It’s not hard to know who doesn’t have a real case when you see free traders going full-retard over two tariffs.
Trump needs to be impeached immediately to head off the trade war he has declared. His appointees who support that trade war, namely Commerce Secretary Ross and Trade Representative Lighthizer, should be fired immediately.
I am not trying to punish him, I am trying to stop the trade war. He has turned himself into a colossal mistake made by American voters in 2016. I don’t care whether he goes to the Leavenworth Penitentiary or Mar-a-Lago. I voted for Gary Johnson.
Let me give you a list of pertinent facts that cannot be denied:
• U.S. GDP has never been as high as now
• The number of U.S. jobs has never been higher than now
• Trumps claims he wants to increase the number of jobs. For whom? There are no U.S. residents left to hire. The Fed chair said we are at full employment and maybe have more people employed than full employment (you need a certain amount of unemployed because people quit, get fired, go to college or grad school, take vacations between jobs, etc.)
• The Smoot-Hawley Tariff bill (Smoot and Hawley were Republicans) was a large campaign issue in the 1928 presidential race. Republican Hoover said he would sign it. He won and took office in March 1929. He did sign it.
• The stock market crashed repeatedly starting on Black Tuesday October 29, 1929. “…by 1932 stocks were worth only about 20 percent of their value in the summer of 1929.”
(http://www.history.com/topics/1929-stock-market-crash) A similar thing happened to real estate, although there were few statistics on real estate back then. They used a study of real estate prices in the New York Times during the Depression to retroactively create the stats.
• Before the 1929 crash, the stock market was booming with shoe-shine-boy/taxi-driver speculative mania fueled by high-loan-to-value-ratio margin loans. There are lower loan-to-value-ratio margin loans now. But they contributed to the recent drop in stocks forcing some to sell to meet margin calls.
• In 1932, when FDR was elected, the U.S. national debt-to-GDP ratio was 17{a298dadb698b5d9f7b1e1aa14f0e41ed4811cd67f55ba9a1b19c355a24d2c8ed}. Today it is 105{a298dadb698b5d9f7b1e1aa14f0e41ed4811cd67f55ba9a1b19c355a24d2c8ed} meaning the U.S, government is in no position to provide the sort of government financial help it did during the New Deal.
• In 1929, international trade was 7{a298dadb698b5d9f7b1e1aa14f0e41ed4811cd67f55ba9a1b19c355a24d2c8ed} of world GDP. Today, it is 25{a298dadb698b5d9f7b1e1aa14f0e41ed4811cd67f55ba9a1b19c355a24d2c8ed}. Furthermore, about 40{a298dadb698b5d9f7b1e1aa14f0e41ed4811cd67f55ba9a1b19c355a24d2c8ed} to 60{a298dadb698b5d9f7b1e1aa14f0e41ed4811cd67f55ba9a1b19c355a24d2c8ed} of all imports coming to the U.S. now were, in turn, imported into the exporting country to make the product in question—including raw material and manufactured components from the U.S.
• “Buying American” today is near impossible. Virtually all manufactured products are a sort of international all-star team as depicted in the essay “I, pencil.”
Let’s address those arguments in order.
- US debt has never been higher. US population has never been higher. That’s why US GDP is at record highs, not semi-free trade.
- There have never been more Americans out of the work force. The record employment is an artifact of the record population. The employment/population ratio is not anywhere near its record highs and is nearly as low as it was prior to the second wave of women entering the work force.
- There are currently 94.6 million Americans not in the workforce. The fact that they are not looking for jobs offered at lower average wages than 1973 does not mean that they are entirely uninterested in ever working at any wage.
- Smoot-Hawley had nothing to do with the Great Depression. First, the annual decline in exports from 1929 to 1933 was less than the decline from 1920 to 1922. Second, the net effect of the change in the balance of trade amounted to less than 0.3 percent of GDP.
- None of this garblefarbling about the stock market is relevant.
- The government will be in a much better position to help manufacturers when it has $500 billion in tariff income at its disposal.
- This is an argument for why less semi-free trade, not more, is needed.
- Buying American is not “near impossible” and it will get considerably easier and more cost-effective when imported goods are taxed.