The
Tariff Issue
By Paul
Craig Roberts
May 14,
2019 "Information
Clearing House"
- Wherever I look at US policy, foreign
or domestic, I see only insanity, ignorance, and
incompetence.
Take
the issue of tariffs, which is Trump’s mistaken
approach to bringing the jobs back home. The
tariff “solution” overlooks that offshored US
production counts as imports when US firms bring
their goods into the US to be marketed.
The
Chinese did not steal American jobs by selling
below US cost.
The jobs were taken to China by US global
corporations, along with the technology and
business know-how, for the sole reason of
maximizing US corporate profits.
Labor, made as productive as US labor by
offshored US capital, technology, and business
know-how, could be hired at much less cost in
China and elsewhere in Asia due to the enormous
excess supply of labor that overhangs Asian
labor markets.
The enormous cost savings went directly
into US corporate profits, capital gains for
shareholders, and bonuses for executives.
Half and perhaps more of the “cheap
goods” imported from China are the goods of
American firms, such as Apple, Levi, Nike.
They are products of US firms that are
made in China for sale in the US.
They are not “cheap Chinese goods.”
Do you think an iPhone is cheap or a
MacBookPro is cheap?
The tariffs fall on American goods produced
offshore by American firms for sale in America. For
example, on May 13 the office of the US Trade
Representative (USTR) released a list of
“Chinese” products subject to a 25% ad valorem
duty. The list includes cell phones, footwear,
textiles. Do the cell phone imports from China
exclude Apple’s iPhone? Do the footwear imports
from China exclude Nike’s shoes? Do the textiles
exclude Levis? I have not seen any information
that Trump’s tariffs are only for Chinese owned
exports to US markets.
The
tariffs will reduce the profits of American
overseas production exported to the US and raise
prices to US consumers, who have already lost
the incomes from the manufacturing jobs that
American companies moved abroad.
In
other words, tariffs are not a solution.
The
only way to bring home the offshored American
jobs is to change the way US corporations are
taxed.
No, this does not mean to lower corporate
taxes.
The way to bring the jobs home is to tax
corporations on the basis of the geographical
location in which they add value to their
products.
If US corporations produce in the 50
states for their US market, the tax rate would
be low.
If they produce abroad in China or
elsewhere for sale in the US, the tax
rate would be high.
The tax
rate on offshored production for US markets
would be calculated to offset the lower labor
and regulatory costs abroad.
Americans, as they always do, got sold a bill of
goods called “globalism.”
Globalism is the deception used to
destroy labor unions, deprive the American work
force of middle class jobs, and strip them of
their bargaining power.
It is also the deception used by
transnational agri-business to drive
self-sufficient third world peoples off their
land and convert the country’s agriculture into
the production of a mono-crop export commodity.
The evil done by globalism has taken a toll on
both first and third worlds.
It is entirely the result of first world
capitalist profit-maximizing.
It has nothing to do with China.
China is being blamed not because its industry
produces cheaper than our industry, but as a
scapegoat to hide from view the fact that
US global corporations alone
are the cause of the lost American jobs.
Tariffs
cannot bring back the jobs.
On January 6, 2004, more than 15 years ago, US
Senator Charles Schumer (D,NY) and I raised the
issue in the New York Times whether jobs
offshoring was in fact an exercise in free
trade. A televised conference was called in
Washington, D.C., to hear us out.
Unsuccessful attempts were made to poke
holes in our argument.
With Schumer in the lead there was hope
that something could be done, but he was
silenced by his corporate and Wall Street
campaign contributors.
In the years since, I have many times
explained the issue in my columns, interviews,
and in my book, The Failure of Laissez Faire
Capitalism.
I testified before the China Commission
and made clear what was occuring and the
consequences, including the impact on state and
local budgets and pension obligations.
It did
no good.
The greedy, grasping capitalists silenced
every member of Congress, every economist, every
financial journalist, and the right and left
wings.
The consequence is that the United
States, once an opportunity society, is now
polarized between a tiny immensely wealthy
billionaire class and a work force deep in debt
and surviving on two or more part time jobs with
no benefits. The Trump regime is now blaming
this catastrophe on China. War could result.
Dr. Paul Craig Roberts was Assistant Secretary of
the Treasury for Economic Policy and associate
editor of the Wall Street Journal. He was
columnist for Business Week, Scripps Howard News
Service, and Creators Syndicate. He has had many
university appointments. His internet columns
have attracted a worldwide following. Roberts'
latest books are
The Failure of Laissez Faire
Capitalism and Economic Dissolution of the West,
How America Was Lost,
and
The Neoconservative Threat to
World Order.
==See Also==
Trump's Trade War With
China Could Cost the Average Family Up to $2,300
a Year, Report Estimates
Trump's failed US-China
trade talks have American soybean farmers
drowning in tariffs
Trump
Seeks New $15 Billion Subsidy To Protect Farmers
From His Own Trade War
The
views expressed in this article are solely those
of the author and do not necessarily reflect the
opinions of Information Clearing House.
