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The corporation vs workers comment seems off. Tariffs on X generally help domestic X producers and hurt domestic X consumers. For most values of X, production

The corporation vs workers comment seems off. Tariffs on X generally help domestic X producers and hurt domestic X consumers. For most values of X, production is done by companies which are mostly owned by a small number of people, whereas consumption is done by a much broader group. So one would generally expect tariffs to help businesses at the expense of workers. And aren't tariffs usually advertised as helping American businesses? To say now that it hurts them seems like a weird change of tack.

ethanwillis 9y ago
So if you look into Elizabeth Warren's reasoning more one of the reasons she's pro-tariff is that China is essentially making us trade U.S. tech for market access. [1] I think the thinking is that Tariffs will be one way to keep China from abusing that. In any case I think the assumption you're making is that it hurts consumers because it destroys consumption of cheap foreign goods. But I think what you're missing is that it increases consumption of domestic goods made by domestic workers. Obviously analogies are bad for discussing the actual nuance of matters.. but think Walmart in a small town that funnels profits out of the local economy versus small town businesses generating and circulating wealth locally. 1.) http://www.businessinsider.com/r-senator-warren-in-beijing-says-us-is-waking-up-to-chinese-abuses-2018-4 http://www.businessinsider.com/r-senator-warren-in-beijing-s...
- valuearb 9y ago
  You are missing that it makes goods cost more and people poorer. We don’t want to produce many of these goods domestically because it’s too expensive. Assembling iPhones in the US would mean more crappy domestic jobs paying near minimum wage. It would also make iPhones more expensive, not just for US consumers, but worldwide. So fewer iPhones are sold. Meaning fewer high paying design and engineering jobs at Apple, at app developers, etc. And more of those jobs in South Korea, at Samsung. Free trade is a wonderful thing that makes everyone better off in the long run. A lawyer who fires his secretary to do his own typing because he can type faster than her is a fool.
  - bluGill 9y ago
    You are assuming an iphone assembled in the US would be assembled manually. However cost of labor means Apple is likely to design robots to assemble the iPhone instead. The initial investment is higher, but it is probable that once Apple does this assembling the phone in the US and exporting to China is cheaper than assembling in China for sale in China (assuming no tarries importing China). Note that Apple is not required to create robots to build in the US. It is an option they have, but there are other options as well. I would expect Apple to be smart enough to consider all options. The obvious alternatives to consider are move the factory to some other country; or have consumers vote against the tariff by showing how much cheaper the iPhone is elsewhere; there are probably more options I haven't thought of.
    - valuearb 9y ago
      Right. Apple who has one of the most sophisticated supply chain and production management operations in the world, yet has no clue about the most efficient ways to build it, and only tariffs will suddenly make them realize it.
      - bluGill 9y ago
        Tariffs change the inputs to the decisions. Before the costs of robots was greater than cheap labor in China so Apple made the correct decision to not invest in them. After the tariffs Apple needs to revisit the decisions of the past to account for a new world where labor in China isn't as cheap. I cannot tell you what decisions Apple will make, only that they will reconsider the decisions of the past in light of new information. (don't forget new information also accounts for whatever advancements in robotics have been made since they last looked at this decision)
  - mistermann 9y ago
    > Free trade is a wonderful thing that makes everyone better off in the long run. If one of the participants has an absolutely massive population, a unified mono-culture known for being incredibly hard workers, doesn't lack any particular disadvantages, and is run my (what seems to be) and incredibly smart communist dictatorship, how do you guarantee that in one thread of possible outcomes that this dictatorship isn't able and willing to spread its wings to largely bring the entire planet under it's dictatorship. I'd hope you don't deny that the US as de facto world leader exercises a little global influence, if all the pieces fall into place and China with it's massive advantages over the US, how do you guarantee this outcome will not (and can not) come to pass? A typical response to this question is that a free democracy always beats a dictatorship (this belief is so pervasive and unbending in the West, it's almost like a religion), but this is in no way whatsoever(!!!!!!!!!) guaranteed to always be true, in fact even with our incredibly small historic sample sizes, things were looking pretty iffy with Germany back in WW2, and they are tiny compared to China. And I suppose I should make it explicit: no, I am not guaranteeing this outcome, I am warning of it as a possibility - but those who say it can not and will not happen are making a guarantee.
