cross-posted from: https://lemmit.online/post/5566633
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The original was posted on /r/todayilearned by /u/MechCADdie on 2025-04-04 08:19:11+00:00.
This time when we stomp down the corporatists we need to make it illegal for corporate interests to be considered when making policy.
And collective ownership
A hero of the right, Ronald Reagan, actually gave a speech condemning tariffs. Yup, I’m actually on Reagan’s side here.
Reagan was a neoconservative, heavily invested in deindustrializing the Midwest to break the domestic labor movement and capturing labor overseas for the benefit of investment capital. He succeeded too well, as his NAFTA and global trade policies birth to large foreign industrial powers that could meet the US as peers instead of supplicants.
Forty years later, Trump looked at the economic landscape and concluded he could undo the Reagan Era by throwing up high trade barriers, because he believed the finance capitalism at home (combined with our large international military) commanded leverage over physical capital abroad. Now we’re gambling on a war over Greenland and a promise that Europe needs Wall Street more than it needs Chinese manufacturing capacity.
But both Reagan and Trump were fixated on global US hegemony. They just went about it wrong, because they were dumb-dumbs surrounded by people more greedy than they were strategic. It’s a double-own goal, from opposite ends of the net.
I think there’s room for reasonable tariff policy, but unfortunately the US is a nuance-free land full of extremists so Trump’s terrible implementation will make tariffs radioactive for another generation if there’s a large public backlash.
It doesn’t need to be absolutely free trade with slavers or tariff man hell. We could raise the standard of living by allowing free trade but imposing tariffs – or even outright bans on imports – from places legalizing slave labor and other close to slave labor conditions. But obviously none of that fits into Trump’s dumbass worldview.
Tariffs in my opinion can be a way to protect a given national industry against price dumping, especially when subsidies are involved, or if you have a specific capability in mind that you want to build nationally, but then I think subsidies are a better way, maybe in combination. But putting blanket tariffs against countries is in most cases not the best idea
Yep 100% agree.
Both “free trade” and big stupid blanket tariffs are extremist positions and it’s America so they’re the only positions discussed.
Someone has either never seen “Ferris Buller’s Day Off,” can’t remember it very well, or didn’t pay attention. This was covered in class!
Planet Money interviewed the professor who wrote the book from which Ben Stein is reading in that scene.
It ia an older episode they re-air periodically. I think this one:
https://www.npr.org/2024/12/11/1218506684/worst-tariffs-ever-update
In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the… Anyone? Anyone?.. the Great Depression, passed the… Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act? Which, anyone? Raised or lowered?.. raised tariffs, in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression. Today we have a similar debate over this. Anyone know what this is? Class? Anyone? Anyone? Anyone seen this before? The Laffer Curve. Anyone know what this says? It says that at this point on the revenue curve, you will get exactly the same amount of revenue as at this point. This is very controversial. Does anyone know what Vice President Bush called this in 1980? Anyone? Something-d-o-o economics. Voodoo economics.
I watched this movie 3-4 times and even when reading this, I’m still spaced out.
Ben Stein just has a voice that makes me tune him out.
Such a great voice for comedy. Shame he’s anti-abortion, pretty racist, pro-Regan and Trump, weirdly against evolution… So many awful perspectives.
weirdly against evolution
You can see his point. Look where it got us, we should have stayed in the sea.
Worth noting Laffers claim had already been proven to be likely true by the time that was filmed. The claim is you can set a tax rate so high that it can encourage tax evasion, avoidance, and fraud and that reducing the rate below this level can bring in as much if not more tax revenue which was demonstrated to be likely true in 1983.
Laffer curve in political practice is BS. It is proven that you raise 0 revenue at 100% tax rate because no one is actually paid to work, then. The political distortion is “therefore, always lower taxes for more revenue”.
No it makes sense it just isn’t scientific nor does it justify any cut after 1983.
nor does it justify any cut after 1983.
That was my point on how it is misused.
proven to be true? that is news to me.
proven to be likely true and you can look at the 1983 tax cuts for evidence of it being likely true.
So the cut that went into effect in '83 was passed in '81, just before a recession hit. So the US seeing an increase in revenue compared to the few years before that where unemployment was up over 8% and gdp dropping, is really more about the economy recovering than tax policy changes.
Except the size of the cut was substantial and we still brought in more revenue because of people moving wealth from foreign banks to US ones. Your explanation doesn’t account for this.
proven likely true means not proven true. Way to many factors. I personally thing the theory has a sorta merit but is very limited and vague (in the sense of there is no identification of where the exact sweet spot of taxation levels are). For example the punitive measures for not paying taxes at very high levels need to be very severe to curtail such behavior. So five figure owning person or mom and pop shop you give a slap on the wrist. Maybe 10% of owed added. Wealthiest individuals and companies get knocked completely out of their level so like 500% of what was owed.
