A Geek With Guns

Chronicling the depravities of the State.

Archive for the ‘Mises Does Not Approve’ tag

Buying Less for More

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The Trump administration has decided to devalue your dollars even more by placing additional tariffs on Chinese goods:

The US is imposing new tariffs on $200bn (£150bn) of Chinese goods as it escalates its trade war with Beijing.

These will apply to almost 6,000 items, marking the biggest round of US tariffs so far.

Handbags, rice and textiles will be included, but some items expected to be targeted such as smart watches and high chairs have been excluded.

The Chinese commerce ministry said it had no choice but to retaliate but is yet to detail what action it will take.

The US taxes will take effect from 24 September, starting at 10% and increasing to 25% from the start of next year unless the two countries agree a deal.

The upside of trade wars is that they don’t start out as shooting wars. The downside of trade wars is that they’re a war on consumers. Every tariff means that consumers are stuck paying more for less. A bag of rice that costs $5.00 can suddenly cost $6.25 for no reason other than where it was produced. A cell phone that costs $500 can suddenly cost $625. What makes tariffs a real gut punch though is that since they’re usually calculated by the price of a good, they increase as inflation causes prices to increase. If that $500 cell pone begins to cost $600 due to inflation, the cost with the tariff tax included will be $750.

The only winner in a trade war is the government because it pockets the tariffs.

Written by Christopher Burg

September 18th, 2018 at 10:00 am

Government Creates the Problems It Solves

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Here’s a familiar story. A government body implements a new policy that causes major hardships for a large number of people then swoops in to “fix” the problem. That’s what’s happening here:

The Trump administration plans to offer up to $12 billion in aid to farmers hit by tariffs on their goods, an emergency bailout intended to ease the pain caused by Trump’s escalating trade war in key electoral states, Secretary of Agriculture Sonny Perdue told reporters Tuesday.

First the government created the problem by implementing tariffs then it offered to redistribute some wealth to those hurt by the tariffs. Of course the redistributed wealth has to come from somewhere, which means another problem will be created by the government that it will then claim to solve.

Written by Christopher Burg

July 25th, 2018 at 10:00 am

Domestic Tariffs

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Tariffs are in the news after Trump decided that the playing field between the bureaucratically choked United States and the rest of the world needed leveling. But what about domestic tariffs? The states that make up the United States aren’t supposed to implement tariffs against each other but thanks to the Supreme Court they now can:

If an internet retailer in Pasadena, CA sells a good or service to a resident of Washington, D.C., simple logic dictates that the transaction not be sales-taxed in Washington, D.C. It shouldn’t because the business isn’t in Washington. It’s on the other side of the country, and there the business will pay Pasadena taxes. So when judges and politicians talk about the importance of levying sales taxes on outside vendors, what they’re really saying is that they want government to dip its hands into our pockets twice.

Stating the obvious, the internet sales tax isn’t about leveling the tax playing field as much as it’s yet another grab of the economy by politicians. “Grab of the economy” is an apt phrase simply because politicians don’t tax away our dollars to stare lovingly at them; rather they take our dollars for what they can be exchanged for. The more tax dollars that politicians collect, the greater their ability to be size buyers of cars, trucks, land, buildings, and most economy-suffocating of all, human labor. Having decided they’re not collecting enough of what we earn, and plainly averse to competing with other locales when it comes to keeping taxes down, gluttonous local governments naturally love the idea of using internet commerce as another way to take.

About all this, let’s make no mistake about what these tax-thirsty governments are doing. Much like businesses that seek protection from competition, they’re seeking protection from lower-tax cities, states and countries. To be very clear, they’re seeking tariff-protection. Let’s call them domestic protectionists.

The reason the issue of online sales taxes arose is because politicians in tax heavy states were losing out to states with less burdensome taxes. Online retailers can operate anywhere in the world, which means many operate in states with relatively low sales tax. For example, an online retailer could headquarter in Montana, which has no sales tax and sell to somebody living in Minnesota, which has an absurdly high 6.875 percent sales tax. The person in Minnesota will be encouraged to purchase from the online retailer over a local sellers because the local seller will charge an addition 6.875 percent on top of the cost of the good or service. This arrangement upsets the politicians in Minnesota because they lose the opportunity to pocket some of the buyer’s money. If Minnesota can force the retailer in Montana to collect sales tax for it, it wins (and, of course, retailers throughout the country lose because they have to become experts on Minnesota sales tax laws along with the sales tax laws of their own state).