- awful 9y ago
  It may increase domestic production for domestic customers, but I think we ran that experiment before. What I found decades ago is that products made domestically, driven by greed, profit seeking, marketing and labor costs were too expensive for your average customer. Tools for example; look at the pricing of simple domestic hand tools, technical and heavy duty. Scopes, meters, soldering tools, socket sets, electronics, schematics and repair manuals, specialty auto tools; there was a time these were too expensive for the average consumer. Sure it created manufacturing, sales and distribution jobs but by lock in - this did not make the technician or the customer wealthy, but it did make the business owner wealthier as they were the moneyed and licensed gatekeepers, charging royally for access. *As a youth I was screwed by electronics manufacturers, car companies for access to semiconductors, schematics, tools, and special tools. I believe that is exactly what China has faced for decades and has been fighting against, at least partially.
  - pm90 9y ago
    Your comment really made me think for a while why this might be happening. And I have a few conjectures. 1. When a protectionist market is created, global companies generally tend to avoid competing in them. What this means is that the local companies producing the protected goods are generally one-market only. They're only interested in the protected market and know they're shielded from foreign competition... less competition == less incentive to make world class products. And new firms will not generally target the captive market created by regulation unless they know the regulations will stay that way for many decades to come. 2. If you can create regulations to keep foreign competitors out, you can also use regulations to keep domestic competitors out. This is a favorite strategy used by bigger corporations in countries with lax implementation of laws, but strict laws on paper. Just threaten smaller firms that they will be sued and take them over.
  - slededit 9y ago
    Having some experience manufacturing electronics domestically I don't think it's a conscious thing. Domestic companies don't fundamentally understand cost optimization and "good enough". As an example making a PCB with a nominal impedance spec. A domestic company will take that to mean you want full testing and careful analysis. A foreign company will quickly rough out a stack up and send you the boards. Because my impedance spec was nominal and not critical the foreign company is the correct approach.
- AFNobody 9y ago
  Elizabeth Warren is not an economist and her opinion on the economics of tariffs is fundamentally flawed. Why do people trust a lawyer's opinions when they so clearly don't understand the underlying principles? Please get a book on tariffs and their history and read it. Please. Literally any of them.
  - casiotone 9y ago
    It would be quicker to just look at the US, where protectionism has resulted in it becoming an economic superpower. But that obviously wouldn’t meld with your free trade boner very easily
    - rory096 9y ago
      >It would be quicker to just look at the US, where protectionism has resulted in it becoming an economic superpower. This is laughably false. The postwar US hegemonic sphere is built on trade liberalization. Please read up on GATT, the WTO, OECD, and the 1934 Reciprocal Trade Agreements Act. Prewar, the 1930 Smoot-Hawley Tariff Act[4] is widely viewed as one of the worst economic decisions ever made, badly exacerbating the Great Depression by collapsing global trade. The US has been the world's main driver of trade liberalization since that protectionist mistake was reversed in 1934, for the entire duration of its superpower status. [0] https://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Trade https://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_a... [1] https://en.wikipedia.org/wiki/World_Trade_Organization https://en.wikipedia.org/wiki/World_Trade_Organization [2] https://en.wikipedia.org/wiki/OECD https://en.wikipedia.org/wiki/OECD [3] https://en.wikipedia.org/wiki/Reciprocal_Tariff_Act https://en.wikipedia.org/wiki/Reciprocal_Tariff_Act [4] https://en.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act https://en.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act
      - casiotone 9y ago
