In Defense Of Wage And Environmental Parity Tariffs
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2010-09-28 10:43 by Karl Denninger
in Politics , 12 references Ignore this thread
In Defense Of Wage And Environmental Parity Tariffs *
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This ought to wake you up:

Household incomes plunged for the second year in a row in 2009, as fewer families earned over $100,000 a year and the ranks of the poor rose, according to census statistics released Tuesday.

...

....almost one in four families earned less than $25,000, an increase of one percentage point. "

Folks, either our wage and hour laws, along with our environmental protection laws, are defensible or they are not.

If they are, then they are for any product or service sold in the United States, irrespective of where it's produced.

If they're not, then they're not defensible for any product or service sold here, again, irrespective of where it's produced.

We have spent 20 years exporting our labor to places where effective slave-labor conditions are the order of the day and environmental standards are non-existent.

This is what rivers and lakes look like in China, where we source most of our "consumer goods" nowdays:

inline

Who are we trying to kid here?

International corporations do this because it's cheaper.  They use the lack of these laws to evade our laws here.  We permit it, we allow them to import as "free trade", and in doing so we are just as responsible for the exploitation of the people, and destruction of the environment, as if it took place right behind your house.

But for our economic activity in this "trade" that pollution and slave-labor would not happen.

So cut the crap America.

Either our standards are valid or they are not.  If they are, then they are.  Enforce them.  Since we can't force other nations to conform with our laws, the solution is simple: we enact wage and environmental parity tariffs, thereby destroying the incentive for firms to poison the environment and exploit people elsewhere to evade our laws here.

The manufacturers now have a choice - either bring the jobs back here, in which case we now have a rising wage base, or our Treasury gets refilled with funds with which to pay welfare and other benefits in various forms to those who are displaced.

Neither political party wants to face this reality, of course.  But that doesn't make it less true.  To the contrary - it is absolutely the case, and we're hypocrites.

We as Americans, bluntly, are pigs.  We claim that "Minimum Wage" laws are both just and necessary, but we won't enforce that which we claim is just and necessary - instead we give manufacturers a simple way around the law by simply firing all the US workers involved and moving the plant to Mexico or China!

Likewise, we claim that environmental protection is important.  But instead of enforcing it, we then allow the manufacturers to do what you see above, so long as it happens to someone else.

Wake up America.  Either our laws are worth enforcing or they're not.  If they're just then they are, and for those who choose to evade them by offshoring, the proper response is to tariff everything that comes into this country using those means of bypass in the exact amount of the benefit so gained.

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Randy123 6k posts, incept 2008-09-24

I feel bad for that dog. Poisoned over there and then likely eaten. Poor pup.

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China is the Enemy. Wake Up.

New Normal. Same As The Old Awful.
Jake3463 773 posts, incept 2010-03-06

Larry Summers came up with this idea in 1991 while at the World Bank as their Chief Economist.

If there is one human being in the world, that all the citizens of the world should demand be hung, Larry is at the top of the list.

Text of the Summers memo:

Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Least Developed Countries]? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.
3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate[sic] cancer is obviously going to be much higher in a country where people survive to get prostrate[sic] cancer than in a country where under 5 mortality is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.
Kwl88 518 posts, incept 2009-04-16

KD, Great Arguments for these Wage & Environmental Parity Tariffs!

However - are there ANY DEMS or REPUBS that have "CHAMPIONED" this cause at all?

IF not - you are just screaming in the middle of nowhere. IF YES - WHO?!?!?!?!

This is an actual DEM issue that would actually HELP the DEMS in this and every election! WHY won't they pick it up and run with it - Instead of ALL the other hurtful and evil issues they campaign & govern with that hurt the USA greatly?!

REPUBS are all about "FREE TRADE" the issue BUT when are they going to actually FORCE "FREE TRADE" with each and every one of our Trading Partners? FREE TRADE is when a product from Country A has the same relatively speaking cost to produce as well as price and thus the better Product wins. In order for that to happen the USA laws/regs need to be similar if not the same as the rest of the World - either by us dropping our wage&environ laws/regs or the rest of the World adopting our wage&environ laws/regs.........WHICH WILL IT BE OR will we continue to get products from slaves in toxic dumps that only the top 20% of the USA population can afford?!?!

Throxxofvron 10k posts, incept 2009-02-17

Larry Summers wrote..
Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Least Developed Countries]?

-snip-

I've always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.


This constitutes nothing less than a sociopathic 'practical economic' argument for genocide.

As an American Citizen I am deeply ashamed of the United States Government for Employing this criminal brute and conferring legitimacy upon such precepts by doing so.

