Why low tariffs and free trade are good for economies

Some of my friends are upset with Bill Clinton for signing a bill creating free trade between the United States, Canada and Mexico. They say that all this does is benefit foreign economies at the expense of our own.

In 1888 Benjamin Harrison made tariffs one of the key issues in the election against incumbant president Grover Cleveland. Harison was a pro-business republican who believed it was necessary to keep tariffs high in order to allow local businesses to compete.

Cleveland contested that tariffs were already too high, as evidenced by a surplus of money in the treasury. Yet Harrison won the election, and republicans gained a majority in Congress. Future president William McKinley drafted what would become the McKinley Tariff Act of 1890, raising tariffs by as much as 50 percent.

Initially there was an economic boom, although it was short lived. (This is the same as what happens when taxes are raised).  By the time Cleveland was back in office in 1893 the country was embittered in a major depression, and high tariff was blamed.

A tariff is a tax on imported goods. While the purpose of a tariff is to benefit a local business, the overall effect is that it hurts the whole community.

So what is a tariff? It is a tax on imported goods. The purpose of it is to raise taxes on the imported goods so that local merchants can compete. Henry Hazlitt, in his book "Economics in One Lesson," explains it this way:

"An American manufacturer of woolen sweaters goes to Congress or to the State Department and tells the committee or officials concerned that it would be a national disaster for them to remove or reduce the tariff on British sweaters. he now sells his sweaters for $30 each, but English manufacturers could sell their sweaters for $25. A duty of $5, therefore, is needed to keep him in business. he is not thinking of himself, of course, but of the thousand men and women he employs, and of the people to whome their spending in turn gives employment."

So in this way, a high tariff sounds good. Throw these people out of work and you create more unemployment, and the economy takes a turn for the worse. So, in this way, republicans were right that tariffs are good. Of course that is what is seen. The problem here is the unseen.

Say the tariff of $5 is removed, which is what Bill Clinton accomplished with NAFTA. Certain American merchants will go out of business, because people will be more likely to buy the higher quality British sweaters at a better price. Sweater consumers now have a high quality sweater and they have an extra $5 to spend on other products. In this way, the value of the dollar increases. Instead of spending $30 on one sweater, he spends $25 on a sweater and $5 at McDonalds.

Now, on the surface this looks bad to the American merchants, and all the people who lost their jobs. But on the plus side, since America no longer needs to produce cheap sweaters and sell them at a high price, the merchant can focus on manufacturing another product that is necessary. For instance, the merchant will make washing machines or aircraftss instead. These industries then absorbs those who were previously unemployed.

Since American washing machines and aircrafts are of higher quality and less expensive than those made in Britain, British washing machine and aircraft manufacturers will be forced to close their doors. Those who lose their jobs will be absorved by industries that otherwise would not have been created if the tariff had been high.

Another advantage of lower tariffs is that the British are encouraged to sell their sweaters in the U.S., and, since American money is only good in America, they will have to spend it on American goods. So this in and of itself boosts the American economy.

"So," Hazlitt explains, "as a result of letting in more British goods, we must export more American goods. And though fewer peple are now employed in the American sweater industry, more people are employed -- in, say, the American washing machine or aircraft building business. American employment on net balance has not gone down, but American and British production on net balance has gone up. Labor in each country is more fully employed in doing just those things that it does best, instead of being forced to do things that it does inefficiently or badly. Consumers in both countries are better off. They are able to buy what they want where they can get it cheapest. American consumers are better provided with sweaters, adn British consumers are better provided with washing machines and aircraft."

So, in the end, lower tariffs are good, and so are free trade agreements between nations. The challenge is to look beyond what is right before your eyes. In order to see the big picture you almost need to use your imagination.

Media wrong about 2016 GOP prospects

The media has no clue what republicans need to do to win in 2016. Take a recent article by Phil Rucker at the Washington Post, "Large GOP field has party leaders anxious about their chances in ’16," as an example. Consider the first paragraph:

To take back the White House after eight years in the political wilderness, Republicans think they must soften their image and expand their appeal in particular to women and Latino voters. As Jeb Bush, a leading presidential contender, puts it, “We’re going to win if we show our hearts.”

That might be what the party leaders think, but that's exactly the opposite of what we need to do. This paragraph is wrong on two accounts.

