Prices Will Go Up!

 

Since the call came down early this morning, I have encountered three leftists lamenting their loss to Trump. What most concerns them surprises me.

“Prices will go up,” one says. 

“Don’t those stupid people realize it is not China that pays the tariffs? It’s the consumer!” another says.

So they don’t fear some Trump Nazi dictatorship, or the supposed loss of abortion rights. Those were just a cover story for the rubes, I guess. Of course they were: those were absurd on their face.

It is tariffs.

But then, how can their concern really be that prices will go up? After all, prices held steady through Trump’s first term; they went up dramatically under Biden. Their guy.

It is not prices. It is tariffs.

And not just any tariffs either.

After all, not long ago, it was the left that was opposed to free trade. The Canadian Liberal Pary lost my support over just that issue. 

The only way I can see this making sense is that they fear tariffs will hurt China, and they are secretly rooting for China to defeat the evil capitalists to show that the Marxist system is best.

To be fair, not just China. They of course also want tariffs and trade barriers on Cuba dropped as well.

Trump does says he wants to impose more tariffs. It does seem common sense that this will raise prices. I have always been a free trader myself. But I am open to Trump’s arguments.

If it will raise prices, it will do other things as well. I was convinced by Trump’s argument for tariffs on steel: it is strategically important not to rely on some foreign source for essential materials. This makes you vulnerable to blockade in time of war. Or, as we have seen recently, times of epidemic.

It will further encourage more manufacturing, and more economic activity, at home. This is Trump’s current  argument. Things may cost more money, but more of the money stays in the USA, instead of being drained away to China or some other nation. When you look at it in those terms, of the economy as a whole, might tariffs actually conserve, i.e., save, money? Don’t you save money by keeping it in the household, making your own things, darning your own socks, growing your own garden, instead of spending it at the store?

And Trump has raised another issue. The extra money from tariffs goes to fund our government. Trump suggested this might even replace income tax.

The argument that tariffs are being paid by the consumer, not by China, is being made by the same people who keep selling or buying the idea that taxes on “big corporations,” or a raised minimum wage, is money taken from the corporation, and not the consumer. Same to same.

So the real question is whether it is better to pay your taxes as tariffs, or as income tax. The foreign goods actually remain the same price. 

Paying taxes on consumption rather than income  is more voluntary, and that seems a good thing. Taxing income naturally serves to suppress initiative or hard work, and takes money the individual might have better use for—such as investing it to improve their business, hence the economy. With a tax on consumption, you can reduce your tax burden by reducing your consumption of foreign goods. It encourages saving and investing rather than spending.

Granted, an economy needs consumers as well as producers. But on balance, surely someone who overproduces is more valuable to the economy and to the rest of us than someone who overconsumes. And if producers can be found abroad, as now, surely consumers can be too.

The idea is worth a look, and perhaps a trial.