Patterico's Pontifications

12/29/2015

Marco Rubio Cannot Justify His Support for Sugar Subsidies

Filed under: General — Patterico @ 11:21 am

In an article from August 2015, we see Marco Rubio’s justification for supporting sugar subsidies:

Battling crony capitalism and corporate welfare has been a central theme of this weekend’s gathering.* In that vein, Mike Allen of Politico asked Marco Rubio at Sunday’s lunch, commented on Rubio’s votes against a federal backstop for terrorism risk insurance and the Export-Import Bank, and then noted that Rubio made one exception to his opposition to crony capitalism. Rubio instantly knew what Allen was talking about: the federal sugar program.

Rubio has consistently voted for and defended the federal sugar program, which drives U.S. sugar prices higher by keeping out foreign sugar and provides federal loans to guarantee those high prices.

Rubio said, “I’m ready to get rid of the loan program for sugar, as long as the countries that export sugar into the U.S. get rid of theirs as well, and here’s why: Otherwise, Brazil will wipe out our agriculture and it’s not just sugar.”

This is nonsense. Other agricultural products do just fine without tariffs. And imposing tariffs on imports from other countries hurts us.

Before we get into why that is the case, let’s clarify what the “loan program” really is: price-fixing by the government. SugarCane.org describes the program this way:

The U.S. Department of Agriculture (USDA) provides loans to sugarcane and sugar beet producers and processors that guarantee a minimum price regardless of the true market conditions. At the end of the loan term (generally 9 months), sugar producers and processors make one of two choices:

1. Turn over to the government the sugar they produced as payment for the loan, or

2. Sell their sugar on the market if the going price is higher than the USDA loan amount

In other words, the government sets a floor for sugar prices. In addition, the government institutes two other forms of corporate welfare for U.S. sugar companies, including domestic market controls and tariff-rate quotas. All of these distort a free market in sugar, with deleterious effects.

I want to concentrate on Rubio’s argument that we have to allow government to interfere with the operation of the free market in sugar, because other countries do the same thing. The argument appears to be: if they slap tariffs on us, we have to slap tariffs on them!

The problem with this argument is the lazy, populist assumption that when we slap tariffs on them, we are hurting them and not ourselves. This, I will explain, is not the case. When we slap a tariff on imports, there is a trade-off. (Remember Thomas Sowell’s dictum: there are no solutions, only trade-offs.) And in that trade-off, we hurt ourselves badly when we slap tariffs on imports of any sort.

The following analysis is based on two rock-solid assumptions:

First: In a free market, people tend to buy the products that they believe are the best value. In other words, they gravitate towards the best products offered for the least amount of money. This means different things to different people, but the collective decisions of a free people result in some products being winners and some being losers.

Second: In a free market, people tend to benefit on both sides of a transaction. The seller believes he is better off with the money he receives, and the buyer believes he is better off with the goods or services he buys.

Any government interference distorts both of these principles.

Let’s first consider what happens when we slap tariffs on other countries’ imports. That will provide us a framework for considering what happens when other countries slap tariffs on our goods.

When we slap tariffs on other countries’ goods, it feels like we’re hurting the other country. But to a large degree, we are hurting ourselves.

Think about what happens when, in the absence of any tariffs, an American chooses to buy a product manufactured in a foreign country rather than one manufactured here at home.

If the good is a consumer good, the consumer benefits because he gets a better product at a lower price. (If he thought he could get the best deal by buying the domestic product, he would.) The consumer gets to keep more of his money and gets a better product — all of which increases his standard of living.

If the good is a capital good, certain American companies benefit if they use that capital good to make consumer goods. What is more, customers of those American companies benefit because they can buy those goods more cheaply.

Some goods are both consumer goods and capital goods — like sugar. Consumers buy sugar as a consumer good. American candy companies and soft drink manufacturers (among others) purchase sugar as a capital good (or used to), which they use to make their products. In these cases, without tariffs, American consumers benefit, certain American companies benefit, and customers of those American companies benefit.

American companies that export goods benefit from a lack of tariffs, for at least two reasons. First, other countries tend to retaliate against our tariffs with tariffs of their own — not a wise policy, but one that occurs. When we remove tariffs, other countries’ retaliatory tariffs are often removed, making our exports more attractive. Second, when we buy foreign goods, that gives citizens of other countries American dollars, which they can then use to buy our exports.

Finally, in all these transactions, the foreign company benefits, because it gets the sale and the profits that go along with it.

American companies making inferior or more expensive products like to argue that they are also “harmed” by a pure free market that lacks of tariffs — because the American company is not making the sale, foreign companies are. And it is true: when tariffs are instituted, it may benefit American companies that make products that do not succeed on a free market, because they are inferior, too expensive, or both.

But a tariff does not just help American companies making inferior and more expensive goods, and hurt foreign companies making better and cheaper products. These tariffs also hurt the people listed above who benefit from a lack of tariffs.

