Trump’s Pages of Accomplishments

Looking at national polls and predictions, it’s easy to get discouraged about President Trump’s reelection prospects.  Even with Joe Biden losing his mind, and the pick of a radical, authoritarian Kamala Harris as his running mate, “Sleepy Joe” is managing to stay up by hunkering down.

On our side there’s grumbling that Trump hasn’t done enough—on immigration, on law and order—and those aren’t entirely warrantless grumbles.  Republicans squandered—perhaps intentionally—an opportunity to fund the construction of the border wall while they controlled both chambers of Congress.  John McCain pompously and vindictively voted to keep the odious Affordable Care Act in place, a clear parting shot at Trump.  Trump did not seem to offer a robust response to the CHAZ/CHOP fiasco, but is now belatedly defending federal property in Portland, Oregon.

Those critiques aside, it’s worth remembering what Trump has accomplished—and he wants you to be reminded.  That’s why he gave Breitbart a six-page document of his achievements.  They are substantial—and make him one of the greatest presidents of the last fifty years.

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TBT: Trade War with China is Worth It

Amid this whole coronavirus situationconundrum, crisis, globalist meltdown—we should keep in mind that it’s all China’s fault.  That’s why GEOTUS keeps calling it the “Chinese Virus” and the “Wuhan Flu,” because those names are completely accurate.  Of course, the media is having conniption fits about the supposedly “racist” intentions and implications of those names (which are quite mild compared to my favorite, “Kung Flu”).  It’s why the only real response to charges of racism—which are designed to make conservatives apologize in panicked fear—is to ignore them.

Regardless, it’s worth remembering that China is to blame.  Whether it was the result of abhorrent, unhygienic culinary practices (the infamous “bat soup“) or a malicious (or incompetent) leak of an engineered biological weapon, China unleashed this plague upon the world.  Perhaps the strongest argument against uncritical globalization is just that:  we made ourselves excessively dependent upon a regime that is fundamentally opposed to our very existence, and which rejects our deepest held values and beliefs.

In retrospect, then, President Trump’s trade war with China looks all the more prescient.  We’ve become so dependent upon and integrated with China, we’re running short on the ingredients for essential medicines because of China’s disease.  Supply chains have been seriously disrupted, and will continue to be, it seems, for some weeks.  Thank goodness the tariffs began moving production of some goods back to the United States.

That’s an important lesson to remember:  paying a bit more for your washing machine is worth the price of having domestic production.  We don’t need to make everything in the United States, but saving a hundred bucks or so on a major appliance isn’t worth gutting our industrial capacity and leaving our middle and working classes out of work.

Oh, well.  A lesson learned too late is still a lesson learned.  When this whole fiasco is over, let’s consider a healthy dose of autarky going forward.

With that, here is August 2019’s “Trade War with China is Worth It“:

There’s a lot of disingenuous scuttlebutt flying around about a looming recession, the inverted yield curve, and the costs of the trade war with China.  I can’t help but think such doom and gloom reporting is part of an effort to undermine President Trump.  Investor and consumer confidence are emotional, fickle things, based as much on feeling as they are on hard economic data.

As such, I suspect that major media outlets are attempting a bank-shot:  scare investors and consumers enough, and they panic into a recession.  President Trump’s greatest strength at present is the booming economy and low unemployment rate; take that away, and loopy, socialist Democrats have a much better shot in the 2020 elections.  With Leftists like Bill Maher actually hoping for a recession to unseat President Trump, that’s not a far-fetched speculation at all.

The inverted yield curve is a bit academic, though, and I don’t think it’s going to have the scary impact its prophets of doom hope.  Oh, a curve on a graph is inverted—scary!  Most Americans aren’t going to respond to that in any substantial way.

On the other hand, the negative media attention around the trade war with China could negatively impact perceptions of the president.  Trade wars, in which countries throw up tariff barriers against one another’s imports, often ratcheting up the duty levels, is a game in which both sides lose out over the long-run—that is, assuming they don’t have other viable trading partners, and that they’re both evenly matched economically.