1. We don't need to soften our image.  This is essentially saying we need to give up on our core principles to win.  They basically want us to give up on our fight preserve traditional marriage, and against the welfare state, amnesty and abortion. If we caved on principles liberalism would win. 
2. We don't need to cater to women and Latinos.  I say this because what the republicans need to do is cater to all Americans, not groups of Americans. Liberalism tries to separate people into groups, as though America is a salad bowl.  They want to pit one group of Americans against another, such as the rich verses poor. Conservatives believe we are all together as a melting pot, and we should create an environment whereby everyone benefits, not just one or another group.  

Later, Rucker explains that the "large and diverse" republican field, along with the fact that Jeb Bush has failed to jump out ahead of the fray, may impact the amount of money that can be raised to win a general election.  He said:

This could cost presidential aspirants tens of millions of dollars; pull them far to the right ideologically, from hot-button social issues to foreign policy; and jeopardize their general-election chances. And in such a muddled lineup — officials are planning to squeeze 10 or more contenders onto the debate stage — candidates will be rewarded for finding creative ways to gain notice.

Sure, this sounds great if you want to turn the republican party into the democrat party.  This is fine if you want both parties to be the same.  This is fine if you want the republican party to return to being the liberal party it was when Teddy Roosevelt and Herbert Hoover were presidents.

But that's not the republican party the rest of us want.  We want the party to be the opposite of what the democrat party has become.  We want the republican party to be the party of the people.  We want the republican party to stand up for the principles that made this nation exceptional once, and what can make this nation exceptional again.

We do not want two parties running whereby the choice, as it was when Obama ran against McCain, is whether you want to spend $200 million on global warming or $200 billion on global warming.  We want one of the choices to represent something other than the liberal values the media and the current White Houses wants.

We do not want republicans to continue to negotiate with democrats in order to soften their image. Most republican voters are adamantly opposed to the rapid influx of immigration in the country, and believe amnesty would simply turn these immigrants into democrats.  Yet the republican leadership is trying to help Obama in order to soften its image and cater to Latinos.  This, in my view, is political suicide.

If Jeb Bush wants to give up on principles to win in 2016, he's going to be met with a lot of opposition within his own party.  So, in this way, the media is once again wrong.  This is another reason why the media cannot be trusted. 

Amtrak tragedy: Will It Become Political?

Prayers are headed to Philadelphia to the the victims of the Amtrak train that crashed.  It was a tragedy. And with every tragedy there is someone who tries to take advantage of it to advance a political agenda.  My guess is it will be to call for more spending on infrastructure.

And it wouldn't be the first time either, as in May of 2013 the Washington Post ran an article suggesting that more money should be spent on infrastructure after the collapse of a bridge along Interstate 5 in Washington. So, every tragedy has to be taken advantage of politically by someone.  I mean, it shouldn't, but it usually is.

So, who's going to be the first to take advantage of this tragedy?

I didn't have to work today, and it's rather cool outside, so I spent quality time listening to accounts of the crash.  And then one commentator said this (paraphrasing):  "It's possible one of the possible causes might be infrastructure.  If, for instance, the track caused this crash, it might indicate the need for more spending."

Aha.  And he wasn't the first.  So that's when it occurred to me that I was on to something.  And then I read the transcripts on the Rush Limbaugh show and that's what he talked about.  He said that over a trillion dollars has been allocated to infrastructure since 2008.

He said:

"It's predictable as easily as the sun coming up in the morning. We're gonna hear that we need to really ramp up infrastructure spending. We're gonna hear hand-wringing, see hand-wringing and complaints, "How could this have happened? We are letting our country just become dilapidated right in front of our eyes. Where is all the infrastructure spending?" And at that point somebody needs to say, "You have asked for over a trillion dollars in infrastructure spending since 2008, and we'd like to see where the money already allocated for infrastructure spending has actually gone."

 According to newsbusters.org, the efforts to do this have already begun by the NBC network.

Since when does throwing more money at something ever solve a problem? We increase education spending every year, and our national ranking continues to plummet.  We allocate a trillion dollars for infrastructure, and people complain about it now more than ever.