American consumers are hurt because of the lack of choices and because they are incentivized to pay more for inferior products, lowering their standard of living.

If the goods slapped with a tariff are capital goods, certain American companies are hurt because they must pay more for those goods. In turn, the customers of certain American companies are hurt because they must pay more for the products, or receive inferior products.

When the goods slapped with a tariff are both consumer and capital goods — like sugar — all three groups are hurt by tariffs. Consumers are harmed. Certain American companies are harmed. And the consumers of those American companies are harmed.

What’s more, there are ripple effects from the massively increased price of capital goods like sugar — including businesses moving to other countries and the loss of jobs resulting from such moves. In March of 2014, I published a post titled Planet Money on Rent-Seeking, Part 4: The Government-Mandated Minimum Prices for Sugar

The Planet Money episode opens with a CEO of a candy company talking about how he could expand his operations here in the U.S., rather than send massive parts of his operations to Mexico. What does he need? he asks rhetorically. Lower tax rates? Workers’ comp reform? A right to work law? Nope. He says he could pay no taxes, and get all those other things, and would still manufacture candy canes in Mexico. What does he ask for?

“Let us buy sugar on the free market.”

Finally, as noted, American companies that export goods are harmed by tariffs on imports.

Now let’s turn to the case Rubio is talking about: the distortion that occurs when a foreign government distorts the market by, say, slapping a tariff on imported goods from the United States.

Again, a simplistic analysis says: when a foreign country slaps tariffs on our goods, they are hurting us. But in reality, they are largely hurting themselves. This flows from taking the analysis above and applying it to the country imposing a tariff.

If Brazil imposes a tariff on U.S. sugar, that can have the effect of helping Brazilian sugar companies, to the extent that they are producing inferior or more expensive products that would not be purchased absent the tariff. It can also have the effect of harming U.S. sugar companies, to the extent that U.S. sugar companies would be able to compete in Brazil absent the tariff.

But, as we have seen, a Brazilian tariff on sugar also imposes harms on Brazil. Brazilian consumers are hurt, as their sugar prices rise, lowering their standard of living. Certain Brazilian companies are hurt — namely, ones that use sugar as a capital good. And the customers of those Brazilian companies are harmed. Also, Brazilian companies that export goods generally are hurt.

It’s not as if Brazil can slap tariffs on us without consequence.

What about the argument that retaliatory tariffs act as a “crowbar” to loosen tariffs in other countries, promoting free trade for all? Jim Powell has examined this argument and found that it lacks any evidence to support it, saying: “it is hard to find a single significant case in which trade retaliation or retaliatory threats have forced open a foreign market.” Trade retaliation tends to close markets, not open them.

As one of several problems with trade retaliation, Powell explains what I have explained above: that tariffs and sanctions harm the country that imposes them as well as the country targeted:

[T]he “tougher” the sanctions, the more they harm people in the retaliating country. Import restrictions trigger shortages and higher prices for consumers, and export restrictions wipe out business for exporters. Sanctions probably inflict as much harm at home as they do on the target country. That is why tough sanctions are seldom adopted, despite continuing objectionable practices in a target country. When such measures are adopted, they lead to losses, black markets, and corruption.

Powell also notes that a retaliatory tariff “tends to inspire nationalism and xenophobia in the target country”; “forces a country to reorient its economy toward alternative suppliers and markets”; “expands the role of government in the target country, much as warfare does”; and “cannot do anything about the worst cases, nations whose economies are already closed.”

Finally, in addition to having wonderful economic benefits, free trade has the effect of increasing the peace. As Stephen Lai argues at the Foundation for Economic Education:

When nations depend on one another for trade, there is little cause for war. As Frederic Bastiat stated, “If goods do not cross frontiers, armies will.”

Rubio supports sugar subsidies because they are goodies for big sugar companies in Florida. His justification for them does not withstand scrutiny.

And, by the way?

Ted Cruz opposes sugar subsidies.

61 Responses to “Marco Rubio Cannot Justify His Support for Sugar Subsidies”

  1. What could be better on a Tuesday than a long, boring post about economics?

    This stuff is really important, but very few people care about it.

    Patterico (eac304)

  2. My guess is Trump’s position, when/if he gets around to formulating one, is or will be identical to Rubio’s.

    Gerald A (5dca03)

  3. this is the same marco sleazio what cast the deciding vote for food stamp’s obamatrade boondoggle

    he’s just too damn sleazy for the love of god someone make him stop

    happyfeet (a037ad)

  4. IMHO, some of this analysis is flat out wrong. The most glaring example being that trade promotes peace. Who was Germany’s #1 trading partner on August 30th, 1939? (the day before WWII kicked off)? France. Second was Britain. Japan’s was the US on Dec 6th, 1941. Russia was Germany’s the day before Barbarosa. There’s also the fact that enriching a likely foe is a bad idea strategically (example, China). Trade can be a very good thing, and usually is, but the peace claim rings utterly false due to there being so many contra examples (for more, look at the trade relationships before WWI, most European wars, etc, etc.).