And, yes, the trade war has had some drag on the American economy—but it’s been so minuscule, only a few sectors have really felt the pain.  Meanwhile, China is really struggling.  Getting Trump out of office would serve China beautifully, as narrow-minded neoliberal economists would likely push a Biden (or Harris—gulp!) administration to end the tariffs.  China has the dubious luxury of an authoritarian system that can direct its economy, while President Trump must survive reelection to keep his trade policy going.

The case for maintaining the trade war is compelling (and it pre-dates Trump:  one of Mitt Romney’s advisers in the 2012 election, Oren Cass, wrote an essay for National Review calling for a trade war with China in 2014).  The best recent summary for why the trade war is beneficial actually comes from my hometown paper, The Aiken Standard (kudos to my Dad for sharing this piece).

Greg Roberts spells out the case in “Facts behind the U.S.-China trade war“; I highly recommend you give it a read.  As Roberts points out, in a normal trading relationship, the price of each trading nations’ currencies would fluctuate based on its relative trade imbalance with its trading partners; this fluctuation would occur until some rough equilibrium in currency values is reached.

China—in violation of its agreement not to do so upon entering the World Trade Organization—has continually depressed the value of its own currency in order to encourage a trade imbalance with the United States.  Because the Chinese currency is held artificially low, it is cheaper for the United States to import Chinese goods than to export American goods to China.  Why?  Because the Chinese currency is cheaper, Chinese goods are less expensive, and can be bought and imported cheaply.

Because China is a currency manipulator, it is not acting per its agreement upon joining the WTO.  Further, Roberts points out other violations, including China’s requirement that firms wishing to manufacture in China turn over their patents, blueprints, and other intellectual property to the Chinese government as the cost of doing business.

Here are two relevant paragraphs:

Has China kept its promise? The answer is a resounding no, since the Peoples Bank in China, which is controlled by the Communist Party, routinely devalues its currency to maintain, in the case of the U.S., a positive trade balance, which, for us, means we have a trade deficit with China, now totaling more than $300 billion annually.

China agreed to many other provisions when it joined the WTO which the country has not kept, to wit not requiring the transfer of foreign technology as a condition of market access; enterprises in China that are owned or controlled by the government have expanded rather than diminished; foreign banks have not been given the access that had been agreed to; the theft of intellectual property has not abated; among many others.

Clearly, China has acted in bad faith repeatedly.  Further, the United States has a number of alternatives for trade in the region, including Vietnam.

Also, the goods China receives from the United States are the stuff of life—soybeans and other agricultural products.  Does the United States need more cheap plastic crap?

Give Roberts’s analysis a read.  It’s the best, most succinct summary of the trade war I’ve read recently, and it will convince you of the necessity of holding the line against Chinese economic aggression.

Phone it in Friday VIII: Coronavirus Conundrum

It’s been another crazy week here in the world of yours portly.  The quarter is coming to a close, and I’ve got a mountain of ungraded quizzes and tests to slog through to appease the gods of higher education admittance.

Ergo, it’s time for a very special coronavirus (or “COVID19,” for your cool kids) edition of Phone it in Friday!

  • Tomorrow’s SubscribeStar Saturday will be a detailed rundown of what I’ve been doing to prepare for the extremely remote possibility that we all get quarantined in our homes and have to practice social distancing to avoid spreading the bug any further.  Here’s the short preview:  I bought a bunch of rice, beans, and spaghetti.
    • On that note, I’m yet again flummoxed by fears of everyday hunger in America.  Ten pounds of rice came to about $7; same with the spaghetti.  Twenty cans of beans cost around $12.  You can eat—maybe not well, but enough to survive and function—for a month for extremely cheaply.  Whining about “hunger” in the United States is a farcical outlier.
    • I am thankful to live in the United States, a country with the best medical system in the world, and the means to treat most diseases.  I’m optimistic that the virus will pass through quickly
  • Was it bat soup, or a Wuhan biological weapon?  Either way, I think we’ve seen the wisdom of the trade war with China, even though we weren’t anticipating something like a Chinese-created pandemic.  The coronavirus exposes the weaknesses and contradictions at the heart of China, and puts lie to the notion that this is a “Chinese century.”  I’ll be glad to be done with such rubbish.  The Chinese have come far, yes, but it turns out a totalitarian regime built on a culture of death and lying (“saving face”) can only snooker people for so long.
    • That doesn’t mean that China will no longer pose a threat.  Indeed, I believe China to be our biggest geopolitical competitor.  All the more reason to relocate industries back to the United States, or at least to friendlier countries like Vietnam, rather than deal with the Chinese.
    • For the best treatment of this subject, read blogger Didact’s essay “Corona-chan Comes for You.”  He spells out the economic threat of the coronavirus, and how the whole thing is likely the result of Chinese incompetence and the insane cultural concept of “face,” in which it’s better to lie (in the Chinese mind) than to risk bringing shame to your family.  Concepts like that make me glad to live in the United States.

