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 Richmans' Trade and Taxes Blog



The Scaled Tariff, a Single Country Variable Tariff, Is All That Is Needed to Balance Trade
Raymond Richman, 1/25/2017

Trump is being importuned to impose a border tax. A border tax is foolish and unnecessary. In the first place, it applies to all our trading partners even those with whom we enjoy a chronic trade surplus. The problem that needs correction are our chronic trade deficits with a handful of countries that has impoverished millions of American manufacturing workers. That is easily corrected by scaled tariffs which rise and fall automatically as the trade deficit widens or contracts. The scaled tariff is a single country variable tariff which has the virtue of raising huge amounts of revenue so long as the trade deficit remains substantial.

The scaled tariff requires no new bureaucracy because tariffs already exist and are administered by an existing revenue authority.  A border tariff is a new tax and will require a new bureaucracy to determine how large it should be and to administer it.  A border tax imposed on imports from countries with whom we have a trade surplus is an undesirable mercantilist policy on our part, something we oppose when others do it. International law recognizes the right of nations to impose tariffs for the purpose of correcting a trade deficit.

 Trade deficits have a number of causes ranging from difference in countries’ savings rates, unjustified wage differences, unjustified barriers to imports and subsidies to exports, and exchange rate manipulation, inter alia.  Regardless of their cause, countries have the right to impose tariffs so long as the trade deficits continue.

The U.S. government  has the obligation to ensure balanced trade with every major trading partner over the long-run. Balanced trade is always beneficial to all trading partners in the long-run. Unbalanced trade is often beneficial to countries importing capital goods to produce more goods or new goods for their own residents. Many of the countries with which we have a favorable balance of trade are in this category. ...

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Soros Finances anti-Trump Women's March
Raymond Richman, 1/22/2017

Ex-WSJ Reporter Finds George Soros Has Ties To More Than 50 "Partners" Of The Women’s March | Zero Hedge

Ex-WSJ Reporter Finds George Soros Has Ties To More Than 50 "Partners" Of The Women’s March

 
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Former WSJ reporter Asra Nomani asks in the NYT's "Women In the World" section what is the link between one of Hillary Clinton’s largest donors and the Women’s March? Her answer: "as it turns out, it’s quite significant."

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Here is what else she discovered.

Billionaire George Soros has ties to more than 50 ‘partners’ of the Women’s March on Washington

In the pre-dawn darkness of today’s presidential inauguration day, I faced a choice, as a lifelong liberal feminist who voted for Donald Trump for president: lace up my pink Nike sneakers to step forward and take the DC Metro into the nation’s capital for the inauguration of America’s new president, or wait and go tomorrow to the after-party, dubbed the “Women’s March on Washington”?

 The Guardian has touted the “Women’s March on Washington” as a “spontaneous” action for women’s rights. Another liberal media outlet, Vox, talks about the “huge, spontaneous groundswell” behind the march. On its website, organizers of the march are promoting their work as “a grassroots effort” with “independent” organizers. Even my local yoga studio, Beloved Yoga, is renting a bus and offering seats for $35. The march’s manifesto says magnificently, “The Rise of the Woman = The Rise of the Nation.”

It’s an idea that I, a liberal feminist, would embrace. But I know — and most of America knows — that the organizers of the march haven’t put into their manifesto: the march really isn’t a “women’s march.” It’s a march for women who are anti-Trump. ...

 

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The Myth of a Global Manufacturing Employment Decline
Jesse Richman, 1/21/2017

AManufacturingEmploy.JPG

...The graph rather speaks for itself.  It is immediately obvious that total manufacturing employment including the USA, the Rest of the West, and China has been on the increase rather than the decline.... 

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Keep the Focus on Net Exports
Jesse Richman, 1/19/2017

The favorite line or political strategy for those who favor trade deals that end up weakening the US economically is that the deal will increase US exports.  President Obama bought this line.  Many Republicans in Congress have too.  The problem is that a focus on exports alone can be deeply misleading. 

To think about why, let's start with one of the jokes my father tells periodically about why he quit vegetable and sheep farming in favor of other pursuits.

The hardware store owner sees a man come in to the store one week.  He buys twenty pitchforks for $20 each. 

The next week the same man comes back, and buys twelve pitch forks for the same price.

The next week the same man purchases another eight pitchforks. 

Finally the shopkeeper cannot suppress his curiosity.  "Why are you buying all of these pitchforks?  What are you doing with them?"

"Well," said the man, "I buy them from you for $20, and then I resell them for $15."

"But you lose at least five dollars for every fork you sell!"..

"Yup," said the man, "But it beats farming!"

Exports are a good thing.  Exports create jobs for those who work to produce the exports.  And they provide countries with the means to purchase imports.  

But just as selling pitchforks for less than one paid for them is a recipe for losses and debt, so too is making a deal that raises exports while raising imports much more.  The jobs displaced in the import-competing sectors will not be offset by the jobs created by the much smaller gains in the export-competing sector. 

Thus, when politicians speak of exports alone without also discussing imports, they ought to be taken to account.  How will their proposed policies influence the overall picture of US trade?  

Here are some other metrics to keep in mind....

 

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Walll Street Journal's Recent Bias Against Trump Revealed By Its Editor
Raymond Richman, 1/5/2017

Wall Street Journal editor-in-chief Gerard Baker on 1-5-2017 wrote an opinion piece entitled “Trump, ‘Lies’ and Honest Journalism” in which he argues that when he defended his advice to  the press to “be careful about using the word ‘lie’. ‘Lie’ implies much more than just saying something that’s false. It implies a deliberate intent to mislead.”  “Mr. Trump certainly has a penchant for saying things whose truthful is, shall we say for now, challengeable” and “Given the number of times Mr. Trumps seems [sic!] to have uttered falsehoods” and “Mr. Trump has a record of saying things that are, as far as the available evidence tells us, untruthful: thousands of Muslims celebrating 9/11 on the rooftops of New Jersey, millions of votes cast illegally in the presidential election, President Obama’s supposed foreign birth” and “When Mr. Trump claimed that millions of votes were cast illegally, we noted, high up in our report, that there was no evidence for such a claim. No fair-minded or intelligent persons was left in any doubt whether this was a truthful statement.” He writes further, “Now, I may (sic!) believe that many of the things Mr. Trump has said in the past year are whoppers of the first order. But there is a difference of believing that, with reason (sic!)—my induction from knowledge of the fact—and reporting it as a fact. The latter demands a very high standard of reporting.” And finally, he concludes, “What matters if that we report the story and that we find the truth. It’s our job also to point out when candidates, presidents, chief executives, public officials or other s in the news say things that are untrue. But I’m content for the most part to leave the judgment about motive—and mendacity—to our readers, who are more than capable of making up their own minds about what constitutes a lie.”...

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    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]