    As for Rubio’s position on sugar, IMHO the most important question is why he holds this position. The answer, unsurprisingly, is payback to big-money backers. Yep, this is Harry Reid style corruption. Rubio is bought and payed for on this issue, as he is with several others.
    http://www.thenewamerican.com/usnews/politics/item/21949-how-sweet-it-isn-t-rubio-backs-big-sugar-and-his-donors

    Arizona CJ (dabb2a)

  5. Sugar price supports were never about sugar producers. It’s always been about making sugar more expensive per serving than corn sweetener. In other words, the purpose is to make a big market for HFCS for Archer Daniels Midland and other big corn companies.

    If sugar price supports were eliminated, demand for sugar would explode because Coca Cola and Pepsi would switch away from HFCS back to sugar. And demand for HFCS would collapse.

    Steven Den Beste (99cfa1)

  6. Ted Cruz would also revoke the gasohol subsidies/mandates, which is a very courageous position to take in Iowa.

    BobStewartatHome (a52abe)

  7. A number of soft drinks have come out with “throw back” versions made with sugar the last several years.
    I have thought that maybe is it not only providing a product that is popular for some, but also reflective of increased prices for corn products because of shunting it off to ethanol.

    Spangler candy company, maker of “Dum-Dum” suckers, opened a plant in Mexico a few years ago, a big thing in these parts since it is a large employer in the area. it has been said that the product they make in Mexico is for the foreign market, while they make here what they sell in the US.
    I figure that has to do with the difference between sugar prices in the US vs. in Mexico.

    MD in Philly (not in Philly at the moment) (deca84)

  8. Who was Germany’s #1 trading partner on August 30th, 1939? (the day before WWII kicked off)? France.

    Doesn’t this overlook a lot of other aspects to Germany’s pre-WWII situation? After WWI, France encouraged rather hostile policies towards Germany, particularly surrounding its steel and coal production and the territory of this and industrial production. You haven’t shown that trade doesn’t promote peace, which is actually a banal point in my opinion. Of course trade might not make the difference between two very hostile nations. This hostility was reflected in hostility from Germany, then appeasement from France (including the trade you speak of) and then the appeased Germany invaded Poland. Even this is a gross oversimplication. But there’s more to it than trade.

    Dustin (2a8be7)

  9. The World War I example is better than the WWII example. This was a near certainty among every foreign policy type in 1913. We were coming to 100 years since Napoleon and the world would be at peace forever.

    In the 1930s, Germany was giving all sorts of warnings that were ignored because of the reaction to the previous carnage.

    The argument about sugar vs corn syrup is an interesting one. Probably true although there is a lot of pressure against corn syrup on medical terms (diabetes).

    Mike K (90dfdc)

  10. I’m not saying trade ensures peace but interaction and cooperation tend to diminish hostility.

    Patterico (7f05b7)

  11. And in any event that is only one small part of the argument.

    Patterico (7f05b7)

  12. Sugar price supports were never about sugar producers. It’s always been about making sugar more expensive per serving than corn sweetener. In other words, the purpose is to make a big market for HFCS for Archer Daniels Midland and other big corn companies.

    If sugar price supports were eliminated, demand for sugar would explode because Coca Cola and Pepsi would switch away from HFCS back to sugar. And demand for HFCS would collapse.

    I can’t agree, and neither does this Washington Post piece which says not only that sugar price supports are there due to lobbying efforts by sugar producers, but also says the big corn companies are trying to undo them.

    I agree that sugar price supports help HFCS makers, but they don’t seem to agree.

    And the article makes clear that a single family in Florida is a huge part of the sugar lobbying effort.

    Hey, where was Marco Rubio a Senator, again?

    Patterico (7f05b7)

  13. From the piece:

    [A] leading member of the traditionally united community plans to do just that: the Corn Refiners Association is about to invest heavily in an effort to unwind the lucrative breaks afforded to sugar, which are among the most generous in U.S. agriculture.

    The Corn Refiners, representing companies that produce high-fructose corn syrup, just hired 10 outside lobbyists for an aggressive, unorthodox attack on the federal sugar program just a year after a new farm bill was signed into law. Their first target is the agriculture appropriations bill, now moving through a House committee.

    While other crop subsidies have withered, Washington’s taste for sugar has been constant. The sugar program, which has existed in various forms since the 1930s, uses an elaborate system of import quotas, price floors and taxpayer-backed loans to prop up domestic growers, which number fewer than 4,500.