        The US existed, and was prosperous, before the Second World War. How the US economy functions in the postwar period really has no relevance to how it got to the position it was in before that. I do hope you’re not suggesting that a single protectionist act having a negative result means that 100 years of protectionism was actually bad for the US. Protectionism was very effective in developing economies. Once your economy dominates and functions mainly by extracting value from submissive developing nations (who are not allowed to enact the same proteionist rules that allowed the US to become so powerful) free trade becomes beneficial to you (but not the other party)
forapurpose 9y ago
> Tariffs on X generally help domestic X producers and hurt domestic X consumers They also hurt businesses that consume X. Steel tariffs hurt automakers, for example, who now must pay more for the metal and deal with supply chain issues.
- tzs 9y ago
  > Steel tariffs hurt automakers, for example, who now must pay more for the metal and deal with supply chain issues. Many US automakers have factories in Mexico as well as in the US, and some models for the US market are built in those Mexican factories. Question: will steel tariffs in the US encourage these automakers to shift more production to Mexico?
  - debacle 9y ago
    The potential changes to NAFTA make that a hard question to answer.
adventured 9y ago
They can also help domestic consumers and businesses if done well, because ideally you bring more production back to the domestic base. That drives up tax revenue, labor demand, wages, domestic capital investment, construction, R&D, etc. It also leads to knock-on rebuilding of your total industrial base, from the countless small support businesses that spring up. If all we do is rebalance $100 billion in trade away from China and back to US production (out of the ~$300 billion deficit), that is money going into the US economy and not to enrich a foreign economy. If it net costs the US economy 15% more to do X domestically, we keep the rest of that value gain that comes home instead of sending the majority of it over to China. The majority of consumers in the US have jobs. Those consumers all benefit from a tighter labor market and increased wage competition. And consumers are connected in numerous ways, both distant and local. That job producing domestic steel instead of buying it from Russia, may employ a wife or a husband in a family of consumers, bolstering wages within a household.
- valuearb 9y ago
  This “rebalancing” is shitty jobs we were wise to export away long ago. More expensive steel is going to cost our economy more than this crappy jobs are going to add.
RobertoG 9y ago
It's a complicated issue, but it seems to me that, without tariffs, a good way to make profit, is to do arbitrage between the different prices of labour in different countries. Tariffs make more expensive to invest abroad than locally and investment is the crucial part of growing an economy. As consumers, the people of an importing country could win in the short term. If you think that the economy is global and that it doesn't matter where the productive capacity is, then tariffs are a bad thing. Otherwise, if you are worried about unemployment and that your country could become only a "services" country, maybe tariffs make sense.
- evanpw 9y ago
  But US unemployment is at historic lows [1], and US manufacturing output is at historic highs, so why now? It's also notable that tariffs are one of the few policies that economists are almost in universal agreement about [3]. [1] https://fred.stlouisfed.org/series/UNRATE https://fred.stlouisfed.org/series/UNRATE [2] https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS [3] http://www.igmchicago.org/surveys/steel-and-aluminum-tariffs http://www.igmchicago.org/surveys/steel-and-aluminum-tariffs
  - Consultant32452 9y ago
    >But US unemployment is at historic lows Meanwhile the wealth gap is at historic highs. Increasing demand when supply is already low should bring up wages. >It's also notable that tariffs are one of the few policies that economists are almost in universal agreement about [3]. Tariffs will not generally improve the welfare of Americans, removing the tariffs after our global competitors have ceased their own unfair trade practices, improved worker conditions, stop polluting so much, etc. may improve the welfare of everyone.
    - evanpw 9y ago
      > Meanwhile the wealth gap is at historic highs. Increasing demand when supply is already low should bring up wages. Tariffs are an extremely inefficient form of redistribution. If you want to fix the wealth gap, just make the pie as large as possible and redistribute directly. > Tariffs will not generally improve the welfare of Americans, removing the tariffs after our global competitors have ceased their own unfair trade practices, improved worker conditions, stop polluting so much, etc. may improve the welfare of everyone. I'm not sure what to make of this. It sounds like the plan is to make ourselves worse off in the hope that it also damages China? Most of the difference in labor practices comes from the fact that the US is much richer than China. It's unlikely that we can convince China to stop being poor by taxing ourselves.

