It is more likely that
we will narrow our trade deficit with China by selling them more oil, liquid natural
gas, coal and other raw materials than by imposing a border tax or tax
subsidizing manufacturing.
We are counting on
lowering the 35% corporate tax rate to 15% to give small business a break and
allow highly automated and high volume manufacturing where labor cost is not a
factor to relocate back to the US.
But to be fair to our
large companies who offshore their touch labor, we might not do much. If we do
bend the rules of economics, it will probably be to ensure that we are
self-sufficient in what we need for military defense. Keeping consumer prices
low is a big factor in US trade deals now. The excellent article below is about
China:
FEAR
NOT AMERICA, THE CHINESE AREN’T EXPORTING TO US OUT OF CHARITY
John Tamny, 6/15/17
Regularly forgotten amid
all the false compassion for the individuals supposedly “left behind” by free
trade is why individuals work in the first place. They work in order to
import, whether from across the street, or from the other side of the world.
Working is all about the getting.
That’s why open trade
always and everywhere benefits every worker, regardless of locale. Open
trade means that workers enjoy the world’s competition for their money, which
means workers are the beneficiaries of competition that not only enhances
product quality, but that also leads to lower and lower prices for all those
who pursue remunerative labor. Free trade means regular raises for
workers regardless of whether their paychecks increase, stay the same, or even
shrink.
To the above, the
frequent response is that free trade has consequences for workers whereby
global competition renders formerly remunerative jobs less lucrative, or wipes
them out altogether. Ok, but all technological advance is about erasure
of formerly necessary work. If it were just about maintenance of existing
jobs, the U.S. and other countries could mimic the former Soviet Union and
abolish technology so that the jobs of tomorrow will be the same as the ones
today. If so, the world, much like the former Soviet Union, would be very
poor. Never forget that before technological advances that saved on
labor, the only work available was on the farm. All toil was focused on
feeding oneself. No sane person would desire a return to what was a very
bleak past in which wealth was wholly a function of one’s ability in the
fields.
All of this speaks to
the greatest aspect of free trade: it’s the path to individual
specialization. When global competition for customers brings down the
cost of everything, rising disposable income leads to new wants in the
marketplace being discovered, and with these new wants, new forms of work rise
up as a necessary way of fulfilling the needs of consumers who desire all sorts
of goods and services as a reward for their work. Free trade leads to lower
prices, which lead to greater individual specialization, and by extension much
greater productivity. When we’re more and more able to do the work most
commensurate with our unique skills, our productivity surges.
Breaking it all down to
the individual, economies just collections of individuals, no one person on
this earth could live beyond the barest of subsistence absent the ability to
trade freely. Life without trade would be defined by unrelenting poverty,
and for a high percentage, death by starvation, lack of protective clothing,
shelter, or all three combined. The free trade that is essential for an
individual on the way to surging productivity and wealth, is by extension
essential for country economies.
Thinking about the U.S.,
imports are largely untaxed here; the average tariff across all foreign goods
roughly 1.2%. That’s a major reason why Americans are the wealthy envy of
the world. Precisely because we can import so cheaply, “getting” once
again the sole purpose of our work, we have much greater odds of doing the kind
of work that maximizes our productivity. Importantly, productivity is
what the investors who create all jobs prize the most. In that case, it’s
no surprise that the U.S. attracts more foreign investment than any other country
in the world, by far. So if we want to enhance
job opportunity in the U.S., the path to the latter isn’t tariffs on foreign
goods that will slow our path to specialization; rather it’s even greater
openness to the world’s goods and people so that we can increase our odds of
doing work that is increasingly unlike work.
Which brings us to
China. Those who should know better claim that China’s voluminous
production of goods and services amounts to an “export strategy” that is
crushing opportunity around the world. Sorry, but the Chinese are
human. They’re not working for nothing in return. To “carry out” is
to by definition “carry in.” No doubt the average Chinese worker saves more,
but that’s wholly logical considering how poor China once was thanks to a lack
of economic freedom.
And as evidenced by the
inflows of foreign investment into the U.S., the greatest “American jobs”
strategy is an openness to foreign production from countries like China.
For one, the fact that they export so much to the U.S. is a certain sign of
individual American productivity. If Americans were rendered poorer and
perpetually unemployed by import inflow, Chinese exports would go
elsewhere. The Chinese aren’t working with charity in mind, much as we
aren’t. Furthermore, openness to Chinese goods amounts to more than a
daily raise for American workers: specifically it boosts Chinese wealth and
savings, and leads to more investment stateside that once again expands
American pay, along with the range of work that Americans can perform. If
you’re an American and you hate your job or hate the work that’s available, you
want more imports from China, not less.
Lastly, we cannot forget
that the Chinese are like the rest of us in the world: they want things in
return for their work. More evidence supporting what is basic comes via a
recent story about a Chinese expat living in Australia. As Jacqueline
Williams and Xiuhzhong Xu explained it in the New York Times, “Zhang Yuan’s
business started with favors for relatives: an aunt who wanted baby formula, a
cousin looking for Ugg boots. She was a college student here in Australia, and
every dollar helped, so she mailed the items back to China and charged a bit of
a commission.”
And as so often happens,
what started as a small service morphed into a business. Zhang “now
employs two buyers, two packers and two people in customer service, with
offices in Melbourne and Hangzhou.” As she told the Times,
“The Chinese have always had a blind adoration for foreign things,” which means
that what began as a service in between classes whereby she would “shop for
whatever was popular that week: vitamins, brand-name jewelry, fake erectile
dysfunction drug called Kangaroo Essence” has become a full-scale company that
rewards Zhang to the tune of $300,000/year.
So while anecdote is not
fact, what can’t be forgotten is that production and export is merely an
expression of a desire to import. The Chinese are just like every other
living human: they want things. They’re producing so that they can get.
All of this speaks to
the value of fully opening the U.S. to Chinese imports without regard to what
Chinese officials do “in return.” It doesn’t matter. As the Australian
example reminds us, they’re not producing in order to live impoverished
lives. Their production is their way of saying they want what we
produce. If we reward ourselves with the better prices and better jobs
that result from Chinese imports, soon enough those who export to us will
reward themselves with what we produce. Again, to “carry in” is the
purpose of all work. The Chinese are no different.
Originally published on Forbes.
Norb
Leahy, Dunwoody GA Tea Party Leader
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