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A similar, and perhaps more amusing, situation happened in Canada a few years ago. We have a 245.5% import tariff on cheese (why? Because dairy farmers are mor

A similar, and perhaps more amusing, situation happened in Canada a few years ago. We have a 245.5% import tariff on cheese (why? Because dairy farmers are more important than poor people, apparently) but there was a much lower tax on "food preparations", including packaged pizza toppings. So companies would package up "pizza topping kits" in the USA, import them to Canada as "food preparations"... and then remove the cheese, which could be sold separately for far more than the cost of the complete kit. After a couple years, the classification rules were amended to exclude anything containing cheese from the "food preparations" tariff class.

gdwatson 10y ago
Isn't the whole point of free trade agreements to prevent those sorts of tariffs? Does NAFTA not cover cheese?
- cperciva 10y ago
  Yes, that is the point. No, NAFTA does not cover importing dairy products into Canada; similarly the USA kept tariffs on some dairy products as well as sugar and peanuts. Unfortunately pretty much all "free trade" deals turn out to be "free trade except for a small number of politically well-connected industries". :-(
  - nyolfen 10y ago
    Kvetching by free trade acolytes about 'real' free market capitalism reminds me strongly of leftists bickering about the USSR not actually being communist.
    - colechristensen 10y ago
      'real' free market capitalism can't exist because without proper regulation, power/wealth tends to concentrate to a level where the strong ruin the 'free' bit. 'real' communism can't exist (outside small rare communities) because the industrial revolution failed to bring about a post-scarcity economy which was marx's failure of prediction. A post-scarcity economy which eliminates the importance of capital is probably very possible in the future. Complete hands off capitalism probably is never going to be possible.
      - cmarschner 10y ago
        Communism failed because of human nature. It is incentives gone wrong. If there is no pressure to become more efficient, or even remain efficient, things will become less efficient and everybody suffers (to the point of starvation). Central planning failed due to complexity of the task. Free market / small government doesn't work because a) it is inherently unstable due to power laws (rich get richer), b) lots of externalities (e.g. environmental damage) not being priced in, c) lower overall wellfare without government spending on infrastructure etc. In the end, it won't work because of human nature (incentives gone wrong). So the challenge is to design the system for a society such that incentives are set right, such that a) there is efficient production such that the society can survive in the short run b) it is sustainable such that it and the whole ecosystem can survive in the long run. The past 50-100 years made a lot if progress on a), and the next 50-100 years need to solve b).
        vidarh 10y ago
        > Central planning failed due to complexity of the task. Central planning is not a requirement in Marxism or even Marxism-Leninism. Lenin tried it during the civil war, and promptly reversed it in 1921 with the introduction of New Economic Policy, which he indicated he believed needed to be in place for decades (NEP involved re-introducing limited market economy). Stalin then reversed Lenins reforms and went much further shortly after Lenin died. There are many left wing ideologies including anarchist and communist ideologies that explicitly promote the use of market mechanisms for resource allocation, and many more that take a "whatever works" approach. The idea of a planned economy is attractive to some because it seems "tidy", while for others it's strongly unappealing because it involves a central authority, which is anathema to a lot of communist ideologies.
        colechristensen 10y ago