ethanwillis 9y ago

So if you look into Elizabeth Warren's reasoning more one of the reasons she's pro-tariff is that China is essentially making us trade U.S. tech for market access. [1] I think the thinking is that Tariffs will be one way to keep China from abusing that. In any case I think the assumption you're making is that it hurts consumers because it destroys consumption of cheap foreign goods. But I think what you're missing is that it increases consumption of domestic goods made by domestic workers. Obviously analogies are bad for discussing the actual nuance of matters.. but think Walmart in a small town that funnels profits out of the local economy versus small town businesses generating and circulating wealth locally. 1.) http://www.businessinsider.com/r-senator-warren-in-beijing-says-us-is-waking-up-to-chinese-abuses-2018-4 http://www.businessinsider.com/r-senator-warren-in-beijing-s...

valuearb 9y ago
You are missing that it makes goods cost more and people poorer. We don’t want to produce many of these goods domestically because it’s too expensive. Assembling iPhones in the US would mean more crappy domestic jobs paying near minimum wage. It would also make iPhones more expensive, not just for US consumers, but worldwide. So fewer iPhones are sold. Meaning fewer high paying design and engineering jobs at Apple, at app developers, etc. And more of those jobs in South Korea, at Samsung. Free trade is a wonderful thing that makes everyone better off in the long run. A lawyer who fires his secretary to do his own typing because he can type faster than her is a fool.
- bluGill 9y ago
  You are assuming an iphone assembled in the US would be assembled manually. However cost of labor means Apple is likely to design robots to assemble the iPhone instead. The initial investment is higher, but it is probable that once Apple does this assembling the phone in the US and exporting to China is cheaper than assembling in China for sale in China (assuming no tarries importing China). Note that Apple is not required to create robots to build in the US. It is an option they have, but there are other options as well. I would expect Apple to be smart enough to consider all options. The obvious alternatives to consider are move the factory to some other country; or have consumers vote against the tariff by showing how much cheaper the iPhone is elsewhere; there are probably more options I haven't thought of.
  - valuearb 9y ago
    Right. Apple who has one of the most sophisticated supply chain and production management operations in the world, yet has no clue about the most efficient ways to build it, and only tariffs will suddenly make them realize it.
    - bluGill 9y ago
      Tariffs change the inputs to the decisions. Before the costs of robots was greater than cheap labor in China so Apple made the correct decision to not invest in them. After the tariffs Apple needs to revisit the decisions of the past to account for a new world where labor in China isn't as cheap. I cannot tell you what decisions Apple will make, only that they will reconsider the decisions of the past in light of new information. (don't forget new information also accounts for whatever advancements in robotics have been made since they last looked at this decision)
- mistermann 9y ago
  > Free trade is a wonderful thing that makes everyone better off in the long run. If one of the participants has an absolutely massive population, a unified mono-culture known for being incredibly hard workers, doesn't lack any particular disadvantages, and is run my (what seems to be) and incredibly smart communist dictatorship, how do you guarantee that in one thread of possible outcomes that this dictatorship isn't able and willing to spread its wings to largely bring the entire planet under it's dictatorship. I'd hope you don't deny that the US as de facto world leader exercises a little global influence, if all the pieces fall into place and China with it's massive advantages over the US, how do you guarantee this outcome will not (and can not) come to pass? A typical response to this question is that a free democracy always beats a dictatorship (this belief is so pervasive and unbending in the West, it's almost like a religion), but this is in no way whatsoever(!!!!!!!!!) guaranteed to always be true, in fact even with our incredibly small historic sample sizes, things were looking pretty iffy with Germany back in WW2, and they are tiny compared to China. And I suppose I should make it explicit: no, I am not guaranteeing this outcome, I am warning of it as a possibility - but those who say it can not and will not happen are making a guarantee.
awful 9y ago
