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The Bit That Robert Lighthizer Doesn’t Get

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It’s right here in the opening sentence of his piece in the New York Times:

The Senate recently passed a bill intended to bolster America’s technological and industrial capacity as we compete against China.

America doesn’t compete, on any rational economic basis, with China. People who are Americans, companies that are or might be, do indeed compete with people who are Chinese and or with companies that are Chinese to some extent or other. They also cooperate with each other too.

People and certain types of organisation might well compete – nations are not one of those organisations that does compete economically. This is just the same sa the statement that nations don;t trade with each other, economic actors do. Which is why national restrictions upon trade aren’t really the thing to be doing. Because if nations don’t trade with each other then how can national restrictions upon who you can trade with be rational?

Yes, of course, we can use shorthands like USA Inc and Germany GmbH but they are shorthands, they are proxies. And as ever with using a proxy it’s important to understand when it’s a useful shorthand for the thing not directly observable and when it isn’t. Trade and nations ain’t.

But in one of those “only in Washington” moments, a bill written to make our country more competitive with China now includes an amendment that will do exactly the opposite.

We’re not trying to make the nation competitive. At most we might desire to make certain economic organisations in the tradeables sector more competitive. At most – and the difference is important.

The notion that all tariffs are bad is foolish and counterproductive. They have been an effective tool of economic policy since the beginning of the Republic. They can offset unfair subsidies by foreign governments and industrial policy; break reliance on foreign suppliers; and raise import costs,

Now he’s just being stupid. For of course “raise import costs” is the reason that all tariffs are bad. They’re a tax upon those who would buy the imports. Further, given the way in which domestic producers will raise all their prices in the absence of the foreign competition, they’re a tax on the buyers of that domestic consumption as well.

You know, shafting the consumer generally is a bad idea?

And now he’s lying:

To the extent that tariffs might raise consumer prices (which is itself debatable),

But you’ve just said that the purpose of tariffs is to raise prices!

In other words, while the overall bill seeks to encourage P.P.E. production in the United States, the trade amendment would undermine that goal by making it cheaper to import protective gear from China.

Quite. The aim of the tariffs is to raise prices.

But then Lighthizer is evil. Navarro and Trump merely misguided but Lighthizer knows what he’s doing. His entire career has been to screw consumers on behalf of his clients.

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1 COMMENT

  1. Once again, There is no rationale for Mr. Trump going along with these misguided thoughts of some of his advisors on trade. One would think that as a developer somewhere along the line he would have figured out in the purchase of construction materials or FF&E for his projects that tariffs were raising his costs. It’s a real head-scratcher. (Aside from some thought that a very short-term tariff MIGHT get another’s attention and initiate a discussion/negotiation).

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