Is the folly of laying duties on your own manufactures a new discovery?One of the things that constantly amazes me when people begin discussion of tax policy is that they so often approach the subject as though it were merely a matter of theory, as though tax policies have existed only since the introduction of the Sixteenth Amendment, as though differing policies have not a lengthy track record by which we may evaluate them.
"Free Trade"--it occurs to me that some people may not entirely understand what I mean by "free trade," and may be thinking that I am about to talk about "free markets." I am not. "Free Trade" and "free markets" are two entirely different animals. "Free Trade" is the policy of eliminating tariffs--taxes--on imported goods, especially manufactured goods, or lowering them to the point of being nearly non-existent. It has a track record. It is largely a track record of exporting manufacturing industries and the high-paying jobs and economic and military strength that go with them to countries with an abundance of human capital (which they often don't mind abusing) and a willingness to foul their own environment to the point of near-unlivability. It also has a track record of creating, in a way, confiscatory income taxes--it is basically always a choice between "tax consumption" (usually imports) or "tax income"--and big, intrusive government (the federal behemoth we now live with did not exist when the feds had to live with income from tariffs).
Tariffs also have a track record--and before someone weighs in with, "Yeah, Smoot-Hawley caused/prolonged the Great Depression!," let me note that this is in much dispute; no less an economic mind than Milton Friedman disputes it, and he is not alone. If you are interested in more, please read the relevant chapter in Patrick Buchanan's The Great Betrayal. It was during the time that the federal government was financed principally by tariffs and duties on imported goods that manufacturing in this country flourished, and the country rose to become an economic and industrial colossus recognized the world over.
It is partly because of this history, this track record, that I support the Fair Tax. It is a consumption tax, and amongst the elements of it I like are that it creates a tremendous tax advantage to manufacturing in this country--as, obviously, do tariffs. History gives every indication that a consumption tax that creates such a tax advantage will stimulate our economy far more than attempting to squeeze the so-called "rich" (always remember: to those consumed with envy, "rich" means only that you have a dollar more than they think you ought to have) ever will.
So why don't our leaders favor this idea? At bottom, I think that it's because for too many of them, tax policy has become far less about what will or will not work and far more about whom they can and cannot reward. With the Fair Tax, you cannot buy votes as easily as you can with a graduated income tax. And ultimately, buying votes with public money seems to be what it's all about.
And that, in a way, is the answer to Burke's question: they--lawmakers, that is--know full well how stupid some of their tax ideas are. They just don't give a rip unless it suits their own ends.
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