It may increase domestic production for domestic customers, but I think we ran that experiment before. What I found decades ago is that products made domestically, driven by greed, profit seeking, marketing and labor costs were too expensive for your average customer. Tools for example; look at the pricing of simple domestic hand tools, technical and heavy duty. Scopes, meters, soldering tools, socket sets, electronics, schematics and repair manuals, specialty auto tools; there was a time these were too expensive for the average consumer. Sure it created manufacturing, sales and distribution jobs but by lock in - this did not make the technician or the customer wealthy, but it did make the business owner wealthier as they were the moneyed and licensed gatekeepers, charging royally for access. *As a youth I was screwed by electronics manufacturers, car companies for access to semiconductors, schematics, tools, and special tools. I believe that is exactly what China has faced for decades and has been fighting against, at least partially.
- pm90 9y ago
  Your comment really made me think for a while why this might be happening. And I have a few conjectures. 1. When a protectionist market is created, global companies generally tend to avoid competing in them. What this means is that the local companies producing the protected goods are generally one-market only. They're only interested in the protected market and know they're shielded from foreign competition... less competition == less incentive to make world class products. And new firms will not generally target the captive market created by regulation unless they know the regulations will stay that way for many decades to come. 2. If you can create regulations to keep foreign competitors out, you can also use regulations to keep domestic competitors out. This is a favorite strategy used by bigger corporations in countries with lax implementation of laws, but strict laws on paper. Just threaten smaller firms that they will be sued and take them over.
- slededit 9y ago
  Having some experience manufacturing electronics domestically I don't think it's a conscious thing. Domestic companies don't fundamentally understand cost optimization and "good enough". As an example making a PCB with a nominal impedance spec. A domestic company will take that to mean you want full testing and careful analysis. A foreign company will quickly rough out a stack up and send you the boards. Because my impedance spec was nominal and not critical the foreign company is the correct approach.
AFNobody 9y ago
Elizabeth Warren is not an economist and her opinion on the economics of tariffs is fundamentally flawed. Why do people trust a lawyer's opinions when they so clearly don't understand the underlying principles? Please get a book on tariffs and their history and read it. Please. Literally any of them.
- casiotone 9y ago
  It would be quicker to just look at the US, where protectionism has resulted in it becoming an economic superpower. But that obviously wouldn’t meld with your free trade boner very easily
  - rory096 9y ago
    >It would be quicker to just look at the US, where protectionism has resulted in it becoming an economic superpower. This is laughably false. The postwar US hegemonic sphere is built on trade liberalization. Please read up on GATT, the WTO, OECD, and the 1934 Reciprocal Trade Agreements Act. Prewar, the 1930 Smoot-Hawley Tariff Act[4] is widely viewed as one of the worst economic decisions ever made, badly exacerbating the Great Depression by collapsing global trade. The US has been the world's main driver of trade liberalization since that protectionist mistake was reversed in 1934, for the entire duration of its superpower status. [0] https://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Trade https://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_a... [1] https://en.wikipedia.org/wiki/World_Trade_Organization https://en.wikipedia.org/wiki/World_Trade_Organization [2] https://en.wikipedia.org/wiki/OECD https://en.wikipedia.org/wiki/OECD [3] https://en.wikipedia.org/wiki/Reciprocal_Tariff_Act https://en.wikipedia.org/wiki/Reciprocal_Tariff_Act [4] https://en.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act https://en.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act
    - casiotone 9y ago
      The US existed, and was prosperous, before the Second World War. How the US economy functions in the postwar period really has no relevance to how it got to the position it was in before that. I do hope you’re not suggesting that a single protectionist act having a negative result means that 100 years of protectionism was actually bad for the US. Protectionism was very effective in developing economies. Once your economy dominates and functions mainly by extracting value from submissive developing nations (who are not allowed to enact the same proteionist rules that allowed the US to become so powerful) free trade becomes beneficial to you (but not the other party)

forapurpose 9y ago

> Tariffs on X generally help domestic X producers and hurt domestic X consumers They also hurt businesses that consume X. Steel tariffs hurt automakers, for example, who now must pay more for the metal and deal with supply chain issues.

