Editors note: An interesting article on Adam Smith’s criteria for applying tariffs.
Exclusive: Curtis Ellis quotes ‘father of free markets’ in defending move on China
[Curtis Ellis | May 17, 2019 | WND]
When China reverted to form and reneged on the commitments it made in four months of commercial negotiations with the U.S., President Trump said “No more!”
He took his finger off the pause the button, and the tax increase on Chinese imports that had been scheduled for Jan. 1 and twice postponed went into effect.
The usual suspects in the Hate Trump camp, media fools such as Chuck Todd and economists who should know better, went into a frenzy lecturing us on the dangers of President Trump’s America First trade policy and particularly his tariffs.
They used an appeal to authority to prove they knew what they were talking about, and the authority they trotted out was more often than not Adam Smith, the original theorist of free markets and open trade.
But in so doing these instant experts proved that they know nothing.
For if they ever read the writings of Adam Smith (and understood what they read) they would see that the patron saint of free markets defends President Trump’s trade policy and tariffs.
Don’t take my word for it (or Chuck Todd’s). Smith laid it all out more than two centuries ago in “The Wealth of Nations.”
First, it’s worth noting that, as the title indicates, Smith was concerned with building the wealth of nations – not the wealth of “the world economy.” He was not an open-borders, one-world libertarian zealot – he was a “Britain First” economic nationalist.
Adam Smith cited four circumstances when it would be “advantageous” to use tariffs. President Trump’s tariffs meet all four counts.
The first instance when tariffs are necessary and wise, Smith wrote, is “when some particular sort of industry is necessary for the defense of the country.”(pages 169, 170 at link) He recognizes the British Navy was indispensable for his nation’s security, and Smith defended protection for British shipping and shipbuilding industries as “the wisest of all the commercial regulations of England” because “defense … is of much more importance than opulence.” (p. 172)
Today, President Trump is ensuring we are able to produce the steel, aluminum, microelectronics and advanced technology our national defense depends on – because “defense … is of much more importance than opulence.”
In the second instance, Smith explains that when a domestic industry is taxed, “it seems reasonable that an equal tax [tariff] should be imposed” on the foreign industry to level the playing field, or as Smith said, to put “the competition between foreign and domestic industry … as nearly as possible upon the same footing.” (p. 173)
American companies pay property taxes, corporate taxes, Social Security and Medicare taxes Chinese companies do not. Our minimum wage and environmental laws amount to further taxes from which Chinese competitors are exempt.
President Trump’s tariffs follow Smith’s guidance to put “the competition between foreign and domestic industry … as nearly as possible upon the same footing” by laying an equalizing tax on foreign goods.
The third example the father of free markets and free trade cites directly applies to the current situation with China:
“Some foreign nation [may restrain] by high duties or prohibitions the importation of some of our manufactures into their country. Revenge in this case naturally dictates retaliation, and that we should impose the like duties and prohibitions upon the importation of some or all of their manufactures into ours. …” (p 176)
China has some of the highest tariffs in the world, far higher than ours, and the president reciprocal tariffs are exactly what Adam Smith prescribes.
Finally, Smith believed “humanity may require” import tariffs be reduced gradually lest a surge of “cheaper foreign goods … deprive all at once many thousands of our people of their ordinary employment and means of subsistence.”
If we had followed Adam Smith’s advice, the Americans who once made clothing, TVs, computers and toys would not have been deprived of their jobs and reduced to alcoholism, addiction and desperation.
President Trump understands Adam Smith better than the media’s instant experts and the effete intellectuals in Beltway think tanks and academia who would sacrifice the independence of our nation to the gods of “the global economy.”
And to those who counsel unilateral disarmament in the economic war China is waging against America, President Trump invokes the spirit of John F. Kennedy who understood Americans will pay any price, bear any burden, meet any hardship in order to assure the survival and success of liberty.
Read the original article here.