It's All in the Fine Print

Felix Salmon present a good Economic view of globalization, with the major proponents and Detractors from both Sides. I worry about such Writings because they all precede from an initial condemnation of Tariffs and Trade barriers. A favorite old Saying of mine is "The Devil is in the Fine Print." This is most evident in the arena of Trade, where Economists despair of the lobbying efforts of national industries to construct national monopolistic Pricing. This fear is justified to greatest degree, as Politicians have a tendency to respond quickly to moneyed Interests.

Reality, on the other hand, states that Tariffs and Trade barriers can be instrumental in achieving national economic Ends, with the least disturbance to national Living Standards, and equally little impact on World markets. Real Value from Tariffs could come from a Statement that such financial charges are to be uniform: I would suggest an 8% Foreign Product Tax implemented in similar fashion to normal State Sales taxation, collected by State agencies who would get 3/8ths of the Tax revenues for its collection and transfer to the U.S. Treasury. This Foreign Product of 8% would equalize the Real Values of American and Foreign labor fairly successfully. It would also provide a substantial Tax revenue base to the U.S. Treasury, far more equitably than will a National Sales Tax, while cutting down the Deficits endured by all levels of U.S. Government. It would also curtail the excess Profits Corporations enjoy from both Offshoring and Product importation.

Trade Barriers remain relatively bad, until One examines what they try to accomplish, which is to maintain basic labor-intensive industries at full production. Absolute Bars to Importation, though, will positively introduce geographic monopolistic Pricing. What to do? The Answer is always the same: Taxation. I would propose a Unnecessary Product Import Tax of 23% on any Product where at least 5 separate American Business concerns can maintain 125% of American Product Needs; the list compiled by Federal Statistical reference and collected by State Sales Tax systems–who will be granted 8% of the Tax for the complexity. American Labor will be protected from forced equalization with World Wage standards, American industries will have Protection from foreign Price Undercutting, and no other Country can claim any undue advantage granted to American labor. The huge American Trade Deficit would be eliminated. The Cost to the American Consumer, though disruptive in the Short-term, should not exceed 2-3% of their yearly Household budgets. lgl