Failed Economic Policies Continue Regardless Of Election
Here is something that is hard for both Biden and Trump to accept…open markets.
When Trump was president, he placed tariffs on goods from many countries including Canada and Mexico. All those taxes did was raise the cost of products for American companies and consumers. The only point in tariffs is to raise the cost to purchase other countries’ goods and to work as an independent subsidy to American manufacturers in the same industry.
Biden did away with most of Trump’s tariffs except with China. It is absolutely true that the Chinese government subsidizes industries such as EVs and solar panels. My question is so what?
If the Chinese want to underwrite America’s use of these products, how are we harmed? Both EVs and solar panels are being subsidized in this country with tax breaks to consumers. How is that better?
In most cases except for products that are for use by our military exclusively, industrial policies whether through tariffs or subsidies hurt our economy. What happens when an American consumer buys a Chinese product that is being sold for less than it costs to make? Americans get a great deal for which the Chinese are underwriting our consumption.
For their subsidization of a product, the Chinese receive a steady production cycle for the manufacturer and employment for the workers. In return, America gives the Chinese an I.O.U. with a promise to pay for hard goods later. Which country has the better outcome?
Biden has resurrected a failed industrial policy from the 1940s. He believes in American manufacturing to produce jobs for Americans not through more cost-effective strategies but by government underwriting of the industry including placing tariffs on imports. In those cases, Americans just end up paying more for products than consumers do in other countries. The cost of keeping employees working in subsidized industries is all out of proportion to what the job is worth.
To add insult to injury, the Chinese are still selling their government subsidized products throughout the world which makes it impossible for Americans to compete globally. Inflation is also a byproduct of U.S. subsidization because it does raise the cost of the product.
There is another factor we should be considering…which country has the better product? Last year, Florida passed a law that local governments can only use American-made drones. Besides law enforcement, building inspectors use drones to check on contractors’ work. Climbing ladders, the method for years, are both dangerous and the view is not as encompassing as the view from a drone.
The Chinese have cornered this market. Their drones are much easier to handle than American-made ones. They are superior in technology and sturdier. And they are a third of the cost. Yet because of government mandates, taxpayers are footing the bill for a product that is not as good as the one replaced.
In Florida, we are experiencing labor shortages especially in the agricultural and construction industries because of another government created crisis. A law was passed last year that transporting undocumented immigrants became a third-degree felony. Because so many have lost our grip on reality, we forgot that those industries and others are dependent on their labor.
Many left the state, making it harder to find those needed to put on a roof or pick a crop. The answer to this self-inflicted labor shortage is to do away with laws protecting children from working in dangerous jobs and eliminating maximum work hours during school days.
I believe Biden sees the flow of migrants differently. He knows he needs to control the migrant surge but is more sympathetic to their plight. The president has not been given the resources it takes to deal with the border crisis like new laws, agents, and judges to speedily handle the cases because Congress, who passes laws and appropriates money, has failed to act.
Economically, the country could absorb many of the migrants by just giving them the right to work while their cases are adjudicated. That would help with our labor shortages. It would turn what is now a drag on taxpayer funds into a win for our economy.
Trump has said he wants to stop all immigration. By doing so, America will suffer an even a greater shortage of workers and new Americans. We would become Western Europe with a negative population count and not enough workers paying taxes into the system. It would also raise inflation by creating a shortage of workers.
The best advice either Biden or Trump could follow is to have a market approach to our economy. Trump can’t say he is a tax cutter if he saddles the nation with trillions in new tariffs which are taxes on Americans. Cutting income taxes at this point will only exacerbate the deficit and continue to make our system even less fair.
If Biden is reelected, he needs to do away with his industrial policy and trust in the markets to do the best for the most Americans. Protectionism is a losing strategy for a healthy economy. Jobs in Bidenomics come with a cost to the American consumer and taxpayer. Trying to birth industry by eliminating world competition has never worked. We need to get back to basics.
