White Shirt Video - More on Tariffs

Over the past few weeks, I have been writing about the tax aspects of tariff policy - how because we do not have a Value Added Tax, we need either a generalized tariff based on the amount of VAT that is zero rated by exporting countries or a specific tariff to match the rates our trading partners have. Germany has a 13% VAT, so we need a 13% tariff to establish equivalency.

To make VAT, Carbon taxes and tariffs available, as well as life in general, we need a subtraction VAT on employers which they can offset by paying $700 or so per child or non-working parent per month - or more (whatever amount they pay to Social Security dependents - with wages or on top of any basic benefits paid by government (from UI to a potential long term UI that is no fault and would replace disability insurance and would be equal 75% of full-time minimum wage work -which also needs to be raised to $13/hour).

There is another reason to do tariffs. It is because standards of living vary for workers from country to country. In many cases, comparative advantage is really comparative slavery. This gives us a hint as to why we have a trade surplus with Europe. Their standard of living for workers is better than ours - much better if you include social benefits. They give us Euros to get stuff made by our workers.

In a cooperative economy, employee-owned firms would pay all workers the same wage in terms of standard living, even if they take a loss on the transfer price. This is probably illegal now, because it trades worker justice for fiduciary gain.

The tariff, therefore, must provide overseas workers and suppliers with the same standard of living overall - as productivity differences between goods should even out. If they do not, the tariff must fill in the gap.

This type of adjustment is what Donald Trump is unconsciously attempting, although if he thought it through, he would see it as socialist (because it is socialist - or at least anti-capitalist. This type of tariff adjustment is the ultimate cure for the neo-liberalism that populists hate. 

Let's do it - and if we don't do it, we should at least calculate and publish the difference between standards of living of workers in similar jobs and how that calculation interfaces with both tariffs and currency prices.

East Russian Infrastructure

The vast majority of Russia has no infrastructure. Neither does Alaska or northern Canada. Cities have roads, but are not interconnected. There is a reason for this - no people.

Russian and Chinese population figures are not honest. They don't have the same census infrastructure found in the United States - and overestimation is endemic. The only obstacles to freedom for Russia Asia is for the ethnic Russians to leave (the inevitable result of the war on Ukraine) and the expense of food. If American style lab grown meat and Dutch green house technology is developed from the Urals to Greenland, this obstacle is overcome - provided resource extraction income is adequate until an independent economy is developed - which takes people to do. Lower food prices will mean more population - especially if jobs are created.

South Asian Russia, which is Muslim, needs to be set free for Turkic and Persian nations to absorb. Inuit, Mongolian and First Nation peoples can reunify to an ethnically similar nation, provided they are allowed a fair share of extraction income. They could be the Saudis of the north. 

Trump Ends Neoliberalism

Trump has broken the back of neoliberalism - as his voters wanted. He mimics their social biases (which he does not believe privately - except the racism) and has essentially thrown the wealthy and upper middle class under the bus. 

He has also created industrial policy, with tariffs which, with correct support, can be used to provide what his voters want while making prices rise for everyone else. He has also created conditions for value added taxes. The question is whether he or a successor adopt this solution and the extent to which exemptions and exclusions from the VAT are allowed and, if so, who controls them. The Congress cannot really do the fine work on doing this fairly that the executive branch can - like tariff policy.

The question is whether or how to give more money to the bottom third of income holders - which is about 77% of the population - either through a higher minimum wage & higher child tax credits - distributed through wages rather than either the IRS directly or indirectly through individual tax filing.

Also, the financial assets that hold pensions are not doing poorly. The speculative side is losing money. His voters don't care. I don't either. The bottom 77% of households have tax free income (and if they are invested in speculative assets, they are getting what they deserve) or are temporarily poor because they have had business losses - including those carried over. Switching to a VAT economy eliminates these advantages - especially if an ASSET VALUE ADDED TAX allows for employer based taxation of high wages, dividends and interest and ignores individual capital gains and losses. The latter can also lead to employee ownership - an essentially cooperativists concept that libertarian socialists support.

A tariff policy favors workers (and by implication overseas workers) over capital. Because it (or VAT) can be manipulated by the executive branch, using them (or VAT exemptions) creates industrial policy that the Soviets and Chinese would envy. 

While Trump voters do not understand this, the Russian and Chinese systems where the connected have the power are the same as the old Soviet system. Oligarchs and senior party members have the some crony relationships with the supreme leader  (and his secret policy) in either case. For some reason, American conservatives don't get the joke. Too funny.

How The Finance Industry Destroys Economies

Capital is the stock of productive equipment. The capital your chart refers to is wealth. Wealth uses finance to allocate value. Wealth increases are under taxed in Trump world and his donors want this to continue. The way to overcome this is an Asset value added tax that can be adjusted to regulate the velocity of finance. 

The problem with the wealth I'm balance is the power the wealthy have over workers/consumers. The only real cure is the rise of a cooperative system that abandons finance by having worker controlled firms provide non-financial debt and democratic control of the means of consumption (make v buy).