tzs 9y ago
> Steel tariffs hurt automakers, for example, who now must pay more for the metal and deal with supply chain issues. Many US automakers have factories in Mexico as well as in the US, and some models for the US market are built in those Mexican factories. Question: will steel tariffs in the US encourage these automakers to shift more production to Mexico?
- debacle 9y ago
  The potential changes to NAFTA make that a hard question to answer.

adventured 9y ago

They can also help domestic consumers and businesses if done well, because ideally you bring more production back to the domestic base. That drives up tax revenue, labor demand, wages, domestic capital investment, construction, R&D, etc. It also leads to knock-on rebuilding of your total industrial base, from the countless small support businesses that spring up. If all we do is rebalance $100 billion in trade away from China and back to US production (out of the ~$300 billion deficit), that is money going into the US economy and not to enrich a foreign economy. If it net costs the US economy 15% more to do X domestically, we keep the rest of that value gain that comes home instead of sending the majority of it over to China. The majority of consumers in the US have jobs. Those consumers all benefit from a tighter labor market and increased wage competition. And consumers are connected in numerous ways, both distant and local. That job producing domestic steel instead of buying it from Russia, may employ a wife or a husband in a family of consumers, bolstering wages within a household.

valuearb 9y ago
This “rebalancing” is shitty jobs we were wise to export away long ago. More expensive steel is going to cost our economy more than this crappy jobs are going to add.

RobertoG 9y ago

It's a complicated issue, but it seems to me that, without tariffs, a good way to make profit, is to do arbitrage between the different prices of labour in different countries. Tariffs make more expensive to invest abroad than locally and investment is the crucial part of growing an economy. As consumers, the people of an importing country could win in the short term. If you think that the economy is global and that it doesn't matter where the productive capacity is, then tariffs are a bad thing. Otherwise, if you are worried about unemployment and that your country could become only a "services" country, maybe tariffs make sense.

evanpw 9y ago
But US unemployment is at historic lows [1], and US manufacturing output is at historic highs, so why now? It's also notable that tariffs are one of the few policies that economists are almost in universal agreement about [3]. [1] https://fred.stlouisfed.org/series/UNRATE https://fred.stlouisfed.org/series/UNRATE [2] https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS [3] http://www.igmchicago.org/surveys/steel-and-aluminum-tariffs http://www.igmchicago.org/surveys/steel-and-aluminum-tariffs
- Consultant32452 9y ago
  >But US unemployment is at historic lows Meanwhile the wealth gap is at historic highs. Increasing demand when supply is already low should bring up wages. >It's also notable that tariffs are one of the few policies that economists are almost in universal agreement about [3]. Tariffs will not generally improve the welfare of Americans, removing the tariffs after our global competitors have ceased their own unfair trade practices, improved worker conditions, stop polluting so much, etc. may improve the welfare of everyone.
  - evanpw 9y ago
    > Meanwhile the wealth gap is at historic highs. Increasing demand when supply is already low should bring up wages. Tariffs are an extremely inefficient form of redistribution. If you want to fix the wealth gap, just make the pie as large as possible and redistribute directly. > Tariffs will not generally improve the welfare of Americans, removing the tariffs after our global competitors have ceased their own unfair trade practices, improved worker conditions, stop polluting so much, etc. may improve the welfare of everyone. I'm not sure what to make of this. It sounds like the plan is to make ourselves worse off in the hope that it also damages China? Most of the difference in labor practices comes from the fact that the US is much richer than China. It's unlikely that we can convince China to stop being poor by taxing ourselves.