A lot of people believe that arrangement sounds fair (funny enough, they’re often the same people who are currently bitching about federal tariffs). But the alternative, states with high sales taxes having to lower their taxes in order to compete with states with low sales taxes, would be far fairer to consumers, especially poorer consumers to whom an additional 6.875 percent isn’t chump change.

Written by Christopher Burg

July 24th, 2018 at 11:00 am

How Tariffs Work

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People who subscribe to mercantilism tend to favor internal trading over external trading. If external trading is to occur, they prefer that their nation only export goods while the other nations of the world only import goods. But that ideal is difficult to realize because people in one nation are often interested in the goods and services provided by people of other nations and that interest leads to mutual trade. How can a mercantilist thwart this mutual trade? By imposing artificial barriers on international economic activity. While there are many such barriers that can be raised, the most popular barrier today is the tariff. The Mercantilists imagine that implementing tariffs means that its people will develop a preference for domestic products over foreign products while foreigners will still prefer importing the goods of their nation. Nobody likes an unfair deal so in actuality all that happens is that the nation implementing the tariffs is bypassed:

The European Union and Japan have signed one of the world’s biggest free trade deals, covering nearly a third of the world’s GDP and 600 million people.

One of the biggest EU exports to Japan is dairy goods, while cars are one of Japan’s biggest exports.

The move contrasts sharply with actions by the US Trump administration, which has introduced steep import tariffs.

If the United States won’t play fair, then it won’t get to play at all.

The current administration is playing a stupid game. It’s trying to develop domestic economic activity by artificially raising the price of imported goods even though the United States doesn’t have the experience or capacity to manufacture many imported goods on a scale that can satisfy demands. The result of this game is that consumers in the United States will be forced to pay more for their goods while the rest of the world bypasses the United States.

Written by Christopher Burg

July 17th, 2018 at 10:00 am

Unsurprising Results

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What happens when your government decides to place additions taxes in the form of tariffs on imported materials that your business relies on? You face the possibility of going out of business:

Steel tariffs could force the nation’s largest nail manufacturer to close or move to Mexico.

The Mid-Continent Nail plant in Poplar Bluff, Missouri, laid off 60 of its 500 workers last week because of increased steel costs. The company blames the 25% tariff on imported steel. Orders for nails plunged 50% after the company raised its prices to deal with higher steel costs.

The company is in danger of shutting production by Labor Day unless the Commerce Department grants it an exclusion from paying the tariffs, company spokesman James Glassman told CNN’s Poppy Harlow.

Shocking, I know.

This isn’t the first business to announced difficulties due to Trump’s new tariffs. Harley Davidson announced that it will move at least some production outside of the United States to get around the new tariffs. More dominoes are likely to fall as well.

“But, Chris, why don’t these unpatriotic companies buy American steel instead,” you ask? Because America doesn’t produce a whole lot of steel and what steel it does produce costs more than imported steel. “Well these tariffs will cause domestic steel production to increase, right?” Not so much. Profit is only one reason for the lack of domestic production. There is also a terrible amount of red tape strangling steel production. The environmental regulations on mining raw materials are many and when those regulations are finally dealt with the refineries get to deal with a bunch of additional environmental regulations. Labor is another factor. American labor isn’t cheap, especially when employers are required to pay Social Security, Medicare, disability, and other mandatory benefits for each employee they hire. Then there is the simple fact that a lot of Americans don’t want a job working in mines or refining metals.

Domestic manufacturers import foreign steel because it’s cheaper but foreign steel is cheaper due to many factors. While the recently implemented tariffs are likely to encourage some increase in domestic steel production, the additional steel probably won’t be enough to satisfy domestic needs and will almost certainly be more expensive than foreign steel, which means domestic manufacturers will still have to move outside of the country if they want to keep their prices at a level to which consumers have become accustomed.

Written by Christopher Burg

June 27th, 2018 at 10:00 am

With Friends Like the United States, Who Needs Enemies

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A lot of people refer to Trump as a fascist. While he (along with almost every other politician) certainly displays a lot of fascist tendencies, I think it would be more accurate, at least economically, to refer to him as a mercantilist. His policies have been aimed at discouraging importing goods in favor of internal trade. While many people still believe that mercantilism is a sound economic policy, it wrecks havoc on international relations:

The US is to impose tariffs on steel and aluminium imports from key allies in Europe and North America.