    Sugar’s protected status is largely explained by the sophistication and clout of a small but wealthy interest group that includes beet farmers in the Upper Midwest, cane growers in the South and the politically connected Fanjul family of Florida, who control a substantial part of the world sugar market. That mix of factors has led to an eclectic coalition on sugar’s side, from Sen. Marco Rubio (R-Fla.) to Sen. Al Franken (D-Minn.).

    Rubio is bought and paid for. By the sugar magnates.

    Patterico (7f05b7)

  14. Now that their big lawsuit settled a month ago, I’m not convinced the Corn Refiners are against sugar subsidies as much as they want to continue their crusade against the sugar industry. They both have a lot at stake. I guess we taxpayers and consumers do, too.

    DRJ (15874d)

  15. When seeking to explain any of Rubio’s positions, IMHO the first place to look is the old adage “follow the money”. He absolutely is bought and paid for. Sadly, he’s far from unique in that.

    As an aside on sugar vs. HFCS, I’ve long noticed that sodas, chocolate, etc, in Europe is superior to that in the USA (for example, a can of Coke in Europe tastes different to its US counterpart). The difference? In Europe, they use real sugar, while in the USA they use HFCS. Sugar subsidies (and the resulting high price of sugar) are a big part of this. End result? We get an inferior product but get to pay more for it. Gee thanks, Rubio.

    Arizona CJ (dabb2a)

  16. Yup. Mexican Coke tastes like the good stuff we had as kids. I think 1984 was the year they changed over.

    Patterico (eac304)

  17. If anything you understate your case. Tariffs and subsidies hurt the imposing country more than they hurt the target country. A trade war is like two people facing each other and each stabbing himself in order to spray blood on the other one’s clothes.

    Milhouse (8489b1)

  18. Sugar price supports were never about sugar producers. It’s always been about making sugar more expensive per serving than corn sweetener. In other words, the purpose is to make a big market for HFCS for Archer Daniels Midland and other big corn companies.

    This. ADM has been one of the most corrupting influences on US politics for generations. Did you know that the money found on the Watergate burglars came from an ADM donation? In 1996 I used to say that the two reasons I couldn’t vote for Dole were ADM and ADA.

    Milhouse (8489b1)

  19. I’d cut Rubio a lot more slack if he’d answered the question by saying “Look, I’m a senator from Florida, did you really expect me not to support the program?” Phil Gramm used to say pretty much the same thing about all the pork he used to grab for Texas — “None of this money should be given to anyone, and if you want to end the whole system I’ll vote with you in a heartbeat, but so long as it is being given away my job is to grab as much of it as I can for my constituents.”

    Milhouse (8489b1)

  20. All of these agricultural subsidies are an embarrassment. Less a believer in “free trade” than I once was, but at a loss why we play these games, other than some states demand it (as with Iowa) and some lobbyists push for it. Rubio probably has few contributors who demand this.

    Rubio (who’s dad was a bartender,as you may have heard) is a lousy candidate on so many levels-the smarmy weasel persona, his warmongering insanity, the Gang of 8 deal, his failure to show any sense of fiscal restraint. This is another log on the fire.

    Bugg (fa64ec)

  21. You can get “throw back” Pepsi, Dr. Pepper, and Mountain Dew with sugar, my mother gets them.
    They are typically in old style packaging.

    MD in Philly (not in Philly) (deca84)

  22. Milhouse,

    That makes sense but now that he’s running for President, Rubio should be like Cruz and admit it isn’t be in America’s interest to support any subsidies.

    DRJ (15874d)

  23. Lobbyists are not illegal but, as Jesse Unruh used to say, “If you can’t take their money, and drink their whiskey and f**k their women, and then vote against them in the morning, you don’t belong here.”

    Good old Jesse, the last honest Democrat in California.

    I spent a weekend with him one time, as he was getting old and sick with the prostate cancer that killed him.

    Mike K (90dfdc)

  24. Milhouse,

    That makes sense but now that he’s running for President, Rubio should be like Cruz and admit it isn’t be in America’s interest to support any subsidies.

    “Like.”

    Sorry, too much Facebook lately.

    Patterico (eac304)

  25. Actually Kenneth h dahlberg, was part of a whole other enterprises. The fanjul aka Gomez menas are the beneficiaries of those subsidies, so tied to clinton, that there was a mention in the star report.

    narciso (732bc0)

  26. Ted Cruz opposes sugar subsidies.

    Does he really oppose it or does he oppose it in the “I’ll say one thing during the primary and something else during the general” way that he was hoping to do with his little immigration amendment?

    top116 (d094f8)

  27. I already addressed that argument in another post, which is where you should debate that losing proposition.

    Patterico (7f05b7)

  28. Doc’s article on mass delusions mentioned the importance of repeating a lie. So top116 is just following his script. The truth about what Cruz did is painfully obvious and supports your point, Patterico. By explicitly removing the possibility of illegals gaining citizenship, he removed the whole point of the legislation, and thus killed the bill.