My hope is that after all is done, China will be a pariah, no longer vaunted as a power on the rise, but maligned as a malicious, mendacious regime.

That’s it for this brief Phone it in Friday.  Wash your hands, stock up on dry goods, and stay healthy!

—TPP

God Bless Us, Every One: The Gift of the Trump Economy

Christmas Week is always full of blessings.  Thanks to the good folks at pro-MAGA news aggregator Whatfinger News (and a helpful tip from photog of Orion’s Cold Fire on how to submit links to them), The Portly Politico has seen its best week in terms of traffic all year.  Two pieces, “Napoleonic Christmas” and “Christmas and its Symbols” made the main page, leading both to surpass my previous top post for the year, “Milo on Romantic Music.”  Apparently, people still get riled up about Napoleon.

It’s also been a wonderful opportunity to spend time with family and to overeat lots of delicious, rich foods.  If you’ve never heard of the Appalachian delicacy “chocolate butter,” do yourself a favor and look it up.  Yes, it’s even better than the name suggests.

Of course, all of that good cheer requires a solid financial foundation.  And in his three years in office, President Trump has shattered records for unemployment, wage increases, and economic growth.  Economics isn’t everything, but the Trump economy is something for which we should give thanks.

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Trade War with China is Worth It

There’s a lot of disingenuous scuttlebutt flying around about a looming recession, the inverted yield curve, and the costs of the trade war with China.  I can’t help but think such doom and gloom reporting is part of an effort to undermine President Trump.  Investor and consumer confidence are emotional, fickle things, based as much on feeling as they are on hard economic data.

As such, I suspect that major media outlets are attempting a bank-shot:  scare investors and consumers enough, and they panic into a recession.  President Trump’s greatest strength at present is the booming economy and low unemployment rate; take that away, and loopy, socialist Democrats have a much better shot in the 2020 elections.  With Leftists like Bill Maher actually hoping for a recession to unseat President Trump, that’s not a far-fetched speculation at all.

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Trade War Favors the United States

Thanks to my dad for sending along this piece from stock guru and madman Jim Cramer about the trade war with China.  I’ve been writing a great deal lately about economics (including the “Lazy Sunday IX” and “Lazy Sunday X” compilations), and I share Cramer’s nuanced view of the trade war and Trump’s tariffsGlobalization of capital is not an unalloyed good.

Cramer gives a nuts-and-bolts rundown of this latest round in the trade war with China.  Monday saw a big selloff in the market, as investors panicked about China slapping tariffs on American goods.  As Cramer points out, the biggest loser is Apple, which is also reeling from a loss in the Supreme Court that will allow a class-action monopoly suit to go ahead against the tech giant.

The two other companies that will most be affected are Boeing and Caterpillar.  Cramer points out—as does President Trump—that there is a huge backlog of potential customers waiting to purchase jets from Boeing, and Caterpillar made a deal with the devil, so screw ’em.

Otherwise, the Chinese dragon looks a lot more like a paper tiger.  In addition to blocking imports of liquefied natural gas—like jets, a product that the rest of the world is clamoring to import from the United States—China targeted a laundry list of foodstuffs:

…[W]hen the Chinese unveiled their retaliation list it was pretty pathetic. I am going to list some of them because you are going to know how little ammo they really have. Here’s the guts of the list: beans, beers, Brussels sprouts, cabbage, carrots cauliflower, broccoli, cucumbers, potatoes, sweet potatoes, rabbit meat, frog legs, almonds, cashews, apples, pineapples, dates, figs, mandarin oranges-mandarin!-hazelnuts, pears, macadamia nuts, whey as in curds and whey although curds aren’t on the list, eggs, butter, pasta, rice, corn, eels, trout, chickens, turkeys, peanuts, cakes, wine, wheat and then here’s some odd ones: televisions, DVRs, and cameras.

