The Grumpy Economist

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The Grumpy Economist

Roosevelt-era farm subsidies to offset the Administration’s tariffs. “Taxpayers will be asked to initial bank checks to farmers instead of getting a trade policy that truly starts and expands more marketplaces. There isn’t anything concerning this that anybody should like,” said Sen. You put people in the poorhouse and offer them help.

These views are good, but not in my own mind the biggest danger really. The closest is Sen. “This is becoming more and more just like a Soviet type of overall economy here: Commissars deciding who’s heading to be granted waivers, commissars in the administration determining how they’re heading to sprinkle around benefits,” said Sen. It isn’t really Soviet, that was more to do what you’re told or go to Siberia.

It’s a darker system, that leads to crony capitalism. Everyone depends upon the whim of the Administration. Who gets tariff security? On a whim. Nevertheless, you can obtain a waiver then. Who gets those, on what basis? You can get subsidies Now. Who gets the subsidies? There is absolutely no statutory regulation, no rule, no basis for just about any of this. If you think you deserve a waiver, on what basis do you sue to get one?

Well, it sure can’t hurt never to be an outspoken critic of the administration when the tariffs, waivers, and subsidies are being handed out on a whim. This is a bipartisan danger. I had been critical of the ACA (Obamacare) since so many businesses were requesting and getting waivers. I used to be critical of the Dodd Frank work since so much enforcement and regulation are discretionary. Keep your mouth shut and support the administration is good advice in both full cases.

And to my mind, our drift for an economy in which every successful business needs a special dispensation or waiver from the government, granted at the government’s pleasure or displeasure, is our greatest danger. ‘s hands from making unilateral tariff policy with legislation that would require Congress to approve of unilateral tariffs that are imposed with the justification of national security. Yes, but that’s only the start.

Tariffs are taxes. Why does the elected leader of unilateral capacity to impose taxes? The president can’t change the income tax code (except for some interpretation issues. Index capital gains for inflation now! The answer is, because the Congress handed him that power. Congress loves to pass laws that make it look protectionist, and then depend on the known truth that no sane Administration would ever enforce them. The standard trade law basically says that the Administration should impose tariffs if any industry is hurt.

That’s basically any industry that has any imports, i.e. all of them. We’ve counted for many years on no administration being nutty to actually do this enough. The national security provisions under which the Trump administration is acting are even vaguer. By now, both celebrations ought to be sick of the imperial presidency.

Take back the energy to impose tariffs. Or at least write an acceptable statute: that tariffs and quotas may only be enforced if individuals are harmed. If nationwide security is a pressing concern, then write that the defense department must require it and shell out the dough. Do we are in need of metal mills so we can re-fight WWII? If so, put subsidized steel mills on the protection budget.

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If defense prefers to use the money for a new aircraft carrier rather than a metal mill, well, that’s their choice. We are informed that the trade battle is all a casino game on the path to freer trade. What’s the strategy, what’s the end game here? At what point do we start to see things re-locate of the chaotic state they are in now and to where we actually see new trade agreements?

” asked Sen. Mike Rounds (R., S.D.). Mr. Trump, dealing with a gathering of veterans groupings on Tuesday, urged tolerance on trade, despite concerns elevated by critics: “Just stick to us,” he said. Well, what’s the final end game? If it’s an environment of zero tariffs — a suggestion the G7 should have taken and run with — fine, but say so. If it is for China to reform intellectual property treatment, fine, say so.