©2024 – Jim Porter Casey
We’ve been through this before. The bad guys are leveraging their economy to unfairly lower the price on the imported goods we buy in America. Or, there’s a national security concern about some product we should have more control over. So, we slap on some tariffs to slow them down.
It does work to some greater or lesser degree but there are also consequences. Usually the price of your favorite gadgets, shoes, socks and avocados go up and that sparks a round of peripheral inflation.
President Trump’s promise to impose tariffs on countries in an effort to encourage them to quell the flow of illegal immigration and illegal drugs into this country will be no different in some ways. In other ways, however, the world stage is different and so the consequences and benefits will also be different. Trump’s pretenses are politically correct but don’t tell the whole story.
Trump’s imposition of tariffs this time around isn’t likely to be as short lived as similar actions have been in the past. This time the world economy has shifted and the United States is likely at a long term and even permanent disadvantage. Times have indeed changed as other nations have modernized and grown economically in the post WWII era. They caught up.
The US has already been suffering the consequences of the new world economy as manufacturing has all but ceased in this country. Corporations have slowly but surely moved their operations to foreign countries over the last five decades to take advantage of cheap labor leaving a swath of unemployment in the wake.
The American consumer has enjoyed products that have been artificially cheap for many years and the additional discretionary income boosted the American economy overall. But an inflection has been reached and, well, the party’s over.
It’s finally gotten to the point that the things we don’t make here is a national security risk, both economically and from a practical standpoint. It’s not just about technology, I mean really, what if all of a sudden no foreign country would sell the US socks anymore? Or shoes? In a matter of weeks everyone would be going barefoot. Since the jobs are gone maybe it wouldn’t matter.
For awhile we could stand to loose the jobs because we were still leading in other sectors like electronics and other service oriented functions. Now even the customer service call centers all seem to be located somewhere else – by the sound of it I’d guess Central America.
What’s the answer? Redistribution of wealth. Words that make the capitalistic loyalists supporting Trump break out in night sweats and cringe as they read the news. But, as I’ve said before, wealth is distributed and there’s no such thing as pure capitalism, and there isn’t going to be.
Imposing tariffs has the potential to unleash injurious inflation but it also has the potential long term benefit of reinvigorating American manufacturing and recreating those jobs, especially for the blue collar working class. Not everyone is a rocket scientist.
Mr. Trump isn’t likely to be the only captain of the new boat which will require careful and incremental steering shifting with the currents over time. And, it may actually be that the economic storehouses of the ultra wealthy will be called upon to (omg I’m gonna say it) trickle down as the new American economy and jobs settle into a new and balanced stability.
Unfortunately, there will be growing pains not dissimilar to those mentioned in my last column in regard to the advent of the internet. Rebalancing and diversifying the new American economy will also come over decades and while there’s likely to be some acrimony, hopefully transitioning will be mostly seamless and palatable and even beneficial for most.
©2024 – Jim Porter Casey
