(no subject)

[timelets]

To me, the biggest surprise of the current presidency is that most Republican values no longer apply:

In other words, they are against tariffs—except when Trump imposes them. Which strikes me as a perfect rationale for this political moment. They are also presumably against stonewalling investigators, refusing to comply with congressional subpoenas, shutting down the government, running up the national debt, labelling close American allies national-security threats, and praising dictators—except when Trump does it. So far, this has been the story of the Republican Senate in the Trump era and, indeed, of the national G.O.P. At a time when no one is really sure anymore just what constitutes Republican ideology, you could do worse than to call it the Except-When-Trump-Does-It Party.

For Republicans, Trump now trumps all. Even D Day, the Party’s national chairwoman, Ronna McDaniel, said should be an occasion to praise and acclaim the President.

https://www.newyorker.com/news/letter-from-trumps-washington/republicans-have-become-the-except-when-trump-does-it-party

BTW, so far the only real effect of the tax reform seems to be growing budget deficits:

https://www.bloomberg.com/opinion/articles/2019-06-07/trump-s-tax-cuts-failed-to-deliver-the-promised-boom

Comments

[gomberg]

Yep, I do not believe these tariffs make any fiscal sense. In the 19th-century debate (and he has certainly taken the debate back to the 19th century), he is very clearly not on the side of those who argued for the revenue-based tariff. Nor would it make much more sense, anyway: there is no reason to believe that, given the modern state capacity and existing legal structure, tariffs would be a very useful revenue tool.

I mean, in a sense this is a traditional Republican policy. 130 years ago Republicans (and Whigs before them) very much stood for the protective tariff. Should we just imagine his name is McKinley? But, then, it is not really even protective. It is just a (very expensive) bargaining tool.

[timelets]

By now, the economics of tariffs is pretty well understood: tariffs cause a loss for consumers and a certain advantage for large domestic producers. From a government revenue perspective, an across-the-board sales tax is a much more efficient tool because the base is broader and maintenance costs are much lower.

Politically, tariffs are a bargaining tool, domestically and/or internationally. I don't know about 19th century Republicans, but nowadays it's an convenient hammer for a transactional president, who knows close to nothing about international trade. Having Navarro(!) for an economic policy adviser speaks for itself.

As the 2018-19 steel/aluminum tariffs showed, the industry would be foolish to make long-term investment plans based on the supposed "protection." It's a yet another supply chain risk that the fucking moron is willing to impose on consumers and businesses for the sake of a short-term political win.

[gomberg]

I am an economist, thank you :)

There was a reason why revenue tariffs were used in the 19th century. First, there was a fairly low level of state capacity: the ability by the government to collect taxes within the country. The border was always the spot at which collecting taxes was easier (the same way these days it generates a lot of data, including reporting by firms not otherwise available, and attracts substantial amount of regulation - hence the existence of International Trade as a separate field of economics). In the US there was the additional consideration that before the 16th amendment the federal government could not legally impose income tax anyway. Duties, on the other hand, where explicitly cited in the Constitution as a revenue source.

[timelets]

You got me here :)

I'm not a historian, but a fun way to explore the history of tariffs would be by visiting castles along the Rhein river in Germany. [Riesling is good there too]. Most of them were built by local lords to extract tolls from merchants. Once a strong regional government was established, they were out of business because trade choke points were established at the border.

Back to the modern world, selective economic tariffs is an ideal tool for abuse of government power; has always been and always will be. No wonder the current US administration is using it left and right.