"The thing about tariffs is - they do the trick" : Keynes, April 17, 1933

    By Flavius on Sun, 01/30/2011 - 7:15pm |

    And : "Free trade agreements are licenses to engage in what used to be called "Labor Racketeering" Give the 6 month notice. Likewise notify the wto that we are out the door " Jolly Roger, in a comment to SleepinJeezus' blog today, "The failure of a thirty year experiment."

    It's intuitively convincing, but in my particular case, FWIW supported by observations from  the 20 years of my career which I spent in international business, usually living abroad, that John Maynard and Jolly Roger, are right.

    In Keynes' case the quote was not a casual comment, assuming he ever made one,  but, in testimony to a Depression Parliament, his formal renunciation of a position he'd brilliantly defended for 30 years. Then followed by his Finlay Lecture in Dublin.

    Even if there is a respectable argument that free trade might benefit the world as a whole, that argument contains an unspoken qualilfier "of course things will be worse for the US, sorry about that, but it'll be great for Bangalore." 

    Uniquely, this country's spread over an entire continent and importantly over all the climate zones that matter (Canada's big too, but doesn't grow avacados), which means that if the rest of the Earth ceased trading with us  tomorrow we could maintain our standard of living.  And of course, that is not in prospect. Behind our tariff wall we could consider exceptions if we found we could not exist without, say, coconuts.

    Future economically literate historians will shake their heads in wonderment that we chose to deprive ourselves of this privileged position by requiring a pattern maker in Utica  to compete with the output of the most recent reservoir of starving workers located by the Free Market .

    Madness. 

    And spare me, Tom Friedman, the illusory prospect we  can live by wits alone. Ultimately the ideas come from where things are made. It'll take a while but the rest of the world will have no more need for our management consultants than it does now for our call center operators.

    The thing about tariffs is-they do the trick.

    Comments

    Then as innovative hobo's, we need to go into self preservation mode 

    Google

    Maynard Keynes: an economist's biography By Donald Edward Moggridge

    Page 513

    Flavious I think your link at the top is not working


    by Resistance on Sun, 01/30/2011 - 8:28pm

    Thanks for the comment on  the link - but I'm puzzled because I didn't actually include a link.

    I took your comment to perhaps apply to my citing Jolly Roger so I edited my blog to identify where you can find his position on tariffs.


    by Flavius on Mon, 01/31/2011 - 5:28am

    Flavious, did you reedit this blog, after I gave the book title. Because I can no longer find the original abstract?

    If you did You must have had some key words I cut and pasted onto google search


    by Resistance on Wed, 02/02/2011 - 6:35am

    On the sole issue of maximizing value, free trade works. And while our consumers benefit from cheaper tax preparers, the rising middle class in Bangalore buys tickets to our movies, More productivity all around, it's all good...except given the complete and total triumph of the Plutocracy, all the benefits of free trade go only to widen the already obscene and dangerous gulf between the rich & the rest.

    by jollyroger on Mon, 01/31/2011 - 1:12am

     

    all the benefits of free trade go only to widen the already obscene and dangerous gulf between the rich & the rest. 
    Yup.. And perhaps I should leave it at that. But I also wonder about:More productivity all around, it's all good.

    First let's hear from those two sages.

     Keynes: : "most  .....production..can be performed in most countries with almost equal efficiency.....let goods be homespun"

    Me: there's no "benefit of free trade"  and  " more productivity"   when offshoring to take  advantage of Xeniastan's lower labor rates(-until the revolution  morphs it into  the People's Republic of Xeniastan and it starts importing yellow cake for its w.m.d's).. .Resources are consumed  in initial set up ,  training and subsequent learning curve-then the contra- productivity need for continuing  transportation. .

    But even if we assume the magical case of equal productivity in the People's Republic ,from a pie remaining  the same size , a bigger slice is  consumed there..

    I'm not suggesting we should try to grow coconuts . Just continue to do those things where there's no productivity gain from offshoring.. Which is most things.

    Let goods be homespun

     

     

     

     

     


    by Flavius on Mon, 01/31/2011 - 7:53am

    Common sense should tell us Homespun is a better model.

    Even as the world is searching for ways to get food to market, The population is finding out the local market should have been supported.

    You want clothes, well we'll order it. You want shoes we'll order it. You want food we'll have to ship it in.

    What happens if there is a disruption. No shoes, no clothes,  no food.  

    I suppose the government has a contingency plan? 