    Regrettably, it is our duty to repeat the truth … endlessly. Or at least as long as we allow trolls like top116 to broadcast their lies.

    I wish I had the ability to make it humorous. Ridicule wrapped in a joke is the best response. But guys like top116 are painfully dull, not to say mind numbing. It is a paradox when contemplating the benefits we hope to receive from the 1st Amendment. Must we be reduced to chanting coded mantras too?

    BobStewartatHome (dfcdb1)

  29. I wonder if Bill’s trying to convince Hillary’s campaign manager to set up a Netflix and Chill with Bill fundraiser.

    NickM (ea8ce1)

  30. The easiest game in the world is “Spot the Conservative”. There is no question that Cruz is the most conservative candidate. However, all that conservatism serves nobody if he can’t get elected. That is why I cannot dismiss Rubio. If he polls better against Hillary than Cruz, and can attract more Hispanic voters than Cruz, then I’ll vote for Rubio. 75% of something is better than 100% of nothing. According to this article, Rubio is the only one who consistently beats Hillary in the polls:

    http://www.nationalreview.com/article/429092/marco-rubio-conservative-polls-beats-hillary-clinton

    Here is another article defending Rubio at nationalreview.com:

    http://www.nationalreview.com/article/429088/marco-rubio-conservative-record

    In presidential elections, the most likeable candidate almost always wins. And by likeable, I don’t mean “like the candidate’s politics”. I mean likeable personality. To me, Christie, Carson, and Rubio are all more likeable than Cruz. Cruz is a brilliant lawyer, and is great in an argument, but I wonder if he doesn’t come across as too pointed to the average American. Most people aren’t steeped in politics the way readers of this blog are. Also, his voice may grate on some. These things should not be important, but they are.

    norcal (dd9747)

  31. 10.I’m not saying trade ensures peace but interaction and cooperation tend to diminish hostility.

    Hostility in the sense you intend is applicable in the realm of personal relationships. WWI and WWII were the result of intentional, carefully thoughtout actions that related to strategic and geopolitical calculations that had nothing to do with personal relationships. It is the ego and hubris of people like Obama, Kerry, and Chamberlain that leads them to believe they can talk deadly adversaries out of their ambitions. Conversely, it is their focus and the clarity of their goals that allow people like Hitler, Stalin, Mao and the German general staff in WWI to encourage their enemies to believe these fictions about personal relationships. At the very least, it delays action that might thwart the accomplishment of the conqueror’s goals. FDR and Churchill got along famously, but Churchill’s role in setting war aims diminished rapidly as the U. S. became the predominant power in the production of war materiel. U. S. goals ran roughshod over Churchill’s better understanding of the realities of European politics. The Iron Curtain was the progeny of FDR’s genius.

    BobStewartatHome (dfcdb1)

  32. sure he can as deep throat said in watergate follow the money $$$$$$$$$$$

    nate (7da039)

  33. Coca Cola and Pepsi would switch away from HFCS back to sugar.

    Within hours.

    Kevin M (25bbee)

  34. HFCS isn’t as good as sugar, but I bet Coca-Cola execs would sell their daughters to the Arabs if they could get a zero-calorie sweetener to taste as good as HFCS.

    Kevin M (25bbee)

  35. In presidential elections, the most likeable candidate almost always wins. And by likeable, I don’t mean “like the candidate’s politics”. I mean likeable personality.

    I wonder if he doesn’t come across as too pointed to the average American. Most people aren’t steeped in politics the way readers of this blog are.

    Bingo. I’m warming up to Cruz in spite of this, though. Not sure Rubio will still come across as likeable once the klieg lights of the media’s full attention start to hit him. Also not sure if he has the stamina or experience to take that sort of pressure with the necessary grace (Reagan) or F-U attitude (Trump) that is required.

    Funny, I’m a poor judge of what women consider attractive in men and I was under the impression that Cruz wasn’t much of a looker, what with that big beak he has. But my Dem-leaning wife (who is sloooowly weaning her way off HRC fandom) said he was somewhat good looking.

    WTP (d553bf)

  36. The three arguments I hear for tariffs are usually these:

    1. We need to protect our domestic producers from competition.

    Response: You can’t give every domestic producer a tariff, because every producer consumes another producer’s production. So you have to give special privileges to some domestic producers at the expense of other producers. The expense is literally an expense, the producers consuming protected production must pay higher prices than they would without the protection, and this works like a tax on everyone concentrated into the pockets of a few favored ones, with a net loss to the economy since people are not getting what they want at the lower price they could be getting, hence they have less money to spend on all goods and services.

    2. Other countries have tariffs on their goods (or subsidies) and so it’s not fair that they have lower prices, so we need tariffs to restore fairness.