Further reading:

• U.S. Infrastructure Spending Has Plummeted Since 2008
• Democrats Blame Amtrak Crash on Infrastructure Spending
• Scandal: Less Than 7% of Trillion Dollar 'Stimulus' Spent on Infrastructure
• CNN, CNBC, and MSNBC Push Infrastructure Spending After Amtrak Accident

Benjamin Harrison: a protectionist republican

Benjamin Harrison (1833-1901)
President (1889-1893)

Benjamin Harrison was the grandson of former president William Henry Harrison, and in 1888 became the 23rd president of the United States when he defeated Grover Cleveland in the electoral college (although he would lose the popular vote).

He was a republican and a protectionist, meaning he was an advocate of restraining international trade in order to protect American businesses and jobs from foreign intervention.

As a protectionist he would sign the McKinley Tariff Act of 1890, which raised the tariff (taxes) on foreign goods imported into the U.S. so their prices were competitive with American goods.  Republicans at the time believed this protected American industries and workers by encouraging people to buy products made at home.

Yet despite his pro-business stance, he was a supporter of the Sherman Anti-Trust Act 1890 that was designed to allow the government to break up new business organizations called trusts.  Trusts are when many similar companies band together to form monopolies that allow them to lower prices and put competitors out of business.

Harrison believed monopolies were unfair for consumers.  Yet despite signing the law, only one monopoly was broken up during Harrison's term in office.  The real stance against such monopolies would come a decade later when progressive republican Theodore Roosevelt was elected President.

Roosevelt in mind, many republicans did not like him because he was a progressive. Yet the man who was responsible for his first job on the national level was Harrison, who appointed him to the U.S. Civil Service Commission.  Roosevelt would prove to be a thorn in Harrison's side, as Harrison refused to accept many of his progressive recommendations.

Harrison was also a supporter of protecting the voting rights of African Americans.  This came to the forefront of his agenda because many southern states had created laws raising requirements for voters that essentially prevented African Americans from voting in the south.

No one knows whether Harrison was truly concerned about African Americans, or if he was doing this for political gain, for it was almost guaranteed that African Americans would vote republican. However, in the end, he did not have enough support in congress (mainly due to a democratic filibuster), and such noble efforts to protect African American voting rights did not gain steam for another 70 years.

Many western states met requirements for statehood when Cleveland was president, but he and his administration dragged their feet on this issue mainly because those states would shift the balance of power in Congress in favor of republicans.

Yet when Harrison was elected, the republican controlled congress took swift action to see to it that Washington (1889), Montana (1889), Idaho (1890), Wyoming (1890), North Dakota (1889) and South Dakota (1889) were admitted as new states.  As expected, the six new states elected 12 new senators, greatly enhancing the republican majority in the senate.

In 1878 Congress succeeded in passing the Bland Allison Act, which required the U.S. Treasury to buy between $2 million and $4 million in silver each month. This was a response to pressure by some Congressmen to purchase from minors some of the surplus of silver in order to back the dollar not just with gold (as was traditionally the case) but also with silver. The bill also allowed for the coinage of silver.

The 12 new western senators once again reinvigorated talk about the surplus silver supply in western states.  They tried to push through congress bills to increase federal dollars spent each month on silver and allow the U.S. to coin silver.

Former president Grover Cleveland was watching these actions closely.  As an ardent opponent of the U.S. purchasing silver, he was very concerned.  While his political advisors recommended he stay silent on the issue as to not offend potential voters, he said, "I am supposed to be a leader of my party.  If any word of mine can check these dangerous fallacies, it is my duty to give that word, whatever the cost may be to me."

So Cleveland published a letter in opposition to the coinage of money, and it became known as the "Silver Letter."  While Harrison signed the Sherman Silver Purchase Act in 1890.  Yet the bill to allow the U.S. to coin silver failed to make it out of congress, and Cleveland was happy about this. But his political aspirations were reinvigorated, and he decided he wanted to run again for president.

The Congress of 1889-90 created bills that appropriated so much money to unworthy causes that it was often referred to as the "billion-dollar Congress."  It appropriated money to steamship companies and new railroads, and spent large sums for the construction of new U.S. navy ships.  This soured voter opinion of Congress.

While the Sherman Silver Purchase Act resulted in an economic boom (it was short lived, but lasted through the end of Harrison's term), but the McKinley Tariff Act was seen as a boon to wealthy industrialists.  Such displeasure was revealed at the midterm election of 1890 when House Republicans lost 93 seats that lead democrats to a commanding majority.

Harrison faced strong opposition from William McKinley and James G. Blaine at the republican convention, and even though Harrison won the nomination on the first ballot, the party was not united.

