The Largest US Trading Partners All Put Higher Tariffs on the US Than Vice Versa

We've seen a lot of innovation in the area of free trade, commerce, etc., but virtually no innovation in education, on the job training, and other areas where policy can help make the economy stronger overall.

So in my view, tariffs are used in a way that is meant to undo the damage from decades of neglect of our educational and skills training infrastructure.

This doesn't call for a more nuanced view on trade (freer is always better), it is a call for us to begin to think rationally about job training.

Whatever job anyone has today, whatever product is demanded today, etc., will not necessarily be the same tomorrow. When we pretend otherwise -- such as the fiction that first world nations should manufacture steel -- we invite all sorts of bad policy when what we really needed was honest understanding that economies change.

Keep in mind that most moral progress over time is not the result of rational people convincing others of something that was previously opaque, it is due simply to economic progress. In other words, moral progress is a luxury we buy with prosperity.

Where we lag in this area most today is that we fail to understand that we must invest heavily in job training, education, entrepreneurship, and other areas that create new life when industries change, move abroad, or shrink.

It so happens that in US politics there are some influential electoral districts that contain steel mills and which have suffered from economic globalization. Sure the easiest way to placate those districts is to introduce tariffs or use other means to offer welfare that prevent those impacted from adapting.

Most of the buildings that house startups in urban parts of the US were once used for manufacturing or meat packing. This is a good thing in the medium term.

But creating job training or investing in new industries to replace old ones is not economics, it's social policy. We should not make the mistake of confusing it with economics.

I'm not sure, however, how you can say that working in a steel mill that would not be in business if it weren't for tariffs on imported steel comes with any dignity. Sure there is the dignity of showing up for a job and doing good work, but ultimately that job is being funded by welfare, and is itself a handout being received by the worker.

The economy is a rapidly changing thing, and there is no reason to believe that any industry that is thriving today will still be thriving in a decade.

But rather than undertake the worthy and challenging task of positioning our economy (via job training, entrepreneurship, etc.) to be resilient to change, we prop up industries that are much more efficiently done elsewhere.

Consider how this would have played out in the early days of the automobile. Soon most of the blacksmiths who had been gainfully employed putting shoes on horses would find themselves out of work because people started preferring motorized cars to horse-drawn transit.

By your logic, we should have idealized that horse-drawn era and should have put policies in place to guarantee that all of those blacksmiths were able to continue the dignity of their trade even though their skills were demanded much less.

While there is something nostalgic about the days of horses and pre-industrial society, most of the important humanitarian (moral, etc) advances that have been made since then have been due to the proceeds of the improved economic output of an industrialized economy.

What happened to those blacksmiths? Some probably ended up out of work and had to struggle to survive, while others likely transitioned their skills doing metalwork in the industrial sector.

All humans have value as humans and I believe that the vast majority have strong work ethic and a desire to support themselves and their family through work and discipline.

Nonetheless, as the economy changes rapidly, we find that we (industrialized nations) have lagged significantly when it comes to our educational system. Our modern schools still do many things the same way they were done in a one room schoolhouse.

There are many reasons why this happened -- I'd argue that the biggest one was the state takeover of education during the industrial era to free up more workers by providing free daycare (not education). So the root cause of worker displacement is connected with industrialization, but it is due to state monopoly power and the destruction of liberal educational ideals in favor of daycare and rudimentary skills training. In other words, we should not teach people a trade we should teach them how to learn for themselves.

Our educational system today is still very trade oriented, and that creates calcification in the economy and is ultimately a grave threat to national security.

But politicians will of course prefer to prop up dying factories in dead industries in exchange for primary votes rather than tackling the much harder problem of figuring out how first world education should work in 2018.

This is categorically wrong, many economists support tariffs as a way for countries to find relief from flooding or other anti-competitive practices.

In 2010, Paul Krugman (an economist who won a Nobel prize for this theories on international trade) called for a 25% tariffs on all Chinese imports [0].

>But due to the political history of tariffs it becomes possible for politicians to claim (falsely) that tariffs will benefit the economy, when in fact they are (at best) a handout to specific industries.

But on longer time horizons and some situations, it's hard to assert that tariffs are net negatives. Many countries use tariffs to encourage domestic industry - South Korea could have never created a domestic auto industry if they allowed Japanese and American car companies to freely sell cars in Korea. The tariffs that Koreans paid from the 1960s to the 1980s supported Hyundai - it's hard to imagine that Korea is worse off in 2018 because it created tariffs to encourage domestic auto production.

Functionally, China's IP and ownership rules are tariffs and they've been wildly successful for China. If China didn't strong arm IP and capital out of companies, they'd be worse off.

>What really boggles my mind about the groundswell of support for tariffs is that much of it is coming from people who would traditionally have frowned upon receiving welfare. Yet they are happy to receive it when it's called tariffs and also happy to receive bailout money when their industry is harmed by the tariffs.

The difference is that tariff beneficiaries have to work whereas welfare recipients don't (or won't) and that's matters to the working class who pays for the social safety net. Additionally, the taxes that support welfare are a lot less discretionary than participation in most markets affected by tariffs. If I really don't want to pay a steel tariff, I can buy items made out of other materials. If I really don't want to pay my taxes to support welfare, a person with a gun will eventually show up at my door.

>Put another way, tariffs are simply a way of introducing the government into economic transactions. If a foreign government foolishly decides to tax its citizens via a tariff on US goods, this harms the foreign citizens.

And it harms the US citizens who are deprived of business they otherwise would have received.

>When the US then plays tit-for-tat and adds its own tariff, this punishes American consumers in an attempt to harm foreign exporters.

Additionally it punishes foreign producers and gives us a way to negotiate our way to lower trade barriers.

>But I repeat, no serious economist (someone who studies the economy scientifically) supports tariffs.

Please stop asserting this, a cursory google search would reveal that a lot of economists support tariffs in limited circumstances and think they're an important tool for economic development.

>They are a political phenomenon and the rhetoric used to support them has no basis in reality.

Tell that to the Indian politicians who run and win on autarky-lite platforms.

>The understanding that tariffs are foolish is a universal among economists and is not remotely a partisan issue.

It's actually a very big schism between the orthodox economist view (that's primarily focused on total wealth) and heterodox views (one that's focused on the environment, the working class, etc.). You're right that most economists believe lower tariffs produce more global wealth, but many concede that some agents are made worse-off by international trade and this is the basis of a cost-benefit argument.

>It's one thing to want to grant welfare to a specific industry for some political reason, but completely another to introduce a distorting factor like a tariff.

They're not that distinct, tariffs can be a way to grant welfare to a specific industry.

>I have a trade deficit with my grocer, for example. Why? Because I chose to exchange money for groceries. How is this bad? The same applies to nations.

That's a gross oversimplification. If you want to change your life and think about how to accrue wealth, it'd make sense to look at your spending and figure out how to reduce your costs and increase your income. Economic agents can do both with development - you could open your own grocery store, you could grow your own food, etc. It's very hard to compete with established players and you might have to spend extra money to compete at first just to get up the learning curve. In practice, it means something like saving 10% of what you spend at the grocery to buy seeds and farming equipment and gradually transitioning from grocery-bought food to self-made food. We can argue about whether it makes sense to change tomorrow, you have to change something today. Tariffs are a way to change the prices faced by consumers and the competitive landscape faced by producers, in some situations they can help agents achieve things they wouldn't have been Able to otherwise.

[0]: http://www.idealtaxes.com/post3079.shtml