        Communism or something like it can easily work post-scarcity. You can't trust human nature to toil away in factories and hard jobs and do so efficiently for 1/2 of waking life. Make that fraction a lot smaller... say the only people that needed to work on whatever were the ones that actually wanted to... and suddenly communism works. Open source software works and so much of it is done because people just want to do it. Some day automation and efficiency will get to a point where nerds who have interests will end up doing all of the work because it's what they want to do. Imagine a 3d printer capable of making complex metal/plastic/ceramic/electronic/whatever objects. You'd get hordes of people designing and sharing things just because they wanted to. Design a 3d-printer that can print copies of itself (as well as most of the things a person could want) and suddenly a huge chunk of capitalism is just unnecessary. 50 years after the creation of Star Trek, we should be able to at least imagine the Star Trek economy being technically feasible in the not too distant future.
  - makomk 10y ago
    Or (for example) "free trade, except that Canadian companies can no longer sell Canadian cheese to Canadians at parmesan-style to help the Italian cheese industry".
- tbihl 10y ago
  The host of one of my favorite podcasts once asked Milton Friedman (huge free market guy, in case someone doesn't know) what he thought of NAFTA, and Friedman said he didn't like it. Friedman said that a real free trade agreement would've been one page, rather than the pile of exemptions it turned into. Everyone with the political clout to make it to the table was able to keep their protectionism somewhat intact.
Kenji 10y ago
I loathe farmer subsidies. I have no idea why our government gives farmers so much money and so many advantages - nobody in our society really benefits from those incredible spendings and it's a significant fraction of our state budget.
- oxryly1 10y ago
  Some (likely outdated) idea to do with treating farming capacity as a strategic reserve.
  - Kenji 10y ago
    Look, in war times, we can plant potatoes in all our gardens and take our spare meadows. We don't need these farmers in peace time; we really don't. They are leeches.
    - rtkwe 10y ago
      Tiny little farms like that wouldn't be a huge amount of food. It's vastly inefficient compared to a huge factory farm and you can just summon up the tractors and watering infrastructure to properly run a farm.
      - sverige 10y ago
        Tell that to those who lived under the Soviet collective laws. They were allowed something like 1/2 acre to grow food for their families. Those little patches produced a significant amount of the food that wasn't grown on the collective farms. Of course, a lot of that had to do with incentives....
        colechristensen 10y ago
        Oh you can totally feed your family with a half acre. If you're good at it you can feed several families. If you only grow and eat potatoes, you can feed 7 people 2000 Calorie/day diets all year. That's the figure if you grow potatoes like big potato farmers. If you nurture the land and integrate other species taking advantage of differing growing seasons and do all you can to make perfect soil conditions, you can get a lot more out of it than potatoes every day for 7.
tesseract 10y ago
This kind of waste seems common and from an outside perspective very frustrating. There is a famous example where Ford imported cargo vans from Europe to the US with disposable seats in them so they would be taxed (more cheaply) as passenger vans. I think the tax in question was referred to as the "chicken tax". The situation is a bit different but China's value-added tax scheme combined with the prevalence of factories in bonded export zones leads to a lot of useless shipping of goods (or components of goods) from China to Hong Kong (or another nearby foreign jurisdiction) and back for no good reason other than to avoid tax. I'm sure this works out great for the local freight industry...
- witty_username 10y ago
  I just can't wrap my head around protectionism. We lose, and they lose, and such crazy inefficiencies occur.
  - tmoertel 10y ago
    But somebody wins, and that's who's usually behind the protectionism in question.
- flyinghamster 10y ago
  That was the Ford Transit Connect. One of the big ironies of that whole situation was that back in the 1960s, Ford was a beneficiary of the tax (which was mostly aimed at Volkswagen). After the tax was enacted, the Type 2 pickup and cargo van disappeared from VW's US product lineup. The loophole has been closed, and Ford no longer sells the Transit Connect in the US.
- yuhong 10y ago
  This also reminds that Hynix had to be bailed out in 2001 and in 2003, US and EU imposed high tariffs as a a consequence. I wonder what would happen if Hynix actually failed and had to be bought by Micron.

