Trade Thoughts

I was listening to Tom Hartman cover for Randi Rhodes on AAR today and he was talking about trade policy and had some interesting facts/observations; most run counter to what I thought I knew, but in afterthought, make a lot of sense.

His theory is that tariffs are good for us. GASP.

He sited a lot of recent economic thought/publishing that seem to back him up. I was in the car, so didnt get to record his sources, but I'm sure if you visit his website, he's got them there.

But, basically, he pointed to the fact that modern international trade isnt trade between nations, but between divisions of the same corporation in most cases. In other words, Nike's Malaysian subsidiary sells to Nike's American subsidiary, and the only thing that really changed hands was the jobs that went overseas. And perhaps the construction jobs for the factories involved.

And he noted that in the 19th Century, the US had tariffs of as much as 50%, while the UK had virtually no tariffs (to encourage trade within the Empire.) The US"s growth rate during that period was more than double that of the UK. And an average of more than 50000 'British' workers a year migrated to the US during the period.

And he noted the similarities of the period we're in now to the period of the late teens and twenties in the US. Government slashing tariffs and taxes, Republican pandering to big business and making it more profitable and less regulated, and the general consolidation of more and more wealth into fewer and fewer hands*. And then he noted that period ended in the Great Depression.

Let's just hope repeating the mistakes of that period doesn't lead to similar results. Housing bubble, anyone?


* Apropos of nothing, but it interested me, Hartman discussed a chart on a website ( lcurve.org I think) that compared US incomes as illustrated by a football field.

The median income would, of course, be at the fifty yard line. The $50,000 figure would be a stack of $100 bills about an inch or so thick. The 90th percentile, at the 10 yard line, would $100000, or a stack about two inches thick.

At the 1 yard line, the 99th percentile, the $1,000,000 income would be a stack of bills slightly less than a foot tall.

at the 1 foot line, the 99.9th percentile, the stack would be 40 inches tall (I forget the exact amount in $)

at the 1 inch line, the 99th percentile of the 99th percentile, the stack would be several miles high.