To be clear it isn’t a theory. It really is an idea explained on a cocktail napkin. There seems to be a rate that if you reduce it under you get more recenue which worked once in 1983. There’s nothing to support further cuts though
I would not even say it worked once in 83. Lower rates are one possible reason but like anything with the economy there are plenty of factors including cyclical changes that could explain it.
Or we could just fund the IRS since it’s a profit center.
We could do both?
I know it from the Newsroom
I’ll just leave this here then: https://www.hiddendominion.com/sir-glubbs-250-year-hypothesis-on-the-duration-of-great-nations/
They also didn’t have fox news at that time :/
trump won’t for much longer…
Being ruled by billionaires works both ways I guess lol one can only hope.
They had newspapers owned by William Randolph Hearst, who pretty much invented the “yellow press”. And whose story is eerily similar to Musk’s, including a sudden swing from progressivism to far right nationalism.
Even Fox viewers can’t hide from their credit card balance. At least I hope that’s the case.
There is some nuance here. Smoot-Hawley didn’t cause the great depression, and there a lot of economists who say it didn’t have that much of an effect at all.
Tarriffs can have some useful effects when used for protectionism, diplomatic coercion, or trade barrier reduction coercion. However, Trump’s tariffs are way dumber than anything that came before, because he’s trying to do all three of these at once. All of these have conflicting effects on each other, and it is literally impossible to design a tariff strategy that can accomplish all three, since raising a tariff for one purpose means that you need to lower tariffs for other purposes. All he’s doing by raising across the board is causing instability in the economy and convincing all partners to ditch the US.
This is what is funny for me. I would like tariffs to discourage trade with countries that have less democracy, rights for its citizens, and high income disparity (which unfortunately we are not a paragon of currently) and encourage trade with countries that are the reverse of that.
All he’s doing is exactly what Putin wants. Systematically isolating and weakening America while weakening the West at large and any other competing countries to his power and new accumulation of wealth.
Tarriffs can have some useful effects
Europe has a some tariffs on Chinese EV brands. The reason is that they get subsidized by their government and can easily dump them on our markets, ruining our own industries. The tariff calculation is based on what we think those subsidies are and how to make it fair compared to our prices.
No one thing triggered it but the tarifs contributed almost as much as the out of control stock market. All the controls put in place to prevent this have been changed. So stupid tarifs(Are there any other kind) and a unregulated market system has us primed for some serious times.
So stupid tarifs(Are there any other kind)
There are some that work in order to protect national interests, mainly local producers and services. Whether they are stupid or not depends on implementation and end results
But these local companies just jack up their price to be competitive to the new tariffed foreign price and pocket the money.
and there a lot of economists who say it didn’t have that much of an effect at all.
Source? To my knowledge Smoot-Hawley is pretty widely regarded as the worst possible move at the worst possible time. Protectionism doesn’t work when domestic purchasing power is already collapsing. Agreed on the rest though.
There is some contention about whether this can necessarily be attributed to the tariff. The Great Depression was already in motion before Smoot-Hawley, mainly due to financial instability, falling demand, and poor banking practices. However, the tariff worsened the crisis by shrinking global trade, hurting farmers, and reducing employment in export-dependent industries. Had it not passed, the Depression still would have occurred, but perhaps with less severity.
Monetarists, such as Milton Friedman, who emphasized the central role of the money supply in causing the depression, considered the Smoot–Hawley Act to be only a minor cause of the Great Depression in the United States.
https://en.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act
yeah maybe my nuance leaned too much to the no side, but I wanted to explain tariffs a bit. Trump tariffs are not protectionism or coercion, they’re just stupid.
“both sides” but the two sides are “it was bad” and “it was disastrously bad”
I was thinking about the protectionism though… like in order for the tariff to work, the us would have to also manufacture the good that is being tariffed. But we don’t produce a lot here…and also even if we did… i guarantee the us business would jack up the prices to be competitive with the foreign price After tariffs and pocket the money. Making the whole thing moot.
The “protectionism” falls flat the moment you consider that the tariffs blanket all goods. If you want to dramatically expand American industry, you don’t start by raising the price of steel and raw materials.
Yea no matter how you slice it, there are no good use of tariffs, and if one were to insist, then it would only be like just barley enough to push up the price above parity, and only on very select items. But then if the other country does it back it goes in favor to the nation that is more industrial.
Correct! That’s what Cavallo et al found when the Trump administration tariffed China in 2018. US profit margins decreased on both imports AND exports, while China’s remained largely unchanged.
According to Cavallo et al, American tariffs hurt Americans more than literally anyone else.
