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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (30365)	4/11/2005 10:59:05 AM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Mon Apr 11 2005 10:21 trotsky (Bleuler@tariffs) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved tariffs are actually pure, unadulterated evil from a libertarian standpoint. they inhibit voluntary exchanges between individuals - and are thus an infringement on individual liberty. it matters not 'which country has the biggest exports in dollar terms'. also the following statements from the wikipedia: "There is still some historical debate as to whether the tariff was harmful or not. A revenue-generating tariff can be beneficial to an economy, if other countries do not respond with tariffs of their own." are imo nonsense. as far as i'm aware there is exactly zero 'debate' as to whether the Smoot Hawley tariff was or wasn't harmful. as to the assertion that a country can 'benefit' from a tariff if other countries don't follow suit with tariffs of their own, this is simply economically illiterate balderdash. the exact OPPOSITE is true ( iow, if say there are several countries , all of which sport tariffs, then the one that unilaterally REMOVES its tariffs will be the one benefiting the most economically. this is for two reasons: 1. such a country will be subject to an abundance of choice in terms of goods and services available to its consumers at the best possible prices, and 2. its industries, forced to compete with foreign rivals on what appears an 'unfair' disadvantage, will over time become much more efficient and productive ( i.e., 'lean and mean' as it is referred to ) than the foreign firms which are bound to become fat and lazy instead. i can offer indirect proof for this assertion by pointing to e.g. the Yen/dollar exchange rate. back in the 70's and 80's, when the Yen was far weaker vs. the dollar ( trading between 250-350 yen per dollar roughly ) , US industry ( GM was VERY vocal about this issue ) complained and whined about the 'too weak Yen' far more vigorously than it does about the Yuan now. similarly to the current debate about China, it insisted that Japan should either strengthen its currency, or face tariffs, and it was widely believed that either one of these 'solutions' would lead to a revivial and increased competitiveness of US industry. in this particular case, currency strength came to the 'rescue' ( the effect of the strongly advancing Yen can be likened to a 200% tariff on Japanese goods since then ) . the result? 30 years later, with the Yen up to 105 to the dollar, Japanese car manufacturers celebrate one victory after another in the US marketplace...their market share expands practicelly every quarter, and they are hugely profitable. GM meanwhile has seen its auto manufacturing operations turn into continual loss makers and is considered ripe for bankruptcy by many ( its $300 billion debt load, which is about 70% more than Argentina faced just before it collapsed, doesn't help its case ) . the other US ( as well as many European ) car manufacturers likewise are unable to withstand the onslaught of the efficient Japanese car industry, which offers consumers reliability , advanced technology and comfort at highly competitive prices. thus the calls for China to either allow the Yuan to appreciate or face tariffs are similarly bound to end in utter failure for those it purports to 'help'. as i've mentioned in another post on the topic, the economic studies that have laid the theoretical foundation for what we can observe in practice ( the harm tariffs inflict on those that impose them ) are nearly 200 years old. a modern day economist who says otherwise has missed a few classes and has taken leave of his his common sense as well. you find links to Bastiat's treatises on trade if you follow the link to my earlier post below: kitcomm.com the argument can be roughly subsumed in three major points: 1. tariffs infringe on liberty and are thus evil PER SE. 2. they do inculculable economic harm over the long term ( short term 'beneficial' effects come at the price of losing out big in the long term ) . 3. they are usually advocated by politicians as a means to buy votes, essentially a play on the fact that most people are blissfully unaware of the negative consequences.