So, Harrison ran for re-election in 1892, and this time he once again faced his arch nemesis, Grover Cleveland.  This was the only time in U.S. history a president and a former president were the two main candidates.   Harrison would once again lose the popular vote, only this time he lost the electoral college as well.

The economic boom created by purchase of silver turned out to be short lived, and almost as soon as Harrison was out of office was the  Panic of 1893, which resulted in a major depression.  Both the McKinley Tariff Act and the Sherman Silver Purchase Act were blamed.  This pretty much sealed Benjamin Harrison's legacy as a poor president. 

Sowell explains why racism is rampant in Obama's America

Racism was supposed to end with Obama.  He was supposed to create a better environment for African Americans.  Instead, racism has gotten worse.  Those who champion for equality are angrier than they've ever been.  

Race riots that were rampant during the 1960s have returned.  There have now been 5 Race Riots in Obama's Post Racial America.  If we add the Baltimore riots to this count, there have now been 6 race riots in Obama's Post Racial America.  

Obama blames Inequality facing minority men behind the unrest in Baltimore and Ferguson.  He also blames slavery and Jim crow.  During an interview with David Letterman, he said: 

If you have slavery, Jim Crow, discrimination that built up over time, even if our society has made extraordinary strides -- and I'm a testament to that, and my children are -- (applause) But it's built up over time.

Thomas Sowell, The Inconvenient Truth About Ghetto Communities' Social Breakdown, said Obama is all wrong.  He said:

Totally ignored was the fact that a black policeman in Alabama fatally shot an unarmed white teenager, and was cleared of any charges, at about the same time that a white policeman was cleared of charges in the fatal shooting of Michael Brown.

 He added:

When the recorded fatal shooting of a fleeing man in South Carolina brought instant condemnation by whites and blacks alike, and by the most conservative as well as the most liberal commentators, that moment of mutual understanding was very fleeting, as if mutual understanding were something to be avoided, as a threat to a vision of “us against them” that was more popular.

That vision is nowhere more clearly expressed than in attempts to automatically depict whatever social problems exist in ghetto communities as being caused by the sins or negligence of whites, whether racism in general or a “legacy of slavery” in particular. Like most emotionally powerful visions, it is seldom, if ever, subjected to the test of evidence.

The “legacy of slavery” argument is not just an excuse for inexcusable behavior in the ghettos. In a larger sense, it is an evasion of responsibility for the disastrous consequences of the prevailing social vision of our times, and the political policies based on that vision, over the past half century.

Anyone who is serious about evidence need only compare black communities as they evolved in the first 100 years after slavery with black communities as they evolved in the first 50 years after the explosive growth of the welfare state, beginning in the 1960s. 

You would be hard-pressed to find as many ghetto riots prior to the 1960s as we have seen just in the past year, much less in the 50 years since a wave of such riots swept across the country in 1965.

We are told that such riots are a result of black poverty and white racism. But in fact — for those who still have some respect for facts — black poverty was far worse, and white racism was far worse, prior to 1960. But violent crime within black ghettos was far less.

Murder rates among black males were going down — repeat, down — during the much-lamented 1950s, while it went up after the much celebrated 1960s, reaching levels more than double what they had been before. Most black children were raised in two-parent families prior to the 1960s. But today the great majority of black children are raised in one-parent families.

Such trends are not unique to blacks, nor even to the United States. The welfare state has led to remarkably similar trends among the white underclass in England over the same period. Just read Life at the Bottom, by Theodore Dalrymple, a British physician who worked in a hospital in a white slum neighborhood.

You cannot take any people, of any color, and exempt them from the requirements of civilization — including work, behavioral standards, personal responsibility, and all the other basic things that the clever intelligentsia disdain — without ruinous consequences to them and to society at large.

Non-judgmental subsidies of counterproductive lifestyles are treating people as if they were livestock, to be fed and tended by others in a welfare state — and yet expecting them to develop as human beings have developed when facing the challenges of life themselves.

Thomas Sowell is an American economist, social theorist, political philosopher, and author. Oh, and if you're keeping track, he's also among the most successful African Americans in the U.S.

Grover Cleveland could have done what FDR did..

Grover Cleveland had to deal with a depression throughout his second term in office. As a classical liberal president he signed a repeal of the Sherman Silver Purchase Act which many suspected was the cause of the depression, but this did not cause the depression to end.