    Response: If other countries hurt their own economies by tariffs and subsidies (see response to 1), we can benefit from the cheaper production–again, every producer is a consumer, and if we artificially raise our prices then we hurt our own producers not protected, for a net loss to our own economy. It does not matter why the foreign good is cheaper. Maybe our labor costs are more, maybe their tariffs and subsidies make it artificially cheaper, maybe (in the case of coffee and sugar) countries with tropical climates have an advantage. Doesn’t matter. Tariffs and subsidies definitively hurt ourselves, and perhaps hurt foreigners. This is “fairness” out of Harrison Bergeron.

    3. Some goods are strategic and we shouldn’t depend on our enemies for them, so we should have tariffs and subsidies for these goods.

    Response: It is extremely unlikely that any country will produce nothing of something solely because of foreign competition, and then lose the capability permanently. But in that extremely unlikely event, rather than distort the whole economy, let the government operate that production on a nominal basis, so that we don’t lose the capability entirely and permanently.

    But in wartime you find you frequently have to go without. There are things that are only produced in a few parts of the world. You do without, or use stockpiles accumulated in peacetime, or have substitutes–for example Nazi Germany substituted coal, which they had lots of, for oil which they could not easily get. Wartime is a huge economic distortion anyway, there’s no need to anticipate it with tariffs and subsidies.

    Gabriel Hanna (64d4e1)

  37. G Hanna-

    Would note from post Civil war through the 1920s, the US had high tariffs and with some ups and downs it was still a time of dramatic and argaubly unprecedented economic growth.

    I understand, again, about competitive advantage. But think free traders overstate the case. And simply that does not mean you abandon whole industries only because of cost. people need jobs, we need industry. .And NOBODY is playing by Adam Smith’s rules.Right now NAFTA, GATT et al are akin to the US giving it’s opponent a 2 TD lead in every football game it plays. While growing your economy can better things for everyone, production is a zero sum game; either here or there. And cost should not be the sole factor. Sadly for too long on trade we’ve had IDIOTS of both parties selling us out.

    Bugg (fa64ec)

  38. @Bugg:Would note from post Civil war through the 1920s, the US had high tariffs and with some ups and downs it was still a time of dramatic and argaubly unprecedented economic growth.

    Lot of other things going on, like a huge empty land to expand to and building an industrial base from scratch, which is always high-growth. Can’t know what history would have been without the tariffs.

    And simply that does not mean you abandon whole industries only because of cost.

    No one has ever demonstrated a case where this happened because of trade. The industry gets smaller, yes, when foreign competition is much cheaper, but there are advantages we have just by being on the spot.

    people need jobs, we need industry.

    Propping up industries costs jobs in other industries. You’re falling right into argument 1…

    And NOBODY is playing by Adam Smith’s rules.Right now NAFTA, GATT et al are akin to the US giving it’s opponent a 2 TD lead in every football game it plays.

    …and right onto 2, because you think that

    production is a zero sum game; either here or there.

    Totally false.

    Gabriel Hanna (64d4e1)

  39. oh my goodness Meghan’s coward daddy’s dizzy wench Nicolle is sticking it to Ted Cruz

    “I worked with him on the [2000 Bush/Gore] recount in Florida, and the recount was sort of ground zero for the biggest egos in both parties in the whole country, and he rose to the top in terms of hubris and egomania.”

    more here

    happyfeet (a037ad)

  40. Imagine a proposal for a $10 tax on everyone whose surname begins with A-Y, with the proceeds split among anyone whose surname begins with Z. It wouldn’t be worth anyone’s time or money to lobby or campaign against it. The time it would take, or the cost of hiring a professional lobbyist to do it, is worth more than any one person has at stake. But it would definitely be in the interest of all those Zells and Zimmermans and Zuckers to lobby for it, either in person or by clubbing together to hire a lobbyist. So the odds are very good that it would pass. The congressmen voting for it might genuinely believe it to be just and beneficial, because the Zs have carefully explained to them whatever cockamamie reasons they’ve managed to come up with to support it while nobody has told them about the reasons to oppose it.

    That’s what 90% of government spending (on all levels) is about, and it’s what protectionism is about. Except that in the case of protectionism the majority of the loss to the A-Y taxpayers doesn’t even go to the Zs; some of it pays for bureucrats to administer the program, but most of it just disappears and nobody benefits from it. It’s pure waste.

    Milhouse (8489b1)

  41. I don’t see how hubris or egomania are involved in preventing an election from being stolen. Nor am I sure they’re necessarily bad qualities in a presidential candidate. But if she thinks they are then she’d better not be supporting Trump.

    Milhouse (8489b1)

  42. And NOBODY is playing by Adam Smith’s rules.

    It doesn’t matter. It’s like saying that it’s all very well to claim that one should play the stockmarket by analyzing the various companies’ fundamentals, but nobody else is playing by those rules, everyone else is just picking stocks by rolling dice or casting horoscopes, so we should do that too. Adam Smith’s rules are how you make a country wealthy. If we’re the only ones playing by those rules then so much the better for us. We should make a killing at everyone else’s expense.