gdwatson 10y ago

Isn't the whole point of free trade agreements to prevent those sorts of tariffs? Does NAFTA not cover cheese?

cperciva 10y ago
Yes, that is the point. No, NAFTA does not cover importing dairy products into Canada; similarly the USA kept tariffs on some dairy products as well as sugar and peanuts. Unfortunately pretty much all "free trade" deals turn out to be "free trade except for a small number of politically well-connected industries". :-(
- nyolfen 10y ago
  Kvetching by free trade acolytes about 'real' free market capitalism reminds me strongly of leftists bickering about the USSR not actually being communist.
  - colechristensen 10y ago
    'real' free market capitalism can't exist because without proper regulation, power/wealth tends to concentrate to a level where the strong ruin the 'free' bit. 'real' communism can't exist (outside small rare communities) because the industrial revolution failed to bring about a post-scarcity economy which was marx's failure of prediction. A post-scarcity economy which eliminates the importance of capital is probably very possible in the future. Complete hands off capitalism probably is never going to be possible.
    - cmarschner 10y ago
      Communism failed because of human nature. It is incentives gone wrong. If there is no pressure to become more efficient, or even remain efficient, things will become less efficient and everybody suffers (to the point of starvation). Central planning failed due to complexity of the task. Free market / small government doesn't work because a) it is inherently unstable due to power laws (rich get richer), b) lots of externalities (e.g. environmental damage) not being priced in, c) lower overall wellfare without government spending on infrastructure etc. In the end, it won't work because of human nature (incentives gone wrong). So the challenge is to design the system for a society such that incentives are set right, such that a) there is efficient production such that the society can survive in the short run b) it is sustainable such that it and the whole ecosystem can survive in the long run. The past 50-100 years made a lot if progress on a), and the next 50-100 years need to solve b).
      - vidarh 10y ago
        > Central planning failed due to complexity of the task. Central planning is not a requirement in Marxism or even Marxism-Leninism. Lenin tried it during the civil war, and promptly reversed it in 1921 with the introduction of New Economic Policy, which he indicated he believed needed to be in place for decades (NEP involved re-introducing limited market economy). Stalin then reversed Lenins reforms and went much further shortly after Lenin died. There are many left wing ideologies including anarchist and communist ideologies that explicitly promote the use of market mechanisms for resource allocation, and many more that take a "whatever works" approach. The idea of a planned economy is attractive to some because it seems "tidy", while for others it's strongly unappealing because it involves a central authority, which is anathema to a lot of communist ideologies.
      - colechristensen 10y ago
        Communism or something like it can easily work post-scarcity. You can't trust human nature to toil away in factories and hard jobs and do so efficiently for 1/2 of waking life. Make that fraction a lot smaller... say the only people that needed to work on whatever were the ones that actually wanted to... and suddenly communism works. Open source software works and so much of it is done because people just want to do it. Some day automation and efficiency will get to a point where nerds who have interests will end up doing all of the work because it's what they want to do. Imagine a 3d printer capable of making complex metal/plastic/ceramic/electronic/whatever objects. You'd get hordes of people designing and sharing things just because they wanted to. Design a 3d-printer that can print copies of itself (as well as most of the things a person could want) and suddenly a huge chunk of capitalism is just unnecessary. 50 years after the creation of Star Trek, we should be able to at least imagine the Star Trek economy being technically feasible in the not too distant future.
- makomk 10y ago
  Or (for example) "free trade, except that Canadian companies can no longer sell Canadian cheese to Canadians at parmesan-style to help the Italian cheese industry".
tbihl 10y ago
The host of one of my favorite podcasts once asked Milton Friedman (huge free market guy, in case someone doesn't know) what he thought of NAFTA, and Friedman said he didn't like it. Friedman said that a real free trade agreement would've been one page, rather than the pile of exemptions it turned into. Everyone with the political clout to make it to the table was able to keep their protectionism somewhat intact.

Kenji 10y ago

I loathe farmer subsidies. I have no idea why our government gives farmers so much money and so many advantages - nobody in our society really benefits from those incredible spendings and it's a significant fraction of our state budget.

oxryly1 10y ago
Some (likely outdated) idea to do with treating farming capacity as a strategic reserve.
- Kenji 10y ago
  Look, in war times, we can plant potatoes in all our gardens and take our spare meadows. We don't need these farmers in peace time; we really don't. They are leeches.
  - rtkwe 10y ago
    Tiny little farms like that wouldn't be a huge amount of food. It's vastly inefficient compared to a huge factory farm and you can just summon up the tractors and watering infrastructure to properly run a farm.
    - sverige 10y ago
      Tell that to those who lived under the Soviet collective laws. They were allowed something like 1/2 acre to grow food for their families. Those little patches produced a significant amount of the food that wasn't grown on the collective farms. Of course, a lot of that had to do with incentives....
      - colechristensen 10y ago
        Oh you can totally feed your family with a half acre. If you're good at it you can feed several families. If you only grow and eat potatoes, you can feed 7 people 2000 Calorie/day diets all year. That's the figure if you grow potatoes like big potato farmers. If you nurture the land and integrate other species taking advantage of differing growing seasons and do all you can to make perfect soil conditions, you can get a lot more out of it than potatoes every day for 7.

tesseract 10y ago

This kind of waste seems common and from an outside perspective very frustrating. There is a famous example where Ford imported cargo vans from Europe to the US with disposable seats in them so they would be taxed (more cheaply) as passenger vans. I think the tax in question was referred to as the "chicken tax". The situation is a bit different but China's value-added tax scheme combined with the prevalence of factories in bonded export zones leads to a lot of useless shipping of goods (or components of goods) from China to Hong Kong (or another nearby foreign jurisdiction) and back for no good reason other than to avoid tax. I'm sure this works out great for the local freight industry...

witty_username 10y ago
I just can't wrap my head around protectionism. We lose, and they lose, and such crazy inefficiencies occur.
- tmoertel 10y ago
  But somebody wins, and that's who's usually behind the protectionism in question.
flyinghamster 10y ago
That was the Ford Transit Connect. One of the big ironies of that whole situation was that back in the 1960s, Ford was a beneficiary of the tax (which was mostly aimed at Volkswagen). After the tax was enacted, the Type 2 pickup and cargo van disappeared from VW's US product lineup. The loophole has been closed, and Ford no longer sells the Transit Connect in the US.
yuhong 10y ago
This also reminds that Hynix had to be bailed out in 2001 and in 2003, US and EU imposed high tariffs as a a consequence. I wonder what would happen if Hynix actually failed and had to be bought by Micron.