The unemployment rate was over 2 million, and there was a lot of pressure on Cleveland to take governmental action to turn the economy around and to help all those who were suffering as a result of the depression.

Yet Cleveland believed it was not the role of government to help the unemployed, that this was the job of businessmen. In other words, while he could have signed laws that violated the constitution yet would have benefited his political career, he chose to veto bills based on principle and principle alone.

In this way, Grover Cleveland was the last classical liberal president; he was the last president who did not use executive powers for political gains. Ninety years later, also facing a depression that lingered through his term, Franklin Deleno Roosevelt did the opposite, signing bills that created programs and that also benefited his political career.

And trust me, many of the same programs that FDR signed into law (or tried to sign into law) were thought of during Cleveland's depression. In 1894, Jacob Coxey, a businessman who had been forced to lay off his workers, proposed many programs that would have benefited the underemployed, even going as far to propose a program for creating government jobs for the unemployed.

President Cleveland would have nothing to do with these programs, claiming they were unconstitutional, and they probably were. It would be another 90 years before a president (his name was Franklin Deleno Roosevelt) would have the nerve to step over constitutional bounds to sign programs, many similar to what coxey proposed, into law.

There was a lot of pressure on Cleveland to create programs to help the unemployed, and signing such bills might even have improved Clevelands popularity, and probably would have made him the democratic nominee in 1896 instead of William Jennings Bryan. Chances are he would have gone on to win re-election as FDR did 90 years later.

The truth was that the nation would have benefited from some regulation and monitoring of the economy, and such programs would also have benefited Herbert Hoover as he faced yet another economic down turn three decades later. Such programs might even have prolonged the Roaring 20s, thus preventing an aggressive progressive such as FDR from ever being elected.

But Cleveland was not interested in what might transpire in the future. He was not interested in furthering his political career if it meant violating the Constitution that he respected. He therefore would have no part in any law that violated it, and so he continued making use of his veto pen to veto bill after bill.

Almost every other president after Cleveland, including Bill Clinton, Calvin Coolidge, John F. Kennedy, Ronald Reagan, and George W. Bush signed laws that might infringe on the Constitution simply for the purpose of political gain. Grover Cleveland was the last classical liberal, and the last president to vetoe bills based on principle as opposed to signing them based on emotion.

Because of the ongoing depression, Grover Cleveland is often cited as an insignificant president. Yet because of his outright respect for the Constitution even though doing the opposite might have benefited his legacy, he ought to be regarded as one of the great presidents.

FDR created the modern economy

While it is probably true that FDR's policies (referred to as the New Deal) prolonged the Great Depression, many of the programs he created benefited future economies.  In fact, one might argue that some of the programs created by him prevented any future Great Depressions.

The best part about the New Deal, however, was that it dealt with the two main problems that plagued Warren G. Harding and Calvin Coolidge, and that was lack of regulations to deal with greedy cooks, and insurance programs to insure invested money.*

There were laws that existed prior to FDR, yet most of his predecessors believed it was not the role of government to enforce them.  FDR changed this by creating organizations to act as monitors to assure regulations were being enforced.

For instance, the New Deal created the:

• Federal Deposit Insurance Program (FDIC) which insured money invested in banks up to $100,000.  
• Securities and Exchange Commission (SEC) to regulate the stock market
• Social Security Board (SSB) was created by the Social Security Act of 1935 was responsible for monitoring insurance to the elderly, unemployment compensation, and  public assistance. The agency is now called the Social Security Administration (SSA).
• Federal Communication Commission to monitor radio and television
• Federal Housing Administration (FHA) was created as part of the Federal Housing Act of 1934 to set standards for construction of homes and to ensure loans made by banks and other lenders for the purpose of building homes.  It is now called Housing and Urban Development (HUD). This assured that even the poorest people could afford a mortgage on a house. 
• Codes for fair competition were created as part of the National Industrial Recovery Act of 1933
  including production restrictions, minimum wages, and working conditions in order to limit competition and foster a spirit of teamwork among industry rivals.

While these programs were inherently beneficial to the nation, in order to pay for them he had to push tax hikes through Congress, which ultimately tripled the tax rate during FDRs terms in office, raising the top income tax rate to 90 percent.

*By saying greedy crooks, I am not referring to people who are rich, as liberals do.  I'm referring to people who actually violate the law for their own personal gain.