Note that those farm products are the necessities of life.  The production of televisions, DVRs, and cameras, as Cramer notes wryly, has been wiped out Chinese competition already, so they’re absurd non sequiturs.

I had a friend lament the collapse of the soybean farmers because of the trade war.  While I sympathize with the farmers, one could be forgiven for thinking this an example of missing the forest for the soybeans.  Someone else will buy the soybeans, and our generous farm subsidies will dull the pain of any major losses.

That’s all to say that soybeans and temporary market disruptions are a small price to pay to restore the American economy and to hobble China’s.  China is a far more serious geopolitical and economic threat than the Russian boogeyman (not to say Russia isn’t a threat), yet we’ve kow-towed to their authoritarian corporatism for decades, with ruinous results.

Yes, some products will cost more.  I spoke with a repair technician about doing some work on an old saxophone, and he said, “Your buddy Trump is why parts are so expensive.  As soon as the trade war started, prices for parts jumped 1000%.”  Based on the value he placed on my pawn shop Noblet, I’m assuming he’s engaging in a bit of genuine hyperbole.

Regardless, the technician lamented the decline of the once-great American instrument-making industry (huge in Elkhart, Indiana), saying that parts are made in China and other countries, with only a few horns still assembled in Indiana.  He mentioned, too, that Gretsch “sold its soul to the devil” as a result of cutting corners and relocating abroad to save costs.

Again, his fixation was on the high price of parts—but those parts could be made here again, at a higher-quality and lower cost.  Elkhart could once again become the global capital of instrument manufacturing, and saxophones wouldn’t be cheap, leaky Chinese toys.

In the short-term, the trade war will be painful for some investors (although Cramer argues that this latest round will calm down as early as today, with investors getting over their textbook-based fear of a Smoot-Hawley Tariff situation), and in the long-term, trade wars tend to produce only losers.

But in the Chinese case, it’s worth some short-term pain, and the disruption of reallocating resources, to regain our economic dominance against China.  Anything we can do to hobble their rise is a net benefit for the United States, East Asia, and the world.

Lazy Sunday IX: Economics, Part I

I followed a fairly standard political-philosophical trajectory to where I am now. Back in my salad days, I was a big Milton Friedman fanboy (in many ways, I still am).  His works, particularly Capitalism and Freedom, compelling made the case for many things I already believed, and made me love liberty even more.

I skewed heavily into libertarian territory (without every fully becoming a capital-L Libertarian), and came to believe that, in most cases, free markets could (and, in some golden future, would) solve virtually all of humanity’s problems, as history Whiggishly improved more and more with each passing year.  Efficiency would free humanity from drudgery, and we’d all have plenty.

Indeed, that is, in many ways, the story of the modern West:  greater efficiency and economic fluidity has yielded material wealth unparalleled in human existence.  Capitalism works quite well at alleviating material misery.

But there’s the rub:  as I’ve grown older, gradually amassing a nest egg and hustling constantly, I’ve come to understand that, as nice as material abundance is, it is a false god (as is the neoliberals’ lust for ever-greater efficiency).  Despite our great wealth and our cheap, shiny, plastic baubles from China, America’s are culturally, morally, and philosophically miserable.

So, for the next two Sundays I’ll be featuring posts on economics, a topic I believe should be regarded as one of the humanities, rather than a social science.  I still believe capitalism is the best possible economic system ever devised, and does a great deal to secure liberty for individuals and nations (as Milton Friedman wrote, economic freedom is a necessary precursor to political freedom).  That said, I’ve adopted Tucker Carlson’s formulation that capitalism should work for us, not the other way around.

