Liberation Day Lite

Much better than nothing. Could be much better.

Well, it has been been a fun beginning of the year. Trump has not only ended DEI mandates, he has made DEI illegal for government agencies, government contractors, and government-funded universities. I hear the shrieking of blue haired bitches. Such a wonderful sound.

Meanwhile, DOGE has not only exposed do-nothing bureaucrats, and Democrat abuse of government funds, DOGE has made it legal for young men to be sophomoric and still have a career later. Go Big Balls!

But then The Donald had to declare Liberation Day: a 10% across-the-board tariff and a declaration of trade war with every country running a trade surplus with the United States. Conservatism, Inc. is having a hissy fit. Golf balls are shriveling across America. The stock market is getting all jittery, threatening the cruise ship plans of millions of Boomers. Glenn Beck is on the verge of proving that men can indeed give birth to children, albeit of the bovine variety.

To some degree I agree with Conservatism, Inc. (and the cosmopolitan Reason readers): the United States should not be using tariffs to bully other countries. I'm partial to sovereignty. I want truly independent countries attempting to act on behalf of their people. Let's limit our influence to aid during disasters, some subsidized corn to starving Africans, and giving strong evidence that The American Way has some really good parts which other countries might want to emulate. And as

Handwaving Freakoutery

rightly points out, requiring other countries to fix their trade surpluses with the US is woke logic applied to trade.

Downright embarrassing. The United States committed economic suicide all by itself. Our government did the Subsidized Outsourcing. And the biggest currency manipulation is the Petrodollar. The dollar is backed by the U.S. military's protection of underpopulated Arab states sitting on gigantic hoards of buried treasure.

But I have another objection: Donald Trump's 10% tariff baseline is wimpy.

As I pointed out way back in Rule 1, if we taxed imports at the same rate as we taxed domestic production, the tariff rate would be closer to 30%

But even that might be too low. We not only tax domestic production, we offload much of our welfare state functions onto employers. Employers are expected to set up retirement and healthcare plans. And they are expected to solve the injustices of the past through the most ridiculous of mandates: for years affirmative action has been both illegal and mandatory. Maybe that baseline should be 40$ or even 50%.

And I'd make it higher for China. If they want to be Morlocks with black lung in order to turn us into Eloi, let them pay a hefty tax penalty. 66% for China -- an appropriate number for a nation that uses an image of the devil as a national symbol. Maybe higher.

And let other nations react as they see fit. If the world doesn't want to buy as many of our soybeans, we can convert some fields into pasture. More grass fed beef. More pasture raised chicken. Mmmmmm. And good for a whole bunch of endangered species as well.

But the Cost!

Oh no! I hear a bunch of retired Boomers whining about increased costs at Walmart. "You raised the price of a new fishing pole by 40%!" Well boo hoo. Guess what else is expensive:

• Gutted core cities across the land.

• Overpriced college degrees as people struggle to find decent paying jobs in our financialized economy.

• Mass quantities of underemployed people qualifying for Medicaid.

• An opioid crisis driven by despair.

• Perpetual deficit spending. (U.S. Treasury spending has gone from 690 billion dollars to 1.3 trillion dollars/year in the past five years.)

• Operating a massive prison industrial complex. (For much of rural America, hosting prisons has replaced local manufacturing.)

And for those who think my proposed tax shift is Big Government or socialism, let me point out that when the government taxes itself, government gets very very expensive. Government buys mass quantities of domestic labor.

The Good Life

I have this wacky notion: life in a rich country should be good -- and not just for rocket surgeons. It should also be good for those insist on being baseline humans.

Our GDP centric optimize-for-consumers policies do not optimize for human flourishing. Humans aren't mere consumer units. The free range human hunts, gathers, fights, does local politics, builds things by hand, farms, herds animals, gathers wisdom, preserves traditions, and engages in inductive logic.

Symbol manipulation, deep deductive logic, computer programming, and supervising robots are unnatural acts. They can be incredibly productive acts. And a minority of people enjoy them -- at least some of the time. For example, I would continue to write software even if financially independent. Computers are toys for me. But I wouldn't write software full time under tight deadline pressure. And the same goes with physics. I'd like to be able to spend some time knocking the rust off my degree, but the prospect of doing theoretical physics as a full time job exhausts me just to think of it. I too like to spend time as a baseline human: building furniture, growing food, engaging in politics, and feeding cats.

A United States where it is possible to make a living as a small scale craftsman would be a better United States. This is what the Walmart hating hippie activists have been saying for years. Let's recruit them.

A United States where it is possible to profitably manufacture things with actual human labor would be a much better United States. And yes, that means being able to make blue jeans here. (Though even with a 40% tariff, jeans from third world sweatshops will still dominate the low end.) As Ronald Reagan pointed out years ago, the best social program is a job. Let's make that a job that pays a living wage.

Bonus points for making it feasible to run such operations part time or seasonally. Repetitive labor is part of being a natural human. But doing such labor all day day in and day out is not. Neither is doing the same repetitive thing all year. (Fixing this requires more than tariffs. I'll write more in a future post.)

A Better World

Up to this point I have been very selfish. I want my country to be a great place too live. Worst yet, I appear to be calling for taxes on goods from poor countries. Very meany-poo.

Keep in mind that the 30-40% is a baseline. We can make some exceptions for our most favorite nations -- as long as we don't treat most of the world as our favorite nations. We can punch some holes in the tariff wall for some poor countries trying to make to jump to modernization. We can cut some reciprocal deals with countries like Canada, where we do a lot of cross production.

But just how much is the American consumer helping the world outside of national socialist China anyway? Are we really helping the world when we buy a trillion more dollars of merchandise and services than we sell? Is that help, or is it collecting tribute? Maybe the "free traders" are the rapacious meany-poos. Maybe MAGA is nicer than plunder the world.

OK, part of our trade deficit is US based multinationals playing tax haven games. But a significant chunk of that deficit is real. A significant portion is the world financing our federal budget deficits. The US federal government has become a capital vacuum for the entire world. This is evil. As I have previously pointed out, deficit spending a subsidy for the already rich at the expense of those who do productive work.

Thanks to the magic of the Petrodollar, our federal budget deficits may well be helping to impoverish the working class of the world. Use the tax shift as part of a plan to balance the federal budget and we can be the unequivocal good guys.

Diversity and Creativity

If the world follows our example, wouldn't this reduce world trade?

Yes. So what? Where comparative advantage is compelling, trade will still happen. Tropical countries will still sell coffee and bananas to people in cold weather countries. Nerds will still buy Japanese anime and manga.

And the well off will buy foreign products because they are exotic. And with double-taxed trade there will be more truly exotic products around the world.

There will be some inefficiencies, some loss of economies of scale. But was the world that terrible when small countries could have their own automobile companies? It was done before. It can be done again. And is it really wise for Boeing to outsource so much of its manufacturing to foreign lands in order to get customers? Maybe we'd be better off with more aircraft manufactures which buy local or make in house. And let us note that the most cutting edge company of all, SpaceX, makes most of its parts in house, here in the United States.

What the world would lose in economies of scale, it would gain in creativity. For example, I remember a time where US backyard inventors could develop an idea, find a US manufacturer in the Thomas Register and get a batch made for marketing. Innovative toys, tools, kitchen devices, fishing lures, and more could be profitably made here.

Nowadays the economics against making it here are brutal. And finding and dealing with a manufacturer on the other side of the Pacific Ocean is a barrier to entry that's too hard to climb for most. Goodbye Yankee Ingenuity.

Similar sad stories play out around the world when trade is too frictionless. Higher friction world trade creates incubators all over the world -- a more interesting world.