The US said a 25% tax on steel and 10% tax on aluminium from the EU, Mexico and Canada will start at midnight.

The move immediately triggered vows of retaliation from Mexico, Canada and the EU, which called the tariffs “protectionism, pure and simple”.

With friends like the United States, who needs enemies?

Mercantilism falls apart because it discourages international trade. First one nation implements a policy that harms another nation. Then that nation implements its own policy in retaliation to harm the first nation. This cycle can continue until trade between the two nations halts entirely.

I know a lot of people believe that this will bring prosperity to the United States. However, if you believe that policies like this will bring back the good old days of the 1950s where a single factory worker could buy a house, truck, and boat, you’re sorely mistaken. Manufacturing is highly automated, which reduces the number of available factory jobs. Moreover, the regulatory red tape makes many economic activities such as resource extraction, resource refinement, and manufacturing cost prohibitive. In addition to all of that, the United States has been out of the game for so long that it lacks the experience and knowledge necessary to mass produce many desired consumer goods. Overcoming all of those issues will take a significant amount of time and even if they are overcome, the available market will be tiny because foreign nations will have already implemented retaliatory policies prohibiting trade with the United States (not having the biggest market in the world, China, available would itself strongly discourage manufacturing goods in the United States).

Written by Christopher Burg

June 1st, 2018 at 10:00 am

It Doesn’t Matter What the Majority Says

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Every political argument seems to eventually boils down to polls. It makes sense since polls indicate what the majority wants and the majority should be listened to, right? If, for example, the majority of Minnesotans support stricter gun laws, then the politicians should respect their desires, right?

A majority of Minnesotans support stricter gun laws in the United States, including wide backing for a ban on military-style rifles and for raising the age for gun purchases from 18 to 21, a new Star Tribune Minnesota Poll has found.

This is usually the point where I would point out the way polls are manipulated to get desired results. For example, if you poll urban individuals about gun control, you’re likely to get a different result than if you poll rural individuals. Likewise, if I’m a publication with a predominantly Democratic readership, the results of my poll about gun control laws are going to differ from the poll results achieved by a publication with a predominantly Republican readership.

Instead of focusing on why polls are irrelevant due to ease of manipulation, I’m going to focus on an even lower level assumption made by people who cite polls: that a majority is right. Take it away, Mises!

Stating that the majority supports a law is irrelevant because there is no inherent wisdom in the majority. For example, if a majority favored a law that required the first born son of every family to be sacrificed to Beelzebub, would you agree that a law requiring that be passed? I’m guessing most people wouldn’t because it’s an awful idea. I’m also guessing that some proponent of democracy will dismiss my example and by extent my argument as being ridiculous, which it is because I chosen it specifically to illustrate my point in the most hyperbolic manner possible. To appease those individuals though, I will present a more realistic example.

Let’s say a few individuals own businesses in a poor neighborhood. The majority of people living in the town decide that they want to revitalize that neighborhood. To accomplish this they demand that the city government pass a new property tax to raise funds for revitalization efforts. Interestingly enough, the demanded property tax is high enough that it would force the poor businesses in that neighborhood to close shop. Should the will of the majority be followed even though it’s obvious that their idea of revitalizing the neighborhood is to use the city’s tax code to run poor individuals out of town?

The premise of democracy, that the will of a majority should become the policy of the State, is flawed at its very foundation because it necessarily assumes that what a majority wants is correct. This is why I dismiss arguments based on the will of a majority outright. Saying that a majority supports something is no different than saying that you personally support something. Saying that you or a majority support something isn’t an argument in support of that thing, it’s merely an expression of personal preference. And, unfortunately for you, I don’t give a shit about your personal preference.

You Get a Job! You Get a Job! You Get a Job!

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Bernie Sanders seems to think that he’s still relevant even though his party during the last presidential nomination process actively conspired against (which isn’t to say he would have gotten the nomination if his party didn’t conspire against him). His latest announcement is a plan to guarantee every American a job:

Sen. Bernie Sanders (I-Vt.) will announce a plan for the federal government to guarantee a job paying $15 an hour and health-care benefits to every American worker “who wants or needs one,” embracing the kind of large-scale government works project that Democrats have shied away from in recent decades.