To that end, here are this week’s pieces on economics:

  • 4.8% Economic Growth?!” – this very short post relaunched this blog.  The TPP 3.0 Era, as I call it, kicked off with my move to WordPress.  It trumpets the incredible growth of the Trump Administration and its economic policies. After years of sluggish “recovery” under President Obama, the Trump Renaissance breathed fresh life into our moribund economy.
  • Q&A Wednesday – Tax Cuts, Trade Wars, Etc.” – I adapted this post from a response I wrote to some Facebook comments from two of my most loyal readers.  It details my evolving views on tariffs—essentially, that instead of opposing nearly completely, I now see their utility.Towards the end of this essay, I address an idea I’ve been kicking around:  that it’s better to subsidize workers through protective tariffs (thereby giving them work, and a sense of purpose) than simply to hand out money or administer costly welfare programs.

    I developed that idea more fully in the next essay on this list.  It goes to the idea that people—and, I would argue, specifically men—derive a great deal of their sense of self from their work.  This understanding is closer to the term vocation than it is merely to “work,” the distinction being that vocation is work that is both productive and fulfilling—it’s work in a higher sense, beyond merely providing for one’s basic needs.

  • The Human Toll of Globalization” – this post was inspired by a lengthy Breitbart piece about the costs of globalization, and is of a piece with the previous essay.  Therein I explored the idea, mentioned directly above, that work is ennobling, and its benefits go beyond a paycheck.  There is a quiet, affirmative satisfaction to doing something and doing it well.  Why else would I blog daily with zero revenue?
  • Global Poverty in Decline” – lest you think I’ve jettisoned the old Friedmanian views completely, this short post—based on a Rasmussen Number of the Day—deals with the decline in global poverty in the last few decades.  That decline is, truly, astonishing.  A good chunk of it came with economic liberalization in China, which has come, in part, at the expense of the United States, but it also reflects the benefits of economic liberty across the globe, particularly in the former Soviet bloc countries.For all the potential moral hazards of excessive material wealth, there’s no denying the inherent morality of a system that prevents starvation, malnutrition, and homelessness, all with only minimal government coercion and interference.  That’s pretty remarkable, and one reason we should be careful to protect capitalism, even as we seek to rein in its more destructive tendencies.

That’s it for this XXL (that’s “Extra-Extra-Large”) edition of Lazy Sunday.  Enjoy!

–TPP

Other Lazy Sunday Installments:

The Human Toll of Globalization

Last week’s posts shared a similar theme:  the costs of unbridled free trade; the benefits of cutting corporate and income taxes to unleash economic growth; and the human side to economics that academics tend to miss.

The first and third topics referenced above came into sharp relief as I read an excellent piece by Chadwick Moore, “Left for Dead in Danville: How Globalism is Killing Working Class America.”  It’s a long-form piece of journalism for Breitbart, but it is well worth the read.  I encourage all of my readers to set aside twenty minutes to read it and its terrifying account of globalization gone wrong.

My post today simply seeks to offer up a summary of Moore’s findings, presenting them in an easily-digestible form for those who don’t have the time or inclination to read his full-length piece.

The conceit of the piece is simple:  Moore visited Danville, Virginia, a former textile mill town located on the Dan River, and very close to North Carolina.  The town was once—and “once” doesn’t mean “a hundred years ago,” but about twenty years ago—a thriving town that supported a solid middle-class through its robust textile industry.  Civic pride was abundant, and the Dan River Mill supported a number of youth and community activities and functions that are familiar to anyone who has grown up in a small town.

Then came NAFTA in 1994, followed by China’s entrance into the World Trade Organization in 2000.  After years of struggling to compete with foreign competition, Dan River Mills shut down in 2006 (it had been open since 1882).

As the town’s economy declined and unemployment skyrocketed, social problems grew.  Drug use increased dramatically, as did crime, and formerly-safe, middle-class neighborhoods devolved into dangerous slums.  More than a quarter of the town’s population is on food stamps.

Race relations also grew worse.  The town had enjoyed peaceful, working relationships between black and white citizens, who worked together happily in the mills and other businesses.  Now, the KKK plans rallies, preying off the desperation of the unemployed (the town is roughly half white, half black).

