-29-2010, 12:41 PM
We have the National Pork Board, established by federal law and requiring a $1 per pig payment from farmers to support the National Pork Board. Talk about government pork. Chickens are probably organized too.

Every American product has an effective internal tariff imposed by internal federal taxes. I'm guessing it is around 13 per cent on average.

Pretty much .

Southron
09-29-2010, 02:07 PM
True free trade can only exist in the absence of nations.

Wouldn't retaliatory tariffs at least teach China a lesson for putting tariffs on our goods?

oyarde
09-29-2010, 02:44 PM
True free trade can only exist in the absence of nations.

Wouldn't retaliatory tariffs at least teach China a lesson for putting tariffs on our goods?

retaliatory tariffs could be a bad idea. They are going to import food . create demand for something other than chicken , sell it to them , no tariff.

Kregisen
09-29-2010, 06:57 PM
Fair enough. do they go into detail at all about how tariffs affects an economy with a commodity backed currency vs. an economy backed by a fiat debt note with an unlimited credit limit?

I've never seen any talk about it. I don't have an answer either if there's a difference or not, but it would be interesting to know.

erowe1
09-29-2010, 07:17 PM
retaliatory tariffs could be a bad idea. They are going to import food . create demand for something other than chicken , sell it to them , no tariff.

They're definitely a bad idea. What's the reasoning? "How dare the Chinese government punish its consumers! We'll teach them a lesson by punishing our consumers too!"

specsaregood
09-29-2010, 09:51 PM
I don't see why it would be a factor. Could you explain that more?

Ok.

In a system where you have a commodity backed currency or even one with a finite amount of fiat currency; free trade can only cause a limited amount of harm. Because at some point you have to produce something to sell to get money back in order to keep buying. In that type of situation, of course you want little to no tariffs, so you have to only spend as little as possible for goods.

In our current system, we have the ability to print the world's currency. We have no real debt limit and an infinite amount of currency. So the equilibrium that would be in place in the previous example is not in place for the US. We have no need to sell or produce anything or make money from other countries or our trading partners. Because that equilibrium is non-existent we will continue to lose all ability to produce anything to sell (why bother if you don't have to?). We will just keep getting fatter and lazyier and ill-equipped to do anything.

I can't imagine how that couldn't be a factor.

Now, I don't think tariffs or protectionism will stave off our loses completely; but think of it as an artificial way of trying to create that equilibrium. Making the imported goods so expensive as to make them less desireable. We end up having increased domestic demand for domestically produced goods. By maintaining internal demand, at least it keeps us from becoming completely lazy and impotent. So if a time comes where we no longer control the world's currency, we can start exporting/producing goods again and acquire wealth.

BUT, on the otherhand, since in essence all the imported goods are "free", one might argue that it wouldn't have any effect as our govt/system would just assume even more debt and print more money and override any barrier those tariffs raised. One might even wonder, that in such a monetary system as ours, would "protectionism"/tariffs hasten the loss of our production capabilities and eventual implosion.

make sense?