I denounce the so-called Christians and Secular Humanists of America for tolerating such inhumanity in their midst.
With all due respect ( none ); any assertions of moral or intellectual superiority are annulled by the fact that such Persons as hold the views espoused by Larry Summers are accepted in roles of leadership and policy determination in American Political Society.
You fail the base test of Your professed religious and Liberal Social and enlightenments and compassions.
I grant credence to no Party who lends importance to Individuals or Organizations taking such a position politically or ideologically.

Larry Summers should not be wandering the halls of Washington DC.; but, should be in irons in the dock of the Hague for prosecuting such morally indefensible policy.

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DIONYSUS: " Thou hast no knowledge of the life thou art leading; thy very existence is now a mystery to thee. " -from 'The Bacchantes' By Euripides During times of universal deceit, telli

Rickysa 2k posts, incept 2007-08-22

So, for a Pooh Bear like me, .gov imposes high tariffs on goods produced in countries that don't abide by our wage/enviornmental laws...and the Fed makes (low interest) money available for companies to build those products here.

We get jobs, higher wage base, production, and a way out (?)...

Who gets hurt by doing this? Would it help lessen the carnage expected by doing all the other things discussed on this forum (making banks eat their losses, many going bankrupt, etc,)

Jake3463 773 posts, incept 2010-03-06

@throxx

Larry Summers and Bob Rubin are sociopaths. A rational person would never try to return to an institution that they cost 1,000,000,000 in their endowment fund with their bad advice, Larry walks through the door feeling entitled looking for a co-ed to play with.
Anti 4k posts, incept 2007-10-09

It is like farting in church to bring something like this up at a congressional town hall meeting - however these arguments might be a good way to start.

succinct, clear -

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The truth shall make you free...
Throxxofvron 10k posts, incept 2009-02-17

There is a special place reserved for sanctimonious hypocrites in Hell.

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DIONYSUS: " Thou hast no knowledge of the life thou art leading; thy very existence is now a mystery to thee. " -from 'The Bacchantes' By Euripides During times of universal deceit, telli
Steelhead23 2k posts, incept 2008-09-09

Bravo Karl. A point seldom made in arguments for tariffs is the effect on foreign citizens. Let's face it, so much recent manufacturing investments have taken place in Asia. Thus, even if enacted tomorrow, it would take some time for manufacturing jobs to return. Foreign vendors would face scalding tariffs and would be encouraged to clean-up their acts. Thus, there would likely initially be pockets of improvement, in wages and benefits at foreign factories. Profits would shrink. The actual return of jobs to America would likely not occur until the cost of shipping from Asia devoured profits. Thus, while I wholeheartedly endorse your proposal for tariffs to provide global wage and environmental parity, I suspect that the initial fruits of such a program would be a lowered demand for domestic taxes and improvements in working and environmental conditions abroad. It could take a decade or more to see dramatic increases in domestic manufacturing (unless some tariff money was used to pay-down the costs of rebuilding America's manufacturing capacity).

If we export justice, we would import peace.

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"Give me control of a nation's money and I care not who makes it's laws" Mayer Amschel Bauer Rothschild Benjamin BernankeFor-profit commercial banks are a menace and should
Karlmarxghost 4k posts, incept 2009-01-26

Quote:
Larry Summers should not be wandering the halls of Washington DC.; but, should be in irons in the dock of the Hague for prosecuting such morally indefensible policy.


Not to sound to tinny but this whole notion of the US being the financial hub with a service economy while having China do all of the manufacturing was planned long before Summers. In fact this has been in the works for nearly 100 years. Congressman Louis Thomas McFadden on the house floor in the 30s talked about this very subject.
Quote:

"When the Federal Reserve act was passed, the people of the United States did not perceive that... the United States were to be lowered to the position of a coolie country which has nothing but raw materials and heavy goods for export; that Russia [China, India...] was destined to supply the man power and that this country was to supply financial power to an international superstate -- a superstate controlled by international bankers and international industrialists acting together to enslave the world for their own pleasure."

Rep. Louis T. McFadden, June 10, 1932.

You can read the entire speech here..

http://www.modernhistoryproject.org/mhp/....

Needless to say McFadden was murdered a year or two later.


Quote:

The manufacturers now have a choice - either bring the jobs back here, in which case we now have a rising wage base, or our Treasury gets refilled with funds with which to pay welfare and other benefits in various forms to those who are displaced.


Yup and yup.

