Re: Just a five year tariff on Chinese goods
A "tariff on Chinese goods" would cause both extreme levels of economic and political pain right now. Neither of which we can afford making this the worst suggestion we can come up with just short of cutting off all imported goods in some vain effort to revitalize domestic production and manufacturing.
Right off the top we have damaged way too much of the production and manufacturing middle class over the past several decades to all of a sudden try to right the ship via tariffs alone. The main issue being over that time we outsourced the primary economic function of a healthy working middle class in a series of political linked to business profit decisions. On a macroeconomic scale swapped having a economic power level based on domestic production and manufacturing for an economy based on consumer debt. The effect was taking a diminishing production middle class and make them take on an increasing level of debt to call our economy "healthy." In that model you will crash the markets overnight with such a tariff idea.
In doing so we caused a series of problems terminating with a recession. What is left of the middle class is unprepared to all of a sudden take on the complications of a "five year tariff on Chinese goods." For one, the cost increases for all those goods rise overnight basically causing what some may consider a form of tax increase on the population that is your target market. Two, a tariff ignores what would really make an impact in jump starting our depressed production and manufacturing ability. Cost of compliance, cost of tax liability, and cost of labor all here domestically. A tariff is a prop, one that ignores these problems. It is still far cheaper to produce products in China, ship them over here, distribute then sell (thus passing the tariff costs) to the decreasing target market than it is to produce them here for the same distribution.
How do you really adress that? Remove the government red tape, remove the cost of compliance, lower the tax burden making it more economical and tax effective to no longer produce overseas taking advantage of labor costs and conditions we cannot compete with. You hit corporations first (the one's reporting record earnings), not the already damaged middle class (or main contributions to our economic failures today).
You do that then you can hit up domestic labor costs (as well as with all the other costs that come with such as healthcare costs and retirement savings.) down the road. The real issue being that a macroecomic shift back to being based on domesitic production and manufacturing will take time, probably somewhat equal to the time it took to abandon that model. It starts with where the money is and the middle class is the farthest from. The target consumer debt market is still here for us to contend with and you cannot shift economic models that fast without real damage.
Any tariff discussion basically ignores that over those same decades of economic movement the other consequence was inherently linking the US economy to the Chinese economy. On another level it also linked our two governments beyond what most consider. You cannot ignore that we are now in a position where just to have a government budget each year going forward, we have to borrow well north of $1 Trillion each year as far as we can see. In that we turn to a communist nation to float our budget sending our own politicians over to China with some degree of frequency to ensure their government "we are good for" our spending habits. At the same time China has no choice but to continue funding our stupidity as their economy would be harmed by our failure. Similarly, China would also be harmed by this tariff idea probably taking their continued "investment" in our economy off the table with such a move. Trying to strangle our government by doing this would cause wide spread economic and market impact, all negative and all long term.
So the effect with the tariff is the worst idea you can come up with being both political and economic suicide. Further damage the decreasing middle class with cost increases across the board, and take away the government's ability to spend at a time where tax revenue cannot possibly make up the difference. A real depression would probably occur. You basically take the worst and most weak economic model one could dream up (our present economic condition) and further damage it. Not a very bright idea.
- Frustrated Independent
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin
"Every time something really bad happens, people cry out for safety, and the government answers by taking rights away from good people.” - Penn Jillette amazingly enough, and I agree.