Fun fact, the Trump Administration cited Cavallo et al as supporting evidence for their tariff calculations.
The soybean tariffs, china found other countries quite quickly into counter the tariffs, and they largely abandoned the US of soybeans export
Yeah, sorry to say you were pretty off base friend. Smoot-Hawley didn’t start the fire, but it poured fuel all over the flames and locked the firemen out of the building.
Friedman was an advisor to Reagan and Thatcher. He was a libertarian who genuinely believed that economic prosperity hinged almost entirely on just printing more money. His economic theories are all over the place, but even he acknowledges that tariffs generally don’t work:
… [Friedman] uses tariffs as an example of a policy that brings noticeable financial benefits to a visible group, but causes worse harms to a diffuse group of workers and consumers
The thing about Smoot-Hawley is that when it happened everyone else also put up equal tariffs among one another.
this time the EU, Japan, South Korea, Canada are only putting tariffs on the US. Not amongst themselves.
Maybe it is a good idea to get rid of senate seats with new people. 50 years the same people might be a bit too long
How about making more then 2 political parties viable with no spoiler effect via state level electoral reform?
I’m good with lengthy term limits, even, but there needs to be something
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It’s not really a term limit, but here in Norway you’re not allowed to work a government job after passing 70.
This also applies to elected officials, so hey at least we don’t have anyone over 70.
34/100 US senators are 70 or older, with another 22 being 64-69 (potentially hitting that mark by the end of their 6 year terms, depending on when they started). The oldest two are both 89.
Second largest senate seat loss, I say hopefully.
Well they had elections afterwards. Trump’s nazis will just throw dissenters into KZs and invade their neighbours.
There will be no free elections anymore
Smoot-Hawley 2: Electric Boogaloo
Not the second time but some are saying this one is similar to two others including smoot-hawley that triggered a huge economic downturn.
https://en.wikipedia.org/wiki/Tariff_of_Abominations
https://en.wikipedia.org/wiki/List_of_tariff_laws_in_the_United_States
something something people who don’t learn from history are doomed to repeat it
Funny thing the 1828 Tariff of Abomination, The Smoot Hawley Tariff and Donald’s Liquidation Day Tariff are all roughly a hundred years apart. Living memory of the consequences of such tariffs need to die out completely before a new generation tries this stupidity.
It’s the same with the nativist bullshit. Memory of the peak of Know Nothing, KKK and now MAGA bullshit has to die out before it is tried again.
My only hope is that this is viewed as the high water mark of the MAGA movement. MAGA incompetence is on full display.
As much as I disagreed with Sen. Chuck Shumers decision to roll over on the budget. Shutting down the government and giving MAGA any excuse to blame Democrats for this economic slowdown would have been a bad call. Donald and the Republicans now solely own this disaster.
For the MAGA faithful it won’t make a difference but for independents, moderates and low information voters this could be a huge turning point.
Attacking Russia stops being a bad idea every 100 years or so too. Occupying government of France leading the cheerleading a common factor.
People came for the Smoot but they stayed for the Hawley.
Tarrifs are billionaire cash grabs, nothing more. Nobody likes those. Except billionaires of course.
Yeah, look past the self-righteous grandstanding to see it for the big wealth transfer that it is.
Even the billionaires are going to lose money. It’s just unjustifiably stupid.
Every once-in-a-lifetime economic disaster I’ve personally witnessed has taught me that any economic loss for billionaires is only temporary.
They have enough money to coast along to buy and hoard failing companies and collect them for whenever the economy rebounds.
Billionaires have so much money, they could spend a few thousand a day and it wouldn’t hurt their bank account for decades.
The old oil money declared war on the neuvo riche tech bros.
Its an attrition war.
The majority are peeons (sic) in this new feudal trickle down economic game.
They could spend $100,000 a day for 50 years an not have spent through 2 Billion. Elon and musk both command 200 Billion ish. the interest alone is worth that 8 billion a year if it was in treasuries.
Let them lose enough to put them on the street with the rest of us. Hopefully it can humble them enough to understand that wealth should not be hoarded but shared for the greater good of society
Tarrifs are billionaire cash grabs
Not really. It is possible that Musk envisioned breaking NA auto pact to USMCA agreements on autos for purposes of destroying big 3 auto competition, which has been releasing competitive EVs prior to this aggression. Most billionaires like the status quo with existing protections of their business.
A depression does permit billionaires to swoop in later to buy assets. Complete chaos, uncertainty, and yo yo policies does allow for people to make huge short term leveraged returns if they know when the chaos is to be reversed and applied.
In this case, its just a cult leader doing stupid cult actions, though chaos profit angle can easily be there.
If you don’t want to read here’s a video https://www.youtube.com/watch?v=s7i-ievZZiQ&t=22s