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My views are my view and mine alone. Karl or ticker forum does not endorse or necessarily agree with my views. DO not trade on my views or take them personally.
Bullionaire 2k posts, incept 2007-12-21

Convenient to downtown Shanghai, this piece of undeveloped rural property features a running brook and wild game! Caretaker will stay on ! This one won't last!

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"Anytime a financial company can take your hard earned money and keep it for decades without promising a set return, and even penalize you for early withdrawal it is a con. America has been conned by
Wb6yyz 242 posts, incept 2009-03-16

The other thing that can be done is simply to refuse to by stuff made in China. I thought it was impossible, but I went out today to a local shoe store (not part of a big chain) and bought U.S. Made shoes. Yes, they cost $145, but when the heels wear out they will be worth fixing. I also helped to keep a U.S. shoe factory open (hopefully they aren't employing illegals). Visit http://americansworking.com to search for items made in the United States. The only things that I have not been able to find that are U.S. made are consumer electronics equipment. So I'll do without or look for used on ebay and craigslist if I need anything like that.
Bezzle 15k posts, incept 2009-08-02

Quote:
Folks, either our wage and hour laws, along with our environmental protection laws, are defensible or they are not.
They are not. There is no aspect of environmentalism which is not reducible to elemental property-rights, vandalism and trespass, which means that the sole reason environmental legislation exists is to provide a phalanx of socialist bureaucrats, lawyers and politicians with leechfuck livelihoods writing and enforcing tons of crap, with the sale of "indulgences" (AKA: bribes, exemptions, campaign contributions, "credits", "off-sets", etc) being a primary motivation.
Quote:
If they are, then they are for any product or service sold in the United States, irrespective of where it's produced.
I am aware of no existing US law which requires domestic consumers at any scale (individual to corporate) to only purchase from external producers which abide by said-same US laws in non-US locations. Either in letter or "in spirit".

Think where this leads: If the US insists that China abide by US environmental laws, then by what logic could the US deny British law, or Saudi law, within its own borders? -- I think everyone around here would be squealing like stuck pigs if, say, the United Nations began insisting that the United States abide by Sharia before it could purchase rugs, dye, spice...or oil...from the Middle East.

Don't laugh, kidz; the camel's nose is already under the tent:

Quote:
We as Americans, bluntly, are pigs. We claim that "Minimum Wage" laws are both just and necessary
Who's this "we" claiming that? I certainly don't claim it.
Quote:
but we won't enforce that which we claim is just and necessary - instead we give manufacturers a simple way around the law by simply firing all the US workers involved and moving the plant to Mexico or China!
And that was a perfectly predictable response, though the NLRB-backed UAW line-worker demanding $45/hr is the more likely culprit.
Quote:
the proper response is to tariff everything that comes into this country using those means of bypass in the exact amount of the benefit so gained.
All I see is another monstrous new Commissariat gouging its cut. I estimate it'll need a big marble building with a view of the Potomac, and at least a budget of $150 billion/yr and at least 100,000 civil-service employees spreading across the fruity plain like commie ward-bosses making sure nobody orders from the wrong web-site on the internet (hmm...police the internet...that'll require another new commissariat...and you end up resembling the Chinese government more and more...).

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El Sock-Puppeto exposed and killed by Tickerguy

Sixmil 36 posts, incept 2010-09-16

You can't enforce our laws in another country. That's why free trade needs a WTO and an EU and all kinds of other organizations that are nothing more than a vehicle through which to give up your sovereignty.

If we charged reasonable tariffs, we would not worrying about any of this. If you make trade about labor standards and/or the environment, all you are doing is creating holes in the system that busy-body politicians can use to control your life and keep themselves in power. Keep it simple - a single, floating tariff rate that applies to everything; goes up when we show a trade deficit, down when we show a trade surplus.

Once we do this, we will have the maximum benefits of trade without giving up our sovereignty or independence.

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The American Medical Association is perhaps the strongest trade union in the United States - Milton Friedman
Bezzle 15k posts, incept 2009-08-02

Quote:
If we charged reasonable tariffs....
Sixmil, there's no such thing as a "reasonable" amount of stealing.

You will always pay the full price for your "Needful thingS":

Always.
Inline

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El Sock-Puppeto exposed and killed by Tickerguy
Pietertvl 4k posts, incept 2007-12-05


Tariffs applied to offset the effects of differential wage levels make no sense to me. Wage levels by and large are about as competitively determined as any market that I can imagine. And I doubt correcting for the effects of exchange rate intervention would affect matters appreciably when the wage differentials are an order of magnitude apart or more. Wage differences will principally reflect supply and demand, adjusting for education, skills, experience etc. Wages are low in China because of its huge workforce and because skill sets are generally still broadly below first world standards for skilled positions.

