Opinion from a Libertarian ViewPoint

Tariffs: The Preferred Tax of Masochists

Posted by M. C. on June 27, 2018

Gary North

If I were to come to you and say “What this country needs is higher taxes in order to make us all rich,” you would correctly conclude that I had lost my mind or my principles. But if I were to come to you and say, “What this country needs is higher tariffs to make us all rich,” a considerable number of you would say, “You know, he’s absolutely right.”

What you need to understand is that these two statements are the same, economically speaking: “What this country needs is higher taxes to make us rich” and “What this country needs is higher tariffs to make us rich.”

Why are they the same? Because a tariff is a tax. This is the “dirty little secret” that every promoter of higher tariffs never tells you. It is the secret revealed by economic analysis ever since Adam Smith’s Wealth of Nations (1776), which is why those people who publicly promote tariffs are very seldom trained economists, and why those few who are economists are devoted followers of John Maynard Keynes and hostile to the idea of economic freedom.

Something for Nothing?

The fundamental principle of economics is the fact of scarcity: “At zero price, there will be greater demand for most goods than there is supply of these goods.” This means that whenever we hear someone offer a scheme that promises us something for nothing, especially a scheme enforced by the State, we should be on the alert. “Put your hand upon your wallet and your back against the wall!”

The defenders of tariffs insist that tariffs are the one remarkable exception to the logic of economics. We can raise tariffs (get the government to collect more sales taxes on imported goods), and in doing so, stimulate the economy and increase our nation’s per capita wealth. Let’s think about this for a moment. Higher sales taxes are beneficial to the economy? That is what the tariff advocate is saying, though he never says it this way. (If he said it this way. nobody would believe him.)…

“To buy” is always “to sell.” It is the same transaction. It is an exchange. The person who suggests that Americans should buy only from Americans is inevitably suggesting the absolute abolition of international exchange. He is advocating the destruction of the international division of labor. He is advocating the abolition of international economic specialization. He is advocating international economic disintegration, given the key position of American trade, American capital markets, and American technology. He is advocating economic collapse. He is advocating a return to barbarism.

We can save Son of Hudson, but only at the expense of some other American manufacturer. The more “freedom from foreign sellers” we give to one industry, the more “freedom from foreign buyers” we impose on another. The time has come to think through the economic, political, and moral implications of the slogan, “buy American.” If we are upset by the implications, we had better abandon the slogan.

Be seeing you

tax crime


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