    Milhouse (8489b1)

  43. Smith wasn’t arguing for an international conference at which everyone agrees to free trade. He was arguing that the UK should have free trade regardless of what anyone else was doing, because that was in its interest. If everyone else is jumping off a bridge that doesn’t mean you should.

    As I wrote above, a trade war is like a competition to see how deeply each contestant can stab himself in order to spray blood on the other one’s clothes. Even if everyone else is bleeding all over you and your clothes are ruined, that’s no reason to join in their game. You’re better off bying new clothes and keeping your blood inside you where it belogns.

    Milhouse (8489b1)

  44. @Milhouse:a trade war is like a competition to see how deeply each contestant can stab himself in order to spray blood on the other one’s clothes.

    People who argue for protection should demand that the Constitution be amended so that Minnesota can slap tariffs on California’s fruit, and California can slap tariffs on Minnesota’s Post-It notes and toner cartridges. Minnesotans would be unable to get produce in the winter, and Californians could pay far more for office supplies. Everybody wins!

    Gabriel Hanna (64d4e1)

  45. yet another example of inconsistency, now christie is attacking rubio for some reason,

    http://www.breitbart.com/big-government/2015/12/30/exclusive-rubio-defends-nsa-spying-netanyahu-private-condemns-public/

    narciso (732bc0)

  46. I would second Milhouse & GH’s points. In addition ” people need jobs, we need industry. “, jobs don’t grow on trees. You have a responsibility to make yourself useful to society. One of the problems with government in regard to jobs is that it makes working for oneself rather burdensome. Who wants to deal with all those legal headaches? It is in your best interest to hire someone (or work for someone) who knows the ins-and-outs of such. Then the headaches imposed by government of hiring other people, etc. etc. etc. The bureaucratic BS does far more to depress job creation than any impact trade could possibly have, if you consider that trade is $500 billion in a $17 trillion economy. But as I agree with M and GH, even going there is a fallacy itself.

    WTP (60406d)

  47. @WTP: It is in your best interest to hire someone (or work for someone) who knows the ins-and-outs of such.

    Not to mention that regulatory compliance doesn’t scale. If GM needs 50 full time staff to cope with a regulation, your lemonade stand might require 0.25 FTE, but the cost of hiring it might be more than your revenue. So regulations benefit big players at the expense of small ones.

    Gabriel Hanna (64d4e1)

  48. Ironic that when socialist loons like Obama, Hillary! and Sanders propose Utopian commie nonsense, we rightfully knock it.But throw up the utopia of “free trade” and we have for too long tolerated on the right the that free trade and it’s real societal costs are suddenly of no interest to too many here. It’s the same thing. Would readily acknowledge in a perfect world complete free trade would be wonderful. This is not a perfect world. And you don’t show up at a gunfight with a butterknife.

    Bugg (fa64ec)

  49. Bugg, free trade is not “tolerated” on the right, it’s the core cause of the right. The liberal movement (now known as “conservative”, since the commies stole our name just as they steal everything else) arose out of the Anti Corn Law League. There is no room in our tent for protectionists. Free trade is not only morally right, it’s also the only rational policy, which is why it’s the one thing that all economists, left and right, agree on.

    There is no gunfight, so it doesn’t matter what you show up with. Protection is a stupid and destructive policy regardless of what anyone else is doing.

    Milhouse (8489b1)

  50. Free trade is liberalism in the true, classical meaning of the word. The freedom to do business with whomever you wish without government interference. It is an anti-tax position.

    Though doesn’t surprise me. Had this same argument on Ace of a Spades a couple weeks ago regarding H1B visas when I pointed out that Protectionism is a favorite of the unions as well. Oh was I soundly denounced and mocked by several of the “regulars”. No rational thought behind it, just reactionary knee-jerk thinking one usually gets from the left. Not saying Bugg is such, just venting a little.

    WTP (094b61)

  51. regardless of what anyone else is doing”.So, if free trade involves dumping goods on the US, or US patents being ignored, or predatory pricing of production costs to kill US industry, it is …okay?Let me stress-would prefer the world worked on Smith’s theorems. And to a point on the margin, it does and should. But reality is it doesn’t carry the day, national concerns do.

    Bugg (fa64ec)

  52. So, if free trade involves dumping goods on the US, or US patents being ignored, or predatory pricing of production costs to kill US industry, it is …okay?

    Absolutely. “Dumping goods” is a peculiar way of saying “giving us bargains”. Every time a store has a sale it’s “dumping goods”; I’ve never heard anyone complain about it. So why should we complain if some foreign producer has a sale on steel, or care why they’re doing it? Patent infringement is be a legitimate reason to ban the sale of infringing products, regardless of where they’re made; thus it’s not a trade issue. And there’s no such thing as “predatory pricing”. There never has been and there never will be. It’s a canard made up by one “progressive” journaist to support breaking up Standard Oil.