Somebody has to build and staff the gulags! Of course this is Bernie Sanders we’re talking about so…

A representative from Sanders’s office said they had not yet done a cost estimate for the plan or decided how it would be funded, saying they were still crafting the proposal.

Why am I not surprised?

Make-work programs sound like a good idea on paper… to the economically illiterate. The problem is that they operate outside of the market, which means there is no feedback mechanism that indicates whether the work is in demand or not. Instead they are decreed by whatever politicians crafted the plan. That usually translates into those politicians’ cronies receiving labor subsidized by tax payers in order to cut their costs. I wouldn’t be surprised if Sanders’ plan resulted in Lockheed’s next manufacturing plant being built by government subsidized labor. Sure, that may not be his intention but once the program exists his intentions will be irrelevant, only the intentions of those who control the program will matter.

Written by Christopher Burg

April 26th, 2018 at 10:30 am

Consumers Always Lose Trade Wars

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Trade relations between the United States and China had been relatively smooth in recent years. Had is the keyword there. Trump decided to provide some protection to his cronies by implementing a series of tariffs to artificially raise the price of imported goods. He sold these tariffs as job creators. Not surprisingly, China retaliated with its own tariffs. Now Trump is planning to retaliate against China’s retaliation with even more tariffs:

US President Donald Trump has instructed officials to consider a further $100bn (£71.3bn) of tariffs against China, in an escalation of a tense trade stand-off.

These would be in addition to the $50bn worth of US tariffs already proposed on hundreds of Chinese imports.

China’s Ministry of Commerce responded, saying China would “not hesitate to pay any price” to defend its interests.

Tit-for-tat trade moves have unsettled global markets in recent weeks.

Governments and their cronies are the only winners in a trade war. Tariff profits go into government coffers while domestic cronies can increase their prices since goods from their imported competitors are now artificially higher. Meanwhile, consumers are forced to pay artificially higher prices for goods. If, for example, a $100 tariff is put on all imported cell phones, the government pockets an extra $100 and you pay $600 for a cell phone that used to only cost $500.

As this trade war wages, consumers are going to get raked over the coals. The only upside is that in the end this will screw over the United States government as well since it will lose tariff profits when imported goods become so expensive that consumption drops significantly.

Written by Christopher Burg

April 6th, 2018 at 10:30 am

Technically a Gulag Is a Retirement Plan

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A writer for Pravda Salon was giddy when he learned that some millennials aren’t bothering to save for retirement because they’re expecting a great socialist revolution within their lifetime:

Wood, 32, a political consultant, told me via Twitter that she felt similarly. “I don’t think the world can sustain capitalism for another decade,” she explained. “It’s socialism or bust. We will literally start having resource wars that will kill us all if we don’t accept that the free market will absolutely destroy us within our lifetime [if] we don’t start fighting its hegemony,” she added.

Technically spending your golden years in a gulag is a retirement plan.

I don’t think these millennials are complete fools but I do believe that they have been suckered by socialist propaganda. It’s no secret that the United States is becoming more of a shithole every year. Unemployment is at record lows… but more and more employment is becoming part time. Costs of healthcare and college are through the roof and the only reason people haven’t been forced to abandon hospitals and colleges is because they’ve taken on tons of debt. Speaking of debt, the national debt continues to rise at an astronomical rate. While the United States may not have prison camps per se, a massive percentage of the population is currently being held behind bars and many of those prisoners are stuck working for Federal Prison Industries. It’s also no coincidence that this degradation coincides with the United States abandoning capitalism for socialism, which is why socialists have to keep desperately parroting the claim that the United States is a capitalist nation and that all of its ills are being caused by capitalism.

A nation that operated under capitalism wouldn’t have Social Security, Medicare, Medicaid, a Federal Deposit Insurance Corporation, or any other government provided welfare program. In order to provide all of those programs a government must necessarily nationalize a portion of businesses. Of course, politicians in the United States don’t use the term nationalization. Instead they call their seizing a portion of a company’s wealth taxation. Whether one calls it nationalization or taxation the result is the same, the government claims a portion of every business in the country. Every business owner works first for the State and secondly for themselves.

Written by Christopher Burg

March 20th, 2018 at 11:00 am