Monday, December 5, 2016

Just Because It’s Good For You?

     Two pieces piqued me this morning: one from an old member of the blogroll, the other from a very recent inclusion.

     First the old friend, Emperor Misha, who strains incoherently to rationalize President-elect Trump’s threat of protective tariffs as “not statist:”

     How about lowering corporate taxes to lure companies to the U.S., something that Trump has also promised to do? We were under the impression that even “TruConsTM” think that’s OK. Is that still OK, or did a new directive go out from the Chamber of Commerce and NRO making that WrongThinkTM lately? We’re having trouble keeping up with all the changes the NeverTrumptards make to the catechism every five minutes, depending on who or what they need to drum out of “their” movement.

     Just how, pray tell, is this different from raising tariffs (no, they’re not a new thing, we have plenty of them already, but they’re the Good KindTM that benefit the Chamber of Commerce, so they’re not statist, you filthy Dirt Person Peasant!) in order to keep them from leaving in the first place?

     They’re both the exact same incentive. One is a positive one, one is negative. Both are enacted by the state.

     But only one of them is “statist?”

     Exactly: An action taken by the State to coerce or intimidate private actors is statist. The elimination or reduction of such actions is not statist; in fact, it’s the exact opposite. The distinction is made clearer by noting that in the case of eliminated or reduced taxes, before the tax was imposed, the taxed individual or entity was free to do as it pleased with its money. Thus, the elimination or reduction of taxes restores, in whole or in part, the condition that existed before the statist action of imposing the tax.

     But wait: there’s more! All tariffs are intended, whether directly or indirectly, to benefit the state. Therefore, all tariffs are ultimately statist. Now and then, a tariff is enacted for seemingly "good" reasons, for example to provide an incentive to keep companies in the U.S., as Trump has promised to do. However, the same end could be achieved in other ways: for example, by closing the borders against emigration, or by reducing the incentives for the company to emigrate. Which of those more closely resembles the action of a tariff?

     Also, a tariff has a “constituency” that’s inherently hostile to the nominal beneficiaries no matter who they are. That constituency is far more interested in the revenue from the tariff, in taxing the beneficiaries, and in increasing its power than in any other consideration, which is why tariffs tend to be perpetuated well beyond any overt rationale for them. Many a tariff has other sinister constituencies as well (e.g., the environmental activist community).

     In the short term, tariffs can forestall business emigration, which is why they’re popular with the communities they target. In the long term, tariffs – especially protective tariffs, rather than frankly revenue-oriented tariffs – create moral hazards that corrupt the business environment and reduce productivity. Hopefully, the Trump Administration's future economic efforts will go to tax reduction, regulatory reduction, and other actions that will increase the desirability of America’s business environment. However, in the short term, threatening a high protective tariff is a popularity enhancing measure for Trump: the sort of move he’s adept at and famous for.

     Always ask Cui bono? It provides the key to many such controversies.


     Second, Bre Faucheux cites a recent Gallup poll. First, the poll results:

     Americans’ support for keeping the Electoral College system for electing presidents has increased sharply. Weeks after the 2016 election, 47% of Americans say they want to keep the Electoral College, while 49% say they want to amend the Constitution to allow for a popular vote for president. In the past, a clear majority favored amending the U.S. Constitution to replace the Electoral College with a popular vote system.

     Bre’s comment:

     Those who say we should have a popular vote don’t understand that the U.S. is not a democracy. It’s a constitutional representative republic. It was designed to be that way. And those who want to abolish the Electoral College, are vouching for the dismemberment of our constitution. There isn’t a doubt in my mind if the Electoral College had helped the democrats to win this election, the left would be singing it’s praises. It’s only an issue when their candidate doesn’t win.

     True...as far as it goes. But it’s seriously incomplete.

     The Electoral College was never meant to stand alone, the last bulwark against “faction,” the term in common use at the time of the Founding to describe a popular passion. It was part of a system intended to distance the nation’s chief executive from the popular vote. That system included:

  • The independence of the state legislatures;
  • The choice of electors by the state legislatures;
  • The unfettered choice of the president by those electors.

     (In addition, the choice of United States Senators was originally left to the state legislatures, further buttressing their voices in federal affairs. Today, U.S. Senators, thanks to the Seventeenth Amendment, are determined by popular vote, which enables the sort of carpetbagging that put Robert Kennedy and Hillary Clinton in the Senate from New York.)

     The state legislatures no longer possess significant independence. Federal disbursements to the states have destroyed some, while the enactment of unConstitutional federal laws and regulations that override state sovereignty took care of the rest. In addition the state legislatures no longer choose the electors who will chose the president; that, too, is done by popular vote. Finally, in 25 of the 50 states the electors are required by state law to abide by the popular vote in their state. Thus, the Electoral College no longer represents the will of the state legislatures in any way. It’s been stripped of the underpinnings that helped to make it a guard against maldistributed support for the president. Its sole effect at this point is to increase the presidential voting power of voters in the less populous states relative to that of voters in the more populous ones. Therefore, if the mega-states were to become populous enough, they could overwhelm the small states’ advantage.

     But that’s largely beside the point, which is this: I don’t favor the retention of the Electoral College because it’s twice defeated nominal popular-vote winning Democrats in recent elections. I favor keeping it and restoring the other elements of the original Constitutional design. Moreover, I would feel the same even if the candidate I preferred would have been defeated under that system.


     The greatest of all moral hazards in politics arises from the temptation to support a policy that’s contrary to the well-being of all – “the general welfare of the United States” – because it would be “good for me.” That’s how we get evil policies: policies that mulct or oppress a part of the population to favor some other part. Protective tariffs are such a policy: by “protecting” a particular company or industry, they impose greater costs on those who consume its wares. That a good and decent person such as Misha will throw his support behind such a policy shows the strength and depth of the hazard.

     Catholics have a practice called examination of conscience. It involves reviewing one’s recent actions for their conformance with the Ten Commandments and the Gospels. Each of us would be well advised to examine his political conscience when he finds himself leaning toward a policy which, were it not to his material benefit, he would probably oppose.

1 comment:

Dystopic said...

I continue to struggle with the notion of tariffs and free trade. Allow me to offer a semi-dissenting opinion here.

One of the few legitimate functions of the state is to defend our liberty, and to that end we have a military, and diplomats, etc... to protect the citizenry from the depredations of other nations.

On the other hand, your point about the use of these tariffs as de facto taxation on the public, and the favoritism this engenders is well taken.

Thus my moral compass is sharply divided on this issue. Having no tariffs is a situation I view as ideal, but at the same time I cannot ignore the sort of economic quasi-warfare practiced by our "frenemies" like China, India, etc... who desire to cripple our economy, reduce our standing in the world, and to make us fully dependent upon them. They have the advantage of being able to artificially depress the wages of their own people in order to accomplish this. This is especially true in China, which has moved from Communism to something resembling Fascism.

The economic effects here in America are exacerbating other tensions, also. And so China, by taking our manufacturing and industrial base, is further destabilizing us.

So we might have free trade with a country like Britain, or South Korea, or Australia, who has no such obvious designs upon us. But with China? India? No, no. We must be very careful. I'm not saying tariffs are necessarily the answer -- I'd prefer a different method if it could work, for the reasons you've stated.

But something must be done about this. There's a reason this issue is one of the biggest driving forces behind Donald Trump. Americans instinctively realize that China is no friend, and that something is very wrong with the trade relationship. China is, in effect, using its totalitarian power to cheat. Rent-seeking on an international level.

And somehow, we must convince them to stop.