But net those out, a large gap remains due to the prevalence of welfare programs in the West (social security, paid vacations, medical insurance, etc). And that gap is growing. Among the reasons highly skilled westerners are having more trouble getting jobs in recent years is because the cost of employing them (beyond their cash salaries) keeps rising thanks to govt mandates and abuse. So the balance keeps shifting away from employing in the West.

There's also the case to be made that foreign exporters target US prices. Put tariffs on, US import prices will remain unchanged since we're still the key market (for now). Exporters eat the duties as lower profits. And before long, with competitive labor markets, the duties would be shifted back onto the foreign work forces as still lower wages. Net effect: nil.

However, I think broad environmental tariffs set at specified levels for all imports from a given country are entirely justifiable on externality grounds -- we share a common planet. Provided that some degree of relief is granted to firms in polluting countries that can demonstrate responsible environmental conduct. You want to reward change.

Three problems that I see. (1) Assuming the WTO were to allow environmental duties, how do you set those duty rates, scientifically or politically? Unilaterally or multilaterally? (2) How do you catch firms tran-shipping via third countries for "final assembly" to escape the highest duties? (3) As noted above, a lot of pollution is generated upstream from the manufacturer in the production of non tradable inputs. Levy environmental duties sufficient to offset all the damage but only on exports and the result would be that most all trade would collapse.

As usual, the devil is in the details.

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"All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature
Bezzle 15k posts, incept 2009-08-02

Quote:
But net those out, a large gap remains due to the prevalence of welfare programs in the West (social security, paid vacations, medical insurance, etc). And that gap is growing. Among the reasons highly skilled westerners are having more trouble getting jobs in recent years is because the cost of employing them (beyond their cash salaries) keeps rising thanks to govt mandates and abuse. So the balance keeps shifting away from employing in the West.
Bingo.

Absafuckin'lutely.

And the taxes; let's not forget those.

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El Sock-Puppeto exposed and killed by Tickerguy
Abn0rmal 9k posts, incept 2009-01-10

Bezzle wrote..
Think where this leads: If the US insists that China abide by US environmental laws, then by what logic could the US deny British law, or Saudi law, within its own borders? -- I think everyone around here would be squealing like stuck pigs if, say, the United Nations began insisting that the United States abide by Sharia before it could purchase rugs, dye, spice...or oil...from the Middle East.
I think a better analogy would be Muslim countries placing a tariff on our exports because we allow lending at interest.
Bezzle 15k posts, incept 2009-08-02

Sure. I can easily see that.

There would be no end to the excuses.

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El Sock-Puppeto exposed and killed by Tickerguy
Anti 4k posts, incept 2007-10-09

This idea from Sixmil:
Quote:
Keep it simple - a single, floating tariff rate that applies to everything; goes up when we show a trade deficit, down when we show a trade surplus.


Sounds good. I would exempt raw materials.

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The truth shall make you free...
Grf 1k posts, incept 2008-12-08

I've asked this every time but it hasn't been answered - what about a rights-based tariff?

+10% on every Constitutional right that isn't protected in the country of origin, or similar.

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"Every time we on TF talk about God and gays, God frees a banker and gives him a bonus." --me
"Your farts are interstate commerce and if they want to stick a muffler up your ass they will do it." --B
Tickerguy 190k posts, incept 2007-06-26

Eh, you could do that, but it doesn't push my buttons.

Environmental and wage-parity, yes. "Adopt the Constitution or else"? Naw.

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The difference between "kill" and "murder" is that murder, as a subset of kill, is undeserved by the deceased.
Grf 1k posts, incept 2008-12-08

Bear with me here for one post here Gen, then I'll drop it.

Is it not the idea of protecting rights enshrined in the Constitution that has allowed our wages to rise and environment to be protected? Both of these are merely extensions of individual property rights, which really is the base of a republic. So wouldn't it be closer to the root of the problem to have rights parity encouraged by tariffs rather than wage/environmental parity?

It's not an "or else", it's an "if you do X then we will make all your products more expensive."

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"Every time we on TF talk about God and gays, God frees a banker and gives him a bonus." --me
"Your farts are interstate commerce and if they want to stick a muffler up your ass they will do it." --B
Tickerguy 190k posts, incept 2007-06-26

We don't even honor The Constitution in our own nation!

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The difference between "kill" and "murder" is that murder, as a subset of kill, is undeserved by the deceased.
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