Protectionism rising in China, Part II
If protectionism takes hold in China and spreads around the world, prices for all sorts of goods will rise. That's what the free-marketers say. I'm no expert, but I wonder if that's the thing I should be worrying about.
Here's a thought. Suppose stuff made in China goes up in price. Wouldn't you cut down on buying the stuff? Prices go up, you buy less. But let's take this another step.
Suppose some entrepreneurial American notices that there are enough people willing to pay up for higher quality items. Take socks, for example. We men all wear them. Suppose you could get socks that were better quality for not too much more money. They'd feel better, look better and last longer. Now suppose our entrepreneur could make these socks in the U.S. at a profit, as long as there were enough people willing to pay the higher price?
I don't know the sock business, so maybe this isn't a good example. I just wonder.
But that's really not the thing that concerns me about a possible rise in nationalism and protectionism. What concerns me is the possible connection with war.
Most people forget that prior to World War I, there was a big movement in the country and in Europe to reduce tariffs. It was a free trade movement. The idea was that if every country would just trade with each other, there would be no more war.
In fact, tariffs were reduced. Trade increased between countries. At the time, it felt as if a great new age had begun: increasing prosperity and o more war. In spite of this effort, World War I broke out.
Then, after WWI, the idea of free trade caught hold again. The old free trade philosophy caught hold again. Unfortunately, with the onset of the Great Depression, protectionism and tariffs were brought back and countries restricted trade. This occurred in the 1930's. By 1939, we had World War II (The US entered the war in 1941.).
Today, some believe that increased tariffs, caused by rising nationalism in China and other countries, along with other protectionist measures, will create an adversarial environment that could make war more possible, even probable, between countries.
I don't know that I buy this. We had tariffs in this country in the 19th century, and didn't go to war with Europe over it. Plus, as I pointed out, the free trade prior to World War I didn't seem to stop that war. And it would be a stretch to say that protectionism before World War II caused that war in any substantive way. At best, it might be considered one possible cause.
In addition, not only did the U.S. not go to war with Europe during a time of tariffs, but the U.S. grew and prospered. Even more interesting is the fact that there was no income tax during the 19th century (with the exception of the Civil War era, when the Union government - the North - desperately needed money to pursue the war against the Confederate States). Our current income tax came about in 1913, after the U.S. had started getting rid of tariffs.
You can see where this sort of thinking can lead, can't you? And you can ask this simple queston: Were we ("we the people") better off when foreign manufacturers paid taxes to our government or when our government started taxing our incomes directly?
You could argue that we had to pay more for imported goods we bought because of tariffs. But, for the most part, it's your choice if you buy or don't buy anything, right? On the other hand, you have no choice when it comes to the income tax. Your only choice is to make nothing, or so little, that you're not taxed. And that's not all that appealing now, is it?
Can we reach any conclusions here? I think it's fair to say that this whole area of protectionism and tariffs is a bit more involved and complex than either the anti-protectionist (free market) folks or the anti-free-market (they're out there too) claim.
Whether you like it or not, it's not such a simple matter to correctly assess what might be the best course. But, of course, many people don't really want to spend the time making a solid assessment, just as many people don't really want to know the truth a lot of the time.
Here's a thought. Suppose stuff made in China goes up in price. Wouldn't you cut down on buying the stuff? Prices go up, you buy less. But let's take this another step.
Suppose some entrepreneurial American notices that there are enough people willing to pay up for higher quality items. Take socks, for example. We men all wear them. Suppose you could get socks that were better quality for not too much more money. They'd feel better, look better and last longer. Now suppose our entrepreneur could make these socks in the U.S. at a profit, as long as there were enough people willing to pay the higher price?
I don't know the sock business, so maybe this isn't a good example. I just wonder.
But that's really not the thing that concerns me about a possible rise in nationalism and protectionism. What concerns me is the possible connection with war.
Most people forget that prior to World War I, there was a big movement in the country and in Europe to reduce tariffs. It was a free trade movement. The idea was that if every country would just trade with each other, there would be no more war.
In fact, tariffs were reduced. Trade increased between countries. At the time, it felt as if a great new age had begun: increasing prosperity and o more war. In spite of this effort, World War I broke out.
Then, after WWI, the idea of free trade caught hold again. The old free trade philosophy caught hold again. Unfortunately, with the onset of the Great Depression, protectionism and tariffs were brought back and countries restricted trade. This occurred in the 1930's. By 1939, we had World War II (The US entered the war in 1941.).
Today, some believe that increased tariffs, caused by rising nationalism in China and other countries, along with other protectionist measures, will create an adversarial environment that could make war more possible, even probable, between countries.
I don't know that I buy this. We had tariffs in this country in the 19th century, and didn't go to war with Europe over it. Plus, as I pointed out, the free trade prior to World War I didn't seem to stop that war. And it would be a stretch to say that protectionism before World War II caused that war in any substantive way. At best, it might be considered one possible cause.
In addition, not only did the U.S. not go to war with Europe during a time of tariffs, but the U.S. grew and prospered. Even more interesting is the fact that there was no income tax during the 19th century (with the exception of the Civil War era, when the Union government - the North - desperately needed money to pursue the war against the Confederate States). Our current income tax came about in 1913, after the U.S. had started getting rid of tariffs.
You can see where this sort of thinking can lead, can't you? And you can ask this simple queston: Were we ("we the people") better off when foreign manufacturers paid taxes to our government or when our government started taxing our incomes directly?
You could argue that we had to pay more for imported goods we bought because of tariffs. But, for the most part, it's your choice if you buy or don't buy anything, right? On the other hand, you have no choice when it comes to the income tax. Your only choice is to make nothing, or so little, that you're not taxed. And that's not all that appealing now, is it?
Can we reach any conclusions here? I think it's fair to say that this whole area of protectionism and tariffs is a bit more involved and complex than either the anti-protectionist (free market) folks or the anti-free-market (they're out there too) claim.
Whether you like it or not, it's not such a simple matter to correctly assess what might be the best course. But, of course, many people don't really want to spend the time making a solid assessment, just as many people don't really want to know the truth a lot of the time.
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