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 Richmans' Trade and Taxes Blog



Time to Require Reciprocal Free Trade
Jesse Richman, 12/7/2018

The most recent US trade deficit statistics highlight the challenges faced by the piecemeal approach to the effort to balance trade currently under way.  Trading partners' retaliations and a strong US dollar (those are not necessarily separate events) have led to one of the largest deficits in years.  The goods deficit was 77 billion.  https://www.politico.com/story/2018/12/06/us-trade-deficit-china-europe-1047317

It is time for the US to consider rolling out a principled pro-free-trade settlement, one that automatically balances trade irrespective of the mercantilism of the other side. 

There are several good alternatives available to accomplish this objective, some of which could be put in place using existing powers granted by Congress to the President. 

Because of its immediate feasibility and a range of other desirable properties, the best approach is a reciprocal free trade trade tariff or scaled tariff.  http://ww2.odu.edu/~jrichman/workingpapers/MechanismstoBalanceTrade.shtml....

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Easy to Get Entangled in an Alliance, Hard to Secede
Raymond Richman, 12/2/2018

 

Brexit is a great example of the proposition that it is easy to form an alliance but hard to secede from it. In 2016, the United Kingdom voted to exit the Eurozone. The exit is still going on. The USA and the European Union are involved in a military alliance. But original French and German efforts to form an alliance were intended to prevent the United States from dominating Europe. The USA invented NATO as a defensive military alliance to prevent the USSR from establishing itself in Europe. This gave the USA control of Europe and led to the collapse of the Soviet Union. A Europe free of communism was achieved by the break-up of Yugoslavia.

The USA took advantage of its success in breaking up the USSR and Yugoslavia by getting some former parts of the USSR and Yugoslavia to join the European Community and NATO,  In 1999, PolandHungary, and the Czech Republic joined, followed by BulgariaEstoniaLatviaLithuaniaRomaniaSlovakia, and SloveniaAlbania and Croatia joined in 2009. The most recent member added was Montenegro in 2017. As of 2018, there are four aspiring members: Bosnia, Herzegovina, Macedonia, and Georgia. The UkraineSwedenFinland, and Serbia are considering applying for membership. The incorporation of countries formerly parts of the  Soviet Union and of Yugoslavia has encouraged Russian counter measures in the Ukraine, Georgia, Syria, Turkey, Iran and elsewhere. American media are united in considering Russia the aggressor while the Russia considers NATO the real aggressor.

A formal military alliance is “permanent” and “entangling. Thomas Jefferson, in his inaugural address, declared his devotion to "peace, commerce, and honest friendship with all nations, entangling alliances with none", using a phrase which is often attributed to Pres. Washington.

Trade agreements are non-military alliances. ...

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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]