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Reply #4: we should increase tariffs until the outsourcing stops [View All]

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Quequeg Donating Member (105 posts) Send PM | Profile | Ignore Sun Apr-09-06 11:46 AM
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4. we should increase tariffs until the outsourcing stops
There was a guy (Jack Davis) who ran for Congress in New York in 2004 and got 44% of the vote. Anyway, this guy owns a manufacturing company and his campaign was all about "saving jobs, farms, and industries."

Though he lost the election, he continues the fight with his website and his association:
www.SaveAmericanJobs.US (not to be confused with .ORG or .COM)
With expertise in manufacturing that spans 40 years, Jack Davis is on a mission to save jobs, farms and industries from government policies that have moved many American jobs out of the country, while undermining the ability of American workers to compete with low-wage earners in other countries and decimating the American middle class.

Anyway, he has some straightforward ideas in this article titled "balanced trade, not fair trade"
America needs Balanced Trade. Balanced trade described in simple terms is, if a country desires to sell products to the United States, they are required to buy an equal dollar amount of products or services from the United States.

The United States cannot force another country to do something they don't want to do (example: Iraq).

Historically, the proven method of controlling imports is with tariffs.

To obtain this balance, the United States will charge a balancing tariff (tax) on imported products. The tariff percentage amounts are variable and will be increased in five-percent increments until the trade balance is obtained.

If the United States exports more dollars in trade than it imports from a specific country, the tariff will be reduced until the trade balance is obtained or the tariff is zero.

The ideal Balanced Trade is equal trade with zero tariffs.

Since Red China has the greatest imbalance of trade, 124 billion dollars in 2003, we should apply a ten-percent balancing tariff on their total value of exports. In 2003 this was 152.4 billion dollars.

If ten percent were not sufficient, it would be increased to 15 percent then 20 percent and increased until the balance of trade is obtained. A tariff of 20 percent would provide the U.S. government with 30.5 billion dollars in 2003.

America imported products and services valued at 1.259 trillion dollars in 2003. This produced a trade deficit of 535 billion dollars. A ten-percent tariff on this would have provided the government with 126 billion dollars.

Select your favorite government program; Drugs for the Needy, Education, Social Security, Medicare, National Defense, Reducing the National Debt or Reducing Income Taxes, etc. Here are the funds.
Just placing the duty on Red Chinese products will send a strong message to all the other nations: You will be next. America is serious about balanced trade. Start buying American products.

I love the idea of just increasing tariffs until we get the desired result. We could debate forever about what the right tariffs should be, but the goal is clear: balanced trade. It's impossible to figure out what the exact, right tariff should be, because there are just so many factors involved, such as differences in laws for the environment, labor, and the currency. So, we should just gradually increase the tariffs until we get the right result.

Also, we cannot make other countries adopt our laws. So, the idea of dimplomatically and gently encouraging "fair trade" is ridiculous. I mean, other countries resent us when we try to tell them what to do, and they're simply not going to do anything unless they feel it's in their interest. For instance, we're not going to convince China to allow workers to form unions, which will then increase the price of labor. The goal of the Chinese leadership is to keep the price of labor cheap, so that their country can as a "tractor beam" for both our low-tech and our high-tech industries.

Also, even if we did have "fair trade", countries like China have so much cheap labor that it's going to take 50 years, if ever, for the price of their labor to get anywhere near our level. For instance, Delphi Auto Parts pays their workers in their Chinese plants $3/hour (2$ in wages, 1$ in benefits). How long is it going to take to get that up to $60/hour (including compensation) which is what is paid in their American plants.

We don't want economic policies which ensure that we lose in a "fair" way. We want policies that ensure that we win from trade, which means that we need "balanced trade, not fair trade." And if we had balanced trade, then every country would benefit from trade. And that would be fair.

As the first post (by msgadget) makes clear, the reason we supposedly cannot have tariffs is that the multinational corporations and Wall Street would lost some of their profits. Unfortunately, these are the wealthy interests which Congress is inclined to represent, since these wealthy interests fund their expensive PR-managed re-election campaigns. But tariffs would be good for American citizens. Spread the word!!!
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