Free Trade vs Mercantilism

[raderag]

If ABC company (a US company) makes a widget w and sells it to another country. To make w, it needs widget y.
Company XYZ, also a US company, makes widget y and sells it for $500.
Company Q, a foreign company, makes widget y and sells it for $50.
Middle class Americans all use and need both widget z and y.

Should the government have tariffs on widget y in order that Company XYZ can sell its product?

I forgot to mention that XYZ is very inefficient, pays its managers 30% over the going rate, and can afford to do so since it sells its widget for $500.

This is mercantilism

[TigerBunny]

If ABC company (a US company) makes a widget w and sells it to another country. To make w, it needs widget y.
Company XYZ, also a US company, makes widget y and sells it for $500.
Company Q, a foreign company, makes widget y and sells it for $50.
Middle class Americans all use and need both widget z and y.

Should the government have tariffs on widget y in order that Company XYZ can sell its product?

I forgot to mention that XYZ is very inefficient, pays its managers 30% over the going rate, and can afford to do so since it sells its widget for $500.

This is mercantilism

*blink* No wonder I failed economics. :BigB:

[Tallen]

Should the government have tariffs on widget y in order that Company XYZ can sell its product?

No, I think that there should be a tax on Company Q though. This would be a fair tax that it would have to pay in order to sell to the American market. Let's say for arguments sake, a 5% tariff that it would pay to access the market. Or even better, tariffs that would equal the tax rates that an American company pays to have the same market. In other words, I don't think that a foreign company should get an unfair advantage to the American market, and that the American companies in the same market would have to pay more taxes to be in this market. Often that is the case, foreign companies will be subsidized by their governments in order to capture an American market and have an advantage over American products. In those cases tariffs should be imposed to cause a fair market.

Our government should be in the business of protecting American interests and American business, as well as looking out for the American consumer. Don't you agree?

[raderag]

No, I think that there should be a tax on Company Q though. This would be a fair tax that it would have to pay in order to sell to the American market. Let's say for arguments sake, a 5% tariff that it would pay to access the market. Or even better, tariffs that would equal the tax rates that an American company pays to have the same market. In other words, I don't think that a foreign company should get an unfair advantage to the American market, and that the American companies in the same market would have to pay more taxes to be in this market. Often that is the case, foreign companies will be subsidized by their governments in order to capture an American market and have an advantage over American products. In those cases tariffs should be imposed to cause a fair market.

Our government should be in the business of protecting American interests and American business, as well as looking out for the American consumer. Don't you agree?

Any tax will propagate itself on the American people and ABC company more than it would protect the inefficient XYZ.

On the other hand, they should pay equal taxes, but corporation shouldn't pay taxes in the first place. :bigO:

Tariffs are usually more like 150% not 5%.

Can you show me in the constitution where government is in the business of protecting American business? that is facism not republicanism.

[Tallen]

but corporation shouldn't pay taxes in the first place.

We agree here.


Can you show me in the constitution where government is in the business of protecting American business?

I can show you in the Constitution where the government is to protect the borders of the United States and the interests of it's citizens to pursue happiness and their own welfare, and to protect personal property that is owned by that citizenship. I would hope this would be all of the businesses that are owned by them as well.


that is facism not republicanism.

Not hardly. I would rather you show this rather than accuse it. Consider:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Would you want to place the business that I own outside of the domestic tranquility, general welfare, and the blessings of liberty that are protected within the constitution? The way I see it, if you make that argument then you are making an argument against your own personal property. :medium-smiley-011:

[raderag]

We agree here.



I can show you in the Constitution where the government is to protect the borders of the United States and the interests of it's citizens to pursue happiness and their own welfare, and to protect personal property that is owned by that citizenship. I would hope this would be all of the businesses that are owned by them as well.



Not hardly. I would rather you show this rather than accuse it. Consider:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Would you want to place the business that I own outside of the domestic tranquility, general welfare, and the blessings of liberty that are protected within the constitution? The way I see it, if you make that argument then you are making an argument against your own personal property. :medium-smiley-011:

Ted, that is quite a stretch, especially since more than half of the framers were Adam Smith influenced liberals. You are reading your own political viewpoint into the constitution here.

No where does the constitution state that foreigners can't own private property in the US.

[Tallen]

Ted, that is quite a stretch, especially since more than half of the framers were Adam Smith influenced liberals. You are reading your own political viewpoint into the constitution here.

No where does the constitution state that foreigners can't own private property in the US.

That's true, and nowhere does it give foreign ownership the same rights afforded to the citizens. BTW, I don't think that what I posted was a stretch at all and has been born out in litigation over time.

[raderag]

That's true, and nowhere does it give foreign ownership the same rights afforded to the citizens. BTW, I don't think that what I posted was a stretch at all and has been born out in litigation over time.

Well, case law has given foreign owners the rights to constitutional protection of property. You are right in that the congress has been allowed to enact laws that favor certain industry and punish others. The many subsidies are a perfect example of that. If only FDR would not have threatened the supreme court in his first administration.

BTW, my argument on trade also applies to immigration. We should have open and regulated borders.

:bigO:

[Tallen]

BTW, my argument on trade also applies to immigration. We should have open and regulated borders.

I agree here somewhat also. I think the devil is in the details of how we are going to regulate those borders. I wouldn't like to see free borders open to anyone nor would I want borders open to a thinly defined population of immigrants.

By the way, we recently saw how the government can treat foreign property when it siezed all Iranian held properties and assets, without due process. It was a matter of depriving a hostile state from money that could've been used to fund our enemies in a war against us. That can't happen to a citizen according to the consitution, without due process.

[raderag]

I agree here somewhat also. I think the devil is in the details of how we are going to regulate those borders. I wouldn't like to see free borders open to anyone nor would I want borders open to a thinly defined population of immigrants.

By the way, we recently saw how the government can treat foreign property when it siezed all Iranian held properties and assets, without due process. It was a matter of depriving a hostile state from money that could've been used to fund our enemies in a war against us. That can't happen to a citizen according to the consitution, without due process.

Ted, I thought that went through a court, though I could be wrong.

The devil is indeed in the details.

I say let healthy non-criminals in to work, but don't give them easy citizenship. Most Mexicans want to live in Mexico anyway.

Did you know that since NAFTA, the Mexican economy is now larger than Canada's? Instead of being a basket case, Mexico is now more like a middle tier Eastern European country. The middle class there is growing, and in many ways already flourishing. Granted, it is mostly in the North (Monterrey, Saltillo, San Luis Potosi,etc). If they can get rule of law there, they will be more like Germany or France.

If you shut down the borders and shut down NAFTA, you will starve Mexico to death, and end of having an enemy nation right on our borders.

Does NAFTA hurt some US workers? In the short run yes, but it makes us all more competitive with the rest of the world.

[raderag]

Another thing about free trade...

Are we going to with a straight face go to foreign countries in the mission field, and tell these people that our cushy US jobs are more important than their jobs? Trade is not a transfer of wealth, but rather an exchange of money for something as valuable. It enriches all involved. Ireland was a relatively poor country, until they liberalized their trade policy in the 80s. It is one of the richest countries in Western Europe now. There are probably some Sheep farmers that had to get different jobs though.