THE US-CHINA ‘TRADE DEAL’
By PAUL CRAIG ROBERTS
Commentary by Charles Sulka
URL of original article:
http://www.informationclearinghouse.info/52872.htm
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Paul Craig Roberts solves the nation’s economic problems with a simple, easy-to-implement solution that is all good and no bad. At least, for 99% of Americans, that is. It won’t be advantageous for the criminal cartels who have ravaged the US economy for personal gain — at least not in the short term. In the long term, however, everyone benefits when the economy is set aright.
PCR provides us with a practical solution. It could be implemented in a matter of days. The enforcement mechanism and the needed bureaucracy are already in place.
The beauty of PCR’s proposed import tax is that it can be applied to any of America’s trading partners, anywhere in the world, immediately or at any time in the future, and without fanfare. Expanding the program to include other countries would require no new agreements, no new regulations, no new bureaucracies, no new discussions or debates. It is truly a ‘one-size-fits-all’ concept. Only the specific details, i.e. the cost of labor, cost of doing business (bribes, etc.) or the cost of environmental safeguards in a particular country would differ.
[Ed. Note: this would also provide meaningful and productive work for government economists, many of whom have not been of much real use to the nation in recent years. At least now they could earn their salaries by devoting their time and energy to analyzing the costs of goods produced overseas, which would be used to calculate the import tax rate. Some economists might have to take refresher courses in basic accounting, of course. For this, we can rejuvenate the national Job Corps program.]
The proposed import tax would also lead the nation’s economists in the direction of thinking about the real cost of goods, taking into consideration many factors which are today externalized and unaccountable.
We can use the increased revenues from the foreign corporations to provide seed capital for a whole new class of entrepreneurial activities. The nation can promote new business ventures with grants and interest-free loans — or very low-interest loans — and, importantly, massive government purchase arrangements. Rather than loaