An Honest Look At Tariffs

Let's try examining tariffs in an attempt to decouple the idea from the current political polarization. I'll use a similar approach to examining minimum wage in my post Intellectual Vision.

Tariffs are a tax on goods or services from another country. A tariff schedule includes a detailed list of products along with tariff rates (% of value and/or a specific amount) and country of origin. 

Raising Tariffs

If a country raises tariffs, the importer (not exporter) pays the fees. The importer can pay the fees out of profits or pass the costs onto customers. The customers may just agree to pay the extra costs or may decided not to buy the product. If they don't buy the product, they may be able to find another equivalent alternative. If they can find another alternative, it will most likely cost more than or not be the ideal fit of the import. If the alternative product is produced domestically, then these businesses can benefit from the additional demand and potentially increase production. Since this demand is essentially incentivized by the tariffs, the business is not experiencing competituve pressure to innovate or cut costs, potentially resulting in higher costs than necessary.

If the customers can't find an equivalent alternative, they will have to find a product that doesn't meet the same needs or may have to make due without the product. 

The fees paid by the importer are collected by the government. These fees can be used by the government for productive manipulation of the economy, for example, by lowering taxes on consumers, offsetting the increased costs. These fees can also be used for non-productive applications, such as paying for excess government spending or special programs. In this case, the customer of the tariffed product ends up subsidizing the government program.

With complicated global supply chains, raising tariffs can end up hurting domestic producers that rely on foreign goods to make their products. Raising tariffs can have hidden costs such as creating an extra burden on businesses to adapt to changing rules.

Lowering Tariffs

After WWII, the U.S. lowered tariffs to promote global trade and economic recovery to help with post-war reconstruction.

If tariffs are lowered, a greater variety and quality of products can be found by consumers. Prices typically drop and global competition forces all suppliers to become more efficient. Foreign products may harm domestic suppliers if they can compete with cheaper foreign imports (due to cheaper labor or less regulation). Some domestic producers may benefit if they can by cheaper foreign parts for their products. If companies become dependent on foreign parts, this could result in supply chain disruptions, for example during a pandemic or war. If a domestic product is considered nationally strategic (e.g. defense, semiconductors), then lowering tariffs can put the national interests at risk.

With lower tariffs, a foreign government may reciprocate with lower tariffs. If they do, this may open new foreign markets for domestic producers. 

An example of this is NAFTA (The North American Free Trade Agreement), where lower tariffs between the U.S., Mexico, and Canada resulted in generally lower prices on imports from the other countries, however many small Mexican corn farmers were put out of business as they couldn't compete with the large U.S. subsidized corn farms.

These last two examples bring up the issue of unfair trade practices, where a government can subsidize a product, then flood a foreign market with cheaper goods to destroy local industries. This can result in foreign monopolies taking over. This is the reasoning for high tariffs on many Chinese products.

Foreign governments may instead keep their tariffs high, creating an unfair trade balance. 

Additional Thoughts

Intellectual Humility - I am not an expert on the intracies of tariffs.

Intellectual Curiousity - I am curious enough to investigate the nuances of tariffs.

Intellectual Honesty - I am open to the truth about tariffs, even when it makes me uncomfortable.

Intellectual Access - I recommend going to objective sources of information and avoid politically motivated sources.

Intellectual Prudence - I have attempted to critically evaluate the pros and cons of tariffs and avoid sensationalism (though I may have oversimplified this whole idea of tariffs with this post).

Intellectual Tolerance - I haven't taken political or nation sides, recognizing the consequences on all parties.

Avoid Persuasion, Seek Understanding - I have tried to create a shared pool of understanding and not persuade you to take one position or the other.

Promote Empathy and Compassion - I recognize that their are winners in losers in the current system and in currently proposed changes, whether or not either are optimal. 

Reference:

https://en.wikipedia.org/wiki/History_of_tariffs_in_the_United_States

The Absurdity of Ideology

 

An ideological vision is more than a belief in a principle. It is the belief that that that principle is crucial or overriding, so that other principles or even empirical facts must give way when in conflict with it.

 -Thomas Sowell, "Knowledge and Decisions"

Analogy

Imagine that you are young and considering a future career. Your research leads you to Accounting. You find the premier accounting school, apply, and are elated when accepted into the program. At orientation, a senior classmate validates your decision with the following speech:

"Accounting is the most important career. You might ask how can that be? How about a brain surgeon? But where does a brain surgeon perform his best work? In a state-of-the-art operating room, in a hospital. It took money, budgets, and planning to pay for this facility. And who did that? Accountants. Where did that surgeon learn his skills? At a university. How did that place of learning come to exist and continue? Accountants. If you think about anything good in the world, it took Accountants to make it happen."

You're young and excited to be part of this critical community. The department has social events, study groups, and symposiums. With every encounter of your classmates, you hear testimonials of the superiority of accounting. You are unknowingly being indoctrinated. 

You throw yourself into your schoolwork but must take unrelated general education courses. You complain: "This is a distraction from my goal of being a great accountant!" You take a class on a whim that sounds interesting and find you enjoy it more than accounting. You spend extra hours on the coursework and shoot to the top of your class. It's easy...and fun! Your professor takes notice of you and invites you to work with him. You continue with sequential courses and are forced into a challenging situation. Do you change your major? You decide to follow your passion and change your major. You are shunned by the accounting students, but find a new group to associate with. You graduate and land an amazing job. Every day, you can't believe you are getting paid to do what you love.

Still, early indoctrination in accounting makes you doubt your decision. Rationally, you know you did the right thing, but deep down, you question your decision to leave Accounting.

Reality

The above analogy is meant to be a safe analogy: something we can all point at and agree is unsound. But how is this different than what, for example, people think of as the solution to world peace? 

The solution to world peace is Democracy|Mutually Assured Destruction|the UN|Nonviolence |Technology|AI|Social Equality|God|Love.

Each of these "ideas" is an incomplete understanding of reality. Yet, the ideologically inclined person grabs onto an idea that feels good and vehemently argues in favor of his or her idea. In my post, Intellectual Vision: Four Truths and Eightfold Path, I claim that while there is an absolute, objective reality that humans cannot know completely. 

Now, let's make this personal. Identify the ideology most important to you. Notice how you feel when you replace "accounting" in the analogy with your ideology. How do you feel now?

Chase Hughes, a leading behavior expert, said:

... if you can't see anything wrong with the side you agree with, and you can't see anything right with the side that you disagree with, you have been manipulated.

Why the title? "The Absurdity of Ideology." Ignoring empirical facts and a diversity of viewpoints is absurd. Our survival on this planet is due to continual adaptation. How many of the current major conflicts in the world are due to conflicting ideologies?

Why I Don't Think the End is Near

Many of my younger friends have shared with me their pessimism and grim outlook for the future. I then share my optimism, which earns the reply "How can I ignore all the frightening news?" This is what I tell them.

TL/DR;

The news media has been sharing the worst possible outcomes for many crises during my lifetime: The Cold War, Nuclear Weapons, Acid Rain, Skylab falling, the Energy Crisis, the Ozone Hole, Y2K, and the election of every president that I can remember. I have concluded that everyone is poor at predicting the future, especially when they present the worst case scenario. I decided to make the most of the present and ignore the noise.

The Cold War and Nuclear War

My entire upbringing we were under the threat of communism with the potential for nuclear winter and the extinction of the human species. Ronald Reagan called the USSR the "Evil Empire", movies showed the Soviets invading the U.S. 

Resolution: 

In 1989, the unthinkable happened when the Berlin Wall came down. In 1991, the Soviet Union collapsed. Nuclear Disarmament treaties significantly reduced the world's stockpiles of atomic weapons. While there is still a nuclear threat, the fear mongering has decreased. (By the way, I highly recommend the Netflix documentary "Turning Point: the Bomb and the Cold War."

Acid Rain and Smog Days

During the 1970s and 1980s, pollution in the air would turn the rain to acid, ruining national monuments, killing wildlife in our streams and rivers, and ruining lakes and forests. The pollution was also causing respiratory problems. The nightly news announced the threat of acid rain in ominous tones. I remember as a child having "Smog Days" at school when the air quality was too poor to allow us to go out at recess and play. 

Resolution: 

The Clean Air Act was amended, and the Geneva Convention on Long-Range Transboundary Air Pollution created an international agreement that resulted in improvements. While it is still a problem in some countries with potential long-term environmental impact, we don't hear much about it.

Sky Lab Re-Entry

In 1979, the United States' first space station re-entered the Earth's atmosphere. NASA couldn't predict where it would fall, raising concerns that it could kill millions of people. 

Resolution:

It fell on parts of the Indian Ocean and Australia and didn't kill anyone.

The Energy Crisis

In 1973, OPEC had an Oil embargo against the U.S. and its allies. This resulted in a recession and high inflation. Gas was rationed resulting in long lines at the pump and the federal government imposing a national 55 MPH speed limit (Have you heard the song "I Can't Drive 55" by Sammy Hagar? I got a few speeding tickets during this period).  

Resolution: 

The U.S. adopted efficiency standards and the economy returned to normal (I won't list the reasons here.)

The Ozone Hole

In the 1980's, the big scare was the Ozone Hole. The concern was that it would keep getting bigger, increasing our risk of cancer, cataracts, and environmental damage.

Resolution: 

Montreal Protocol (1987) banned CFCs, with ozone hole recovery trends observed.

Y2K

In 1999, there was a fear that our infrastructure would collapse due to the Y2K bug. The year 2000 came with no significant problems.

Honorable Mentions

I didn't include these as they are too rife with controversy.

• COVID-19
• Gay Marriage
• Climate Change
• Artificial Intelligence

Fears about U.S. Presidents (that I remember)

Jimmy Carter was considered an outsider and weak on foreign affairs. He gave us economic struggles (inflation, gas shortages), the Iran hostage crisis, and perceived weak leadership.

Ronald Reagan was too old (69 at inauguration), a former actor, had extreme right-wing policies, and increased the risk of nuclear war. His trickle-down economics would hurt the poor, and he was marred by the Iran-Contra scandal.

George H. W. Bush was just Reagan 2.0.

Bill Clinton was too young and inexperienced, a country baffoon, a womanizer, and a draft dodger. He was scandalous (Whitewater, Monica Lewinsky). He was the only president on this list to balance the federal budget and start to pay off the debt. Way to go, Bill!

George W. Bush wasn't intelligent enough, was elected under controversy (2000 recount), and gave us the forever wars (Iraq War under false pretences) and the economic collapse (2008 recession).

Barack Obama was inexperienced, secretly a radical, and people questioned his birthplace and religion. He pushed for government overreach (Obamacare). Racial tensions increased.

Donald Trump 1.0 had no political experience, was reckless, had an unfit temperament, and authoritarian tendencies. In office, he was divisive, attacked institutions, mishandled COVID-19, and resisted the election results.

Joe Biden was considered too old, cognitively declining, a weak leader. He caused inflation, a border crisis, and a botched Afghanistan withdrawal.

Donald Trump 2.0 - Concerned that he would be another Hitler and Stalin and bring the world order to an end. 

This Isn't New

Predictions of Doomsday have been going on for a long time.

From Benjamin Franklin

The Bible (too many instances to quote here).

Conclusion

I've become numb to the overhyped fearmongering and dire predictions in the media. I have tried unsuccessfully to predict the future and realize that I am not only bad at it, but so is everyone else.

I decided to make the most of the present and wait a few years to see if other's predictions actually pan out.

Biography

"The Culture of Fear" by Barry Glassner.

"Hate, Inc." by Matt Taibbi.