    Innovative hobos will survive?


    by Resistance on Mon, 01/31/2011 - 12:48pm

    Thanks. Going back to your earlier comment , can I google just page 513? And with both comments should I take innovative hobos literally- the term makes sense that way- or is it a reference. I see obey used it a couple of days ago in a comment  re the SOTU.  


    by Flavius on Mon, 01/31/2011 - 3:01pm

    Obey as far as I know coined the term, and it was good one


    by Resistance on Mon, 01/31/2011 - 3:32pm

    Here is the originating comment, in context.


    by Verified Atheist on Mon, 01/31/2011 - 3:37pm

    No, I believe I scrolled to page 513 after I googled the lnk

    When I put the link on this post, it extended across the page to latest comments.


    by Resistance on Wed, 02/02/2011 - 1:30am

    Keynes made his remarks when the U.S. debt was not financed by a whole array of foreign investors who would purée our capital if we closed our market to them. 

    A price control scheme would certainly encourage local production but would also make everything more expensive very quickly. It would piss off a lot less people if we developed more demand for what is made here.

    If we cannot compete in a certain market, investment in unmet demand is the only way to rollover available cash to new enterprises.


    by moat on Mon, 01/31/2011 - 7:23pm

    Keynes made his remarks when the U.S. debt was not financed by a whole array of foreign investors who would purée our capital if we closed our market to them. 

    Very likely you're right altho very likely  we could locate experts anxious to vigorously defend the opposing position. .

    My  aim was/is  to suggest what we ought to  do rather than what we can.  Seemed useful given that  it's only nine years since Greenspan vigorously defended  the proposed  Bush tax cuts to forestall   the impending  market distortion when the Treasury parked   the dread fiscal  surplus  in corporate securities .

    Whew , that was a narrow escape!.

     


    by Flavius on Mon, 01/31/2011 - 8:29pm

    A close shave, indeed. Imagine the chaos on our hands if the Feds had all that money now. Things may be rough but we have been spared that calamity.

    Your reminder of Greenspan's logic suggests to me that the monetary wrangling going on now is the equivalent of employing tariffs to level prices.

     


    by moat on Mon, 01/31/2011 - 9:28pm

    Great case for tariffs.  Here is something to add to it in case you don't already have it.

    Alexander Hamilton in his Report on Manufactures argued that the U.S. could not become fully independent until it was self-sufficient in all necessary economic products.[1]

    Hamilton reasoned that to secure American independence, the United States needed to have a sound policy of encouraging the growth of manufacturing and secure its future as a permanent feature of the economic system of the nation.[2]

    Are current free trade ideas and policies effectively undeclaring our independence?

     

    [1] http://en.wikipedia.org/wiki/American_School_(economics)

    [2] http://en.wikipedia.org/wiki/Report_on_Manufactures


    by EmmaZahn on Tue, 02/01/2011 - 10:55am

    Are current free trade ideas and policies effectively undeclaring our independence?

    I think they are ... pretty much by definition. Isn't the whole idea to foster economic interdependence (for better or worse)?

    But the "independence" aspect might be sort of missing the forest for the trees (it should play really well in several right-leaning crowds, however ... so as rhetoric goes, it's a great arrow to have in the quiver! Thanks). Fact is, what we have been doing clearly isn't working. To me, that renders all the ancillary arguments for or against the ideas and policies kind of moot. If it obviously isn't working, why are we even considering sticking with it - let alone expanding it?

    And though I know it doesn't really pertain to your point, it is worth noting that "free trade" and "free market" are not synonymous as far as ideas go.

     


    by kgb999 on Tue, 02/01/2011 - 10:59pm

    Mu barak Obama needs to read this. Weren’t all of these issues raised in the  SOTU? 

    Where is Barack Obama, on this issue?  

    Lets form an alliance with the Tea Party, on this issue.

    It would be a win/win for all.

    We’d probably break the back of the Clinton Democrats  

    Excerpts from The Report on Manufactures

     “Hamilton reasoned that bounties (subsidies) to industry, which would rely on funds raised by moderate tariffs, would be the best means of growing manufacturing without decreasing supply or increasing prices of goods. Such encouragement through direct support would make American enterprise competitive and independent along with the nation as a whole. In part subsidies would be used to: 

    Was this in the …… SOTU?…..

    encourage the spirit of enterprise, innovation, and invention within the nation 

    Was this in the …… SOTU?….

    support the building of roads and canals to encourage internal trade; ……… High speed rail, the internet  

    grow the infant United States into a manufacturing power independent of control by foreign powers through reliance on their goods for domestic and especially defense supplies.

    The tariff

    raise revenue to pay the expenses of government; ………

    Was this in the …… SOTU?………No cuts in S.S.  Financing for medicare  

    "These policies would not only promote the growth of manufacturing but provide diversified employment opportunities and promote immigration into the young United States. They would also expand the applications

    of technology and science for all quarters of the economy, including agriculture." …… 

    Weren’t all of these issues raised in the  SOTU?  Will this not solve our deficit problem too?

    Hamilton said it would

     


    by Resistance on Wed, 02/02/2011 - 1:32am

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