Whenever a survey of professional economists is taken so as to unearth consensus, or the lack thereof, they are typically united on three things: minimum wages cause unemployment for unskilled workers, rent control ruins the residential rental housing market, and, of relevance in the present case, free markets enhance economic welfare and tariffs are uneconomical.
On this latter issue, according to google: “Yes, there is a strong consensus among economists that free trade benefits the overall economy, a view supported by economists since Adam Smith. However, this consensus is often at odds with public opinion and political positions, which may favor protectionist policies.”
In the view of the Hoover Institution: “Economists often do disagree, but that has not been true with respect to international trade. Ever since Adam Smith there has been virtual unanimity among economists, whatever their ideological position on other issues, that international free trade is in the best interests of trading countries and of the world.”
Maintains Independent Institute: “Economists, going back to Adam Smith and David Ricardo, are virtually unanimous that free trade benefits consumers and the overall economy.”
John Lott is an accomplished dismal scientist. He has done world class work on the economics of gun control. He has done more than anyone else to establish truths like these: more guns, less crime; an armed society, is a polite society. However, he demurs regardnig the economic consensus on tariffs. He goes so far as to not only defend this bane of international trade, but also the stop and go, inarticulate Trumpian variety thereof, which is based, all too often on personal pique.
Lott makes one not totally unreasonable defense of his mercantilist mentor in this regard. Taxes on international trade, e.g., tariffs, are out of whack with regard to other levies, such as on income, or wealth, or on real estate. The former are too low, he avers, the latter are relatively too high.
President Trump is indeed decreasing duties on other sources of income, while he raises them on imports. This claim of Lott’s is difficult to refute, since there is no clear agreement within the profession as to the proper allocation between different types of taxes. (In my own view, they should all be radically reduced, and the proportion between them is of relative unimportance. The resulting slack in government services should be met through privatization.)
But that is the best that can be said in behalf of tariffs on economic grounds. It is, indeed, the only argument that can plausibly be made in behalf of ruining the international division of labor and specialization which has led to amazing prosperity levels. There is no other case that can be made in behalf of tariffs, Lott to the contrary notwithstanding. After all, there is no tax whatsoever that does not misallocate resources.
Except that Trump is not raising tariffs reasonably, to reduce the budget slack from income tax reductions. He is instead going all over the lot, continually changing them in a pattern known only to himself, and no one can be sure of the latter either. The words “whim” and “capriciousness” properly arise in this context.
India trades with Russia? Tighten tariffs on the former. Doug Ford, Premier of Ontario, concocts a video demonstrating that Ronald Reagan opposed mercantilist tariffs? Boost tariffs on Canada by 10%. This has nothing to do with a not totally unreasonable argument in favor balancing taxes. Install a 90 day pause? That cannot be reconciled with allocating taxation. Rather, personal anger seems to be the motivating force behind this kaleidoscope.
All trade, international or intranational, is mutually and necessarily beneficial, at least in the ex ante sense, and almost always ex post as well. No one buys, sells, rents, invests, banks, employs, did he not expect to be made more wealthy, thereby. Tariffs reduce international trade and thus prosperity. Trump infamously opined that “tariffs are the most beautiful word in the English language.”
He engages in this economically illiterate plan, in great part, because he laments the reduction in factory jobs in the U.S. He can perhaps be forgiven for such economic illiteracy. He probably never took Economics 101 in college, or, if he did, this aspect of that course did not stick with him. Matters are different, far different, for his economic advisors, with PhDs in economics, who have encouraged him down this particular garden path. There ought to be a recall on their advanced degrees.
There are virtually no manufacturing jobs in Iowa, Alaska, Hawaii or Dallas, Miami or Las Vegas. Are these places particularly impoverished? Not at all. (I was going to add New York City to this list, but in view of its new mayor, I had better not). If other countries have either an absolute or comparative advantage in the provision of manufactured goods, it behooves us to stick to what we now do best, whatever it is, and trade with them, for whatever they do best, to mutual advantage. Not to do so is to cut off our nose to spite our face.
If Trump is so intent to turn back the clock, why not revive the horse and buggy industry? At one time, a significant portion of our work force was involved therein. What about typewriters! The loss of jobs in that industry was gargantuan.
So much for pure economics. On non-economic grounds the case for tariffs is much stronger, but this will not come anywhere near rescuing Lott’s argument for tariffs on commercial and financial grounds.
What is the argument here? Stipulate, arguendo, that China abuses its Uighur population. Posit, also, that it is the business of the U.S. to rescue these unfortunates. The President of the United States has but two main options: bomb them, or declare an economic war on the People’s Republic, mainly by implementing and/or raising tariff rates on their exports to us. When looked upon the matter in this way, and only in this type of way, can a not unreasonable case be made in favor of tariffs.
Lott has made important contributions to support of the second amendment. When it comes to international trade, he should not stick to his guns, but get back to them. On gun control, yes, he is brilliant; on tariffs, not at all.