Moore gives a good bit of space to quoting Michael Stumo, the CEO of the Coalition for a Prosperous America.  Stumo elegantly explains the problem in Danville—as with many other small towns in Middle America—tracing it to China and the World Trade Organization.  Some choice bits to chew on:

“‘When China joined the WTO in 2000 with 1.3 billion people underemployed, it began pulling them out of the rice paddies, the farms, and rural areas, and putting them to work. The Chinese under-consume. They produce more than they consume, [in] a country that’s four and a half times as big as ours and relying on the American consumer to fund their path to wealth and doing so with a state-directed economy, which is different than communist, it’s a strategic mix of state capitalism with a little bit of private sector in it. We always thought communism would fail, but China found central planning 2.0 and is pretty good at it,’ he says….

‘We have free trade within the 50 states,’ Stumo says. ‘By impoverishing our middle class with this offshoring driven by free trade policy, you’re killing the U.S. consumer market, which drives growth, because they have no money. Five or ten percent cheaper prices is overwhelmed in this stage by lack of production and stagnant wages,’ he says. ‘The U.S. middle class cannot afford to fund the rise of other countries anymore.

‘Industry doesn’t stand still; industry is always incubating—you give up the jobs, the wealth creation, the supply chain clusters in communities, and that affects the service sector around them,’ Stumo says. ‘You pull those plants out, and a lot of people are out of work, and then the whole general wage level drops because burger-flipping isn’t an upward pressure on wages, but production is.'”

A degree of globalization, in an age of mass transit and mass communications, inevitable.  And open trade with lower tariffs generally is beneficial.  But naïvely-open trade with dishonest trading partners with slave-level wages primarily benefits the dishonest party.  Yes, there are some winners in the United States—I certainly enjoy a higher quality of life because of cheap electronics from abroad, for example—but as I wrote last week, isn’t it worth paying a little more for your television or washing machine, if it means an American keeps his job.

My thinking on this is simple:  the actual, physical and mental of work, in and of itself, important.  Yes, we could pay everyone a guaranteed basic income, or help people through more assistance programs (ignore the astronomical costs of those programs for the moment), but even if they worked beautifully in the material sense, they will, in the long-run, lead to a deterioration of real skills and, more important, a spiritual vitality.

I strongly believe that the three keys to happiness are faith, family, and work, in that order.  Work is ennobling, even if it is unpleasant at times.  As such, if the government is going to do something, would it not be wiser to offer assistance that requires work?

Tariffs accomplish this goal to some extent, and are entirely constitutional (indeed, one of the authors of the Federalist Papers, Alexander Hamilton, argued for them as Secretary of Treasury).  They also produce revenue for the federal government, and could be used to offset further reductions in corporate and income tax rates.

Ultimately, the social and civic costs of unbridled, unfocused free trade seem too steep.  Read Moore’s observations about the flood of drugs and despair into this once-civic-minded, prosperous town, and understand that the 10% discount you enjoy on your consumer goods is seldom worth the human toll.

To clarify once again, I’m not arguing we return to the massively high tariffs of the late-nineteenth and early twentieth centuries.  That would be economically disastrous in other ways, and would further enhance our federal government’s penchant for corporatist back-scratching and favoritism.  But some judicious, targeted tariffs, especially against nations like China, are wise.  Why should we be subsidizing China’s growth at the expense of our own?

One final thought:  as I wrote Friday, a married man used to be able to raise his kids on a gas station pump-boy’s salary.  Sure, life was lean, and there weren’t a ton of crazy gadgets to play with or luxuries to enjoy, but the kids grew up well enough and the wife could stay home to raise them.  Are we really that much better off now, when both husband and wife slave for 40+ hours a week (and usually longer), outsource their parenting responsibilities to daycare and public schools, and can’t get out from under student loan, home, car, and consumer debt?

There are a host of factors driving the modern scenario of today versus the “blue-collar father” of yesteryear, but surely one economic solution is to stop burrowing out our families and towns in favor of frosty, urban cosmopolitanism and aloof globalism.  I care about the people of China, and I’m glad to see they’re no longer trapped in rice paddies and collectivized farms, but—like our great President Trump—I care about my country and fellow countrymen first.  So should the United States government—it’s job is, literally, to put Americans first.

Q&A Wednesday – Tax Cuts, Trade Wars, Etc.

