http://buchanan.org/blog/g
Patrick Buchanan has come out in support of Obama’s tariff on tires, saying that its a good start. But Buchanan makes several mistakes throughout his column.
He starts off early in his article, blaming the Chinese tire industry for taking away market shares of the Cooper Tire company and causing the South Georgia tire plant to be shut down. But this isn’t at all the fault of the Chinese. It is the fault, if you could call it a fault, of the consumers. The consumers have let their preferences be known and have chosen Chinese tires over Cooper tires. Buchanan I know gives lip service to capitalism. And if it were not the Chinese, but Goodyear tires that were becoming more popular with consumers than Cooper tires, Buchanan wouldn’t bat an eye. He would rightly and logically conclude that Goodyear is producing a higher quality product at a lower price, and that the market has succeeded. But because it is not just the Lawton Goodyear plant that is producing more tires (producing about 2,000 tires a day) but also China producing more tires, Buchanan is crying foul, and throwing the concept of the free market under the bus. 2,100 men and women are out of work in Georgia, would it really help those people pay their mortgage if their job was replaced by men in Oklahoma rather than China?
Buchanan then looks at how the Chinese are able to produce a lower cost product; pointing out that workers are willing to work for much less in China, a result of the lack of labor unions, and government intervention in labor unions, since the plant he mentioned, in fact all tire plants in the United States, with the exception of the Goodyear Tire plant in Lawton, Oklahoma are union plants (though Buchanan fails to go into that), that the Chinese government does not meddle in the market by way of health and safety regulations, civil rights laws, and perhaps most damning, environmental regulations. But the problem here is not China, it is us, or more precisely our governments. To fix this the government should get out of the way and let the market operate, lift the crippling environmental regulations, and stop protecting labor unions.
But another factor is the Chinese Government, they do in fact, as Buchanan mentioned, manipulate their currency to benefit exporters and hurt importers, though this is also an example of government meddling in the market, the solution is not to have more government meddling, but for the United States to eliminate the Federal Reserve. It is quite easy for a government to manipulate its currency in regards to another fiat currency, it would be quite another thing however for China to attempt to manipulate its currency in relation to Gold, it would end in disaster for them, if they were foolish enough to try.
Buchanan goes on to blast Cooper Tires for moving plants to China. But why? does he consider Toyota as a traitor to Japan for building plants in the U.S.? (no one likes a traitor even if the traitor defects to his own side.) No, he doesn’t, It is the nature of men to act in a way that best serves their interests. Instead of spinning my own clothing or growing my own food, I turn to a cheaper alternative, the grocery store, and the mall. Labor is no different, or does Buchanan expect us to not hire the cheapest bid to cut our grass? Why shouldn’t Cooper move to China if they can get a better deal?
“ Welcome to 21st century America, where globalism has replaced patriotism as the civil religion of our corporate elites.”
But this is to confuse patriotism with nationalism. Patriotism is only the desire a man has for his country, his brethren, and himself to be free. Free from taxes, from extortion, crime, and perhaps most accurately, to be left alone. It is nationalism that insists that all consumer goods be made in his home country, that his government be powerful, that his government exert her will over other governments and people far and wide.
Yet even still I don’t know of any religion that our corporate elites hold, I can not even address this point except to say that all men, from the smallest child, to the most powerful corporate elite, act in his own self interest and in a way which, in his judgement will most benefit him.
Buchanan goes on to illustrate a lack of understanding of self sufficiency independence,
“What has this meant to the republic that was once the most self sufficient and independent in all of history?”
Being independent does not mean that I built my own house and car, that I spun my own clothing or created my own electricity for lighting, or even that I cut my own grass. Rather it is a matter of being able to produce something, or give some service in trade so others will be willing to provide those goods and services to me. if I were not self sufficient, I would not be able to supply myself with these goods, either directly or through trade. The same model that I put forward for an individual also applies to the aggregate of American individuals, i.e. to the country.
We are still independent, but Buchanan has confused political independence with economic independence. Under Buchanan’s concept, consider how utterly non self sufficient a brain surgeon must be, Who can not operate perform brain surgery on himself, and since that is his only talent, he can not change the oil on his porsche, pilot his private jet, sew his thousand dollar suits, or cut firewood to heat his 10,000 square foot home!
Addressing the “trade deficit” is the next leg of Buchanan’s article. But again one has to question the premise. What exactly is a trade deficit, perhaps more importantly, what is a trade? A trade, as it should be obvious to any 10 year old boy trading baseball cards, is exchanging what one values less for what one values more. Tom values Jim’s Nolan Ryan card more than he values his own Greg Maddox and Barry Bonds card, while Jim values the Maddox card Barry Bond’s card more than his Nolan Ryan. The two boys agree to a trade. And through my magic of deception, I have made the trade deficit disappear!
But there is no deception. That is what a trade is. Consider another example. your own “trade deficit” with your local grocery store. If you have never sold anything to your grocery store, Buchanan would say you are running a trade deficit in the amount of dollars that you spend annually at the store. But how preposterous is this? Would you really be better off eating a $100 bill each week than trading it for nourishing food? Of course not. There is no trade deficit here. The fact is that the act of trading negates a trade deficit.
As Buchanan raises the question of dependence on China again, think about your own dependence on your grocery store... Are you dependent on your grocery? No, you trade with him, but you are not dependent. If he goes out of business, or stops carrying the type of tea you prefer, you go to another store. Its that simple.
Now Buchanan gains strength towards the end, saying that we should reciprocate, that since they have tariffs on our goods, we should put tariffs on their goods. But this is probably not the way to go.
The fact is that besides hurting producers of another country, it also hurts consumers of the home country. This, more than any other issue is what lead to the war between the states. As the Confederate Constitution was ratified March 11th 1861, creating a virtual free trade zone by article one section eight of the new Constitution, in the north shortly before the Morrill tariff was passed, putting a tax of 47% on goods entering in the remaining United States. Naturally the monied elite could not stand to see a tariff of such magnitude put on them while the south would have a bare 10% tariff on goods entering the newly formed republic, and papers across the North changed their tune and called for blood.
Likewise WWI had at its root trade. and Woodrow Wilson admitted that the war was fought to prevent Germany from gaining economic supremacy.
It is admirable that Buchanan is such an outspoken opponent of unnecessary wars, yet it is sad he doesn’t realize that tariffs, and trade wars, are the leading cause of wars.
It does not help our case for China to remove its trade restrictions when we put our own on them. And the result, if we do so, is that the American consumer is the one who gets hurt.
Lastly I’ll address Buchanan’s view on taxes where he says, “ As they rebate value-added taxes on exports to us, and impose a value-added tax on our exports to them, let us reciprocate. Impose a border tax equal to a VAT on all their goods entering the United States, and use the hundreds of billions to cut corporate taxes on all manufacturing done here in the United States.”
Apparently Buchanan is not for cutting taxes, but transferring taxes from one group to another. He is right that corporate taxes should be cut, because they are passed on to the consumer, but does he fail to realize that taxes on foreign goods are also passed along to the consumer?