    Milhouse (8489b1)

  53. @Milhouse:Every time a store has a sale it’s “dumping goods”; I’ve never heard anyone complain about it.

    I have. Wisconsin has the Unfair Sales Act that sets a minimum markup on all goods sold in the state. It’s an enormous benefit for stores in neighboring states.

    Gabriel Hanna (64d4e1)

  54. @Milhouse:predatory pricing

    The legend is that an evil company with deep pockets sells at a loss in an area, which they can afford to do for a while, until all the competitors are driven out of that area, and then the evil company jacks up to monopoly prices.

    a) No one has ever cited a case of this happening.

    b) It is never explained how, once the prices are jacked up, the evil company prevents any new competition in the area. I imagine they have Men-In-Black neuralyzers.

    Gabriel Hanna (64d4e1)

  55. It is possible the corn syrup people don’t want the sugar price supports, but they also don’t want sugar imported. Can you check into what exactly they are lobbying for??

    Sammy Finkelman (67f658)

  56. 40. Milhouse (8489b1) — 12/30/2015 @ 2:19 pm

    Imagine a proposal for a $10 tax on everyone whose surname begins with A-Y, with the proceeds split among anyone whose surname begins with Z. It wouldn’t be worth anyone’s time or money to lobby or campaign against it. The time it would take, or the cost of hiring a professional lobbyist to do it, is worth more than any one person has at stake.

    And it would also be cheaper and simpler to just change your last name.

    The congressmen voting for it might genuinely believe it to be just and beneficial, because the Zs have carefully explained to them whatever cockamamie reasons they’ve managed to come up with to support it

    To help compensate people to the effects of rampant alphabetism, of course. Unconscious, maybe, but nevertheless you can clearly show disparate impact.

    http://www.buzzfeed.com/christianzamora/ways-your-end-of-the-alphabet-name-has-ruined-your-chance

    11. End of the alphabet last names are less likely to receive tenure.

    12. They’re less likely to win the Clark Medal or Nobel Prize.

    13. AND THEY’RE LESS LIKELY TO LEAD THE UNITED STATES OF AMERICA.

    Of the 44 U.S. presidents to date, 31 had surnames in the first half of the alphabet.

    The biggest lobbying against it would be mainly from people who wanted all letters from V – or maybe T, or Q, or even K or L included.

    A good lobbyist would make maybe 75-25 the dividing point between the losers and winners.

    And they would only ask Congress to authorize a class action lawsuit against – let’s say, corporations above a certain revenue total, and make the lawsuit easy to win.

    That way, Congress would not have to appropriate any money and it would be left up to judges to actually decide this, and only if they won.

    Maybe incoroporate it in a bigger bill authorizing other kinds of lawsuits, keeping in mind, though, the need to prevent the percentage of winners, or at least certain winners, from getting too high.

    I think it might take close to 20 years of lobbying to get this bill passed. A huge investment – tax deductible of course – might be nneeded to get this started , but perhaps the organizer might approach billionaires whose names begin near the end of the alphabet to get this started.

    Mark Zuckerberg, perhaps, could be persuaded to lay out the seed money.

    Sammy Finkelman (67f658)

  57. Interesting point: The name Trump comes later in the alphabet than almost any president, even Truman (although the tie is settled only in the 5th letter of the name.)

    He is beaten only by George Washington, and Woodrow Wilson. There are some candidates and Vice Presidents, too, who come later in alphabetical order.

    If Donald Trump realized that he beat Truman alphabetically he might make this into a big selling point.

    Sammy Finkelman (67f658)

  58. In Australia there used to be a genuine bias in elections towards candidates with names earlier in the alphabet — candidates used to be listed on the ballot in alphabetical order, and about 4% of voters are what is known as “donkey voters”, who just number the ballot in order from top to bottom without paying any attention to the names. So whoever was on top would get an extra 4% in the primary vote, and those votes would eventually end up with whichever major party candidate was closer to the beginning of the alphabet. In the mid-’70s a new party started up called the Australian Democrats, and it deliberately chose candidates whose names were early in the alphabet, to take advantage of call attention to this phenomenon. So in 1984 the system was changed, and now ballot order is determined by lot.

    Milhouse (8489b1)

  59. If Donald Trump realized that he beat Truman alphabetically he might make this into a big selling point.

    hah sammy made a funnie

    this might could be an interesting year

    happyfeet (831175)

  60. A good number of those alphabet reasons in Sammy’s link apply to us tall people as well. Often we lined up short to tall, partly because we were seated that way in class. I’m doubly disadvantaged. Where do I apply for to be compensated?

    WTP (094b61)


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