Two of my most loyal readers, Megan and Frederick (I highly recommend the latter’s corporate history blog, CorporateHistory.International), both chimed in via Facebook about Monday’s post on tax cuts.  Frederick pointed out a potential downside to corporate tax cuts—what’s to stop large multinationals from investing that money in physical plants and employees overseas, notably in China?  Megan asked me to elaborate further on tariffs in relation to that very question.

Being a conservative, I like to conserve things—traditions, morals, civil society, working institutions, etc.—but most especially effort.  I’m a strong believer in the dictum, “Work smarter, not harder” (although you need a healthy dose of the latter, too).  As such, I’m adapting my Facebook response to them here.

I think the question of tariffs and trade wars is hugely interesting, and needn’t be bogged down in tedious charts and numbers.  What I do believe is that President Trump has ripped the façade from the bipartisan push for globalism, and particularly demonstrated the real, human cost of unbridled free trade.

I used to be 99% a free trader, with 1% reserved for mild tariffs on national security-related goods, like steel.

Now I’m probably more 85% free trade, 15% tariffs. A tariff is a tax, yes, and it’s borne not just by foreign nations exporting goods to the US, but also by American consumers, who have to pay more for goods that are protected (and, thus, more expensive and potentially of a lesser quality than they would be in a competitive, free market).  That disclaimer aside, it seems like paying a few more bucks for your washing machine is a good way to keep Americans employed and earning a decent wage.

If you take that reasoning too far you fall into the dilemma of minimum wage increases, which increase unemployment (especially for unskilled, young, and minority workers) and raise costs, so that any increased wages enjoyed by the beneficiaries are eaten away by the increased costs of consumer goods—all served up with a side of higher unemployment.

That said, judicious tariffs—I’m not arguing for the high, blanket tariffs of the late nineteenth century, which wouldn’t work well in our modern, interconnected economy—especially related to key industries like steel, could keep a lot of Americans working, and would allow blue-collar workers to earn a wage that wouldn’t require years of expensive schooling.

Also, I think targeted tariffs against unequal trading partners—I’m thinking primarily of China—would level the playing field, and prevent some of the outsourcing and capital flight that might occur with a corporate tax cut (or, more likely, increase). It’s unreasonable to expect American workers—with all their labor protections, etc.—to compete with near-slave wage Chinese workers. China’s currency manipulation to make its exports artificially cheaper, as well its rampant intellectual property theft, needs to be combated, and if it means getting our cheap plastic Happy Meal toys from Vietnam (or the USA!) instead of China, so be it.

The current “trade war” with China sees Americans in a much better position than the Chinese. China needs those exports, but the USA can stand to experience some minor drag to its GDP growth given the massive growth we’re seeing with the tax cuts (not just the corporate tax cut, but also the 20% deduction for small business pass-through earnings, which is YUGE for small business growth—a key driver of employment in our country). I see it as a trade-off—pay a little more for some consumer goods, but create imbalance in the Chinese economy and force them to play ball on par with the Western world and Japan.

My only real concern with this approach is there is no limiting principle (although that’s true for any type of tax, and we have to have some of them), which makes me wary as a limited-government Jeffersonian, but the Hamiltonian commercialist in me sees this moment in history as one in which we can uniquely leverage our economic clout to improve our own economy and our position internationally, and we can afford to go through a trade war longer than China (or Mexico, or Europe).

Everyone loses if a trade war lasts too long, but I think the Chinese will blink first. American workers will be the ones to benefit.

One additional thought, which will require more elegant development in a future post:  even with the inefficiencies and deadweight loss that would occur from overly-high tariffs, wouldn’t protecting domestic jobs be a more effective and fulfilling way to provide a living for blue-collar workers than the current welfare system?  Instead of a massive, government-run bureaucracy administering a complex and redundant system of bennies, society could bear the cost through paying a bit more for consumer goods.  Such a system would create more semi-skilled positions in some industries, and I’d rather we subsidize people through work than to subsidize them not to work.  Again, that’s a very rough sketch, but some food for thought.

Regardless, tariffs are not an unalloyed evil, nor is free trade an unalloyed good.  There’s room for both.  Economics suggests that the balance should favor the latter more heavily than the former, but we can temper the massive social disruption that unbridled globalization unleashes.