November 2018

Donald Trump celebrated his monomania this morning in a text boasting, “Billions of Dollars are pouring into the coffers of the U.S.A.” because of tariffs on the Chinese. Yes, tariffs do indeed go to the federal government, but who pays them? Trump and his zealots will claim it’s the exporter. But is it?

Let’s say the Chinese currently sell widgets in the US for $15 each. While US companies must sell them at $18 to make a profit. In response, Trump levies a tariff of $3 per widget. The Chinese could pass along the whole cost, making American widgets competitive. The US Treasury would benefit by collecting $3 for each Chinese widget sold.

But who’s paying the $3? Whoever is buying widgets — in this case, the American consumer. Increasing the price of widgets by $3 is the equivalent of adding a 20% sales tax. However, that revenue would only come from Chinese widget sales. The Treasury would get no direct benefit from increased American widget sales.

Ultimately, the treasury would receive some money from an increase in corporate tax collected. But let’s remember Trump slashed the corporate tax rate —  and businesses are very good at hiding profit.

Let’s say the Chinese decide to absorb $1 of the tariff. The American consumer would still pay $2 (13%) more for a widget. And American widgets would still be uncompetitively priced. The Treasury would still receive tariff revenue of $3 a widget, but the American consumer would pay 2/3rds of that.

Also consider this: Sales tax is a retrogressive tax which burdens the poor more than the rich — because the poor must spend a higher percentage of their income on stuff than the rich do.

It gets worse. the Treasury needs more money because of Trump’s tax cuts. So while the rich get theirs, the poor are paying more to ease the deficit burden. In other words, tariffs aren’t just a sales tax they also shift wealth from the poor to the rich.

Let’s look at one last scenario. Trump slaps a tariff of $5 on each widget and the Chinese can’t afford to pay it. Now the consumer is paying a 33% sales tax. And where is that money going? Not to the government to fund things the consumer needs, but straight to American corporations to be paid out in executive bonuses and stock buybacks. Again benefiting the rich at the expense of the average consumer.

But here corporate apologists will cry triumphantly ‘but what about all the extra jobs created by a rise in American widget sales?’, I grant you there will be an increase in US widget jobs. But the Chinese are not sitting on their hands. They are targeting American exporters. So jobs in those companies will decline.

And what of Trump’s claim that foreigners can just shift production to the US? It’s magical thinking. The Chinese are not about to shift jobs to the US. They will do as stated above, put tariffs on American goods. 

Lastly, if the aim of Trump’s policy is to increase jobs and reduce the trade deficit he should forget tariffs and instead subsidize the labor cost of American widget manufactures. Now the domestic widget makers can hire more people and price their widgets competitively. 

The advantage here is that employment goes up. The consumer doesn’t pay any more for widgets. And the Chinese are priced out of the US widget market. Just imagine not subsidizing fossil fuels but instead training miners to make widgets in plants run on clean power. Feels good, doesn’t it?

Free-market types will protest — but it will be meaningless. Tariffs are just as big an interference in the free-market as labor subsidies are.  

The disadvantage from Trump’s point of view is that US widget manufacturers won’t profit from it. And it will increase the deficit. But step two is electing a Democratic President and Congress so that America can have a tax code that creates a more equitable distribution of wealth.

In other words, we can see an increase in American production. An increase in employment. A fairer tax code. And a move away from a new Robber Baron age to an era of Eisenhower-style wealth distribution. And don’t conservative always extol 1950s values? 


Trump’s Profound Disregard for the US Military Continues.

November 29, 2018

Trump told reporters today we shouldn’t worry about the troops spending Thanksgiving at the border because they are “tough people”. I’m sure they are. And no one signs up for the military thinking it’s going to be a 9-5 job with holidays off. Hardships are expected. But no good commander sends his troops to suffer hardships pointlessly. And what of […]

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The Symphony of the Seas, the USS Ford, and a Tale of Political Piracy.

November 29, 2018

The Symphony of the Seas is the world’s largest cruise ship. It is 1,188 ft long, 215 wide and has a gross tonnage of 228,081. It can carry almost 9,000 passengers and crew. It cost $1.35 billion. But it is not the world’s most expensive ship. The most expensive is the aircraft carrier, USS Gerald Ford. This largest-ever naval ship is 1,106 […]

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From High Humidity to Foreclosure, Voting Problems on Election Day

November 15, 2018

It’s not just Russian interference in our democratic process, state politicians have done a masterful job of gerrymandering and voter suppression. Take Kansas. In the historically infamous Dodge City there are no polling places. City residents have to travel 2½ miles out of town to vote at the city’s only polling place.  Technological failures in Texas and Georgia (or is it […]

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Anatomy of an Ann Coulter Lie.

November 15, 2018

Ann Coulter is a conservative, and she is a liar —  but I repeat myself. However, she is a sophisticated liar. Unlike Trump, who says whatever he wants, safe in the knowledge his base will never fact-check anything, Coulter strives for credibility by giving her lies a superficial plausibility. Let me give you an example.  […]

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The Conservative Base is Scared Witless. And Has Been for Years.

November 3, 2018

Conservatives love to be scared. And Trump loves to scare them. Rational Americans look at a caravan of desperate, hungry, thirsty, dirty vagabonds and see a people yearning to be free. But Trump paints them as terrorists, gang-bangers and drug dealers — rapists in their spare time — and his acolytes eat it up.  This fear is […]

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Today’s Conservatives Engender a New Age of Anti-Semitism.

November 3, 2018

The massacre at the Tree of Life Synagogue is just the most violent, recent expression of anti-Semitism in the US. The gunman may have acted alone, but he had many accomplices. The severity of the event makes it unique, but it sprang from soil well fertilized by many Americans, from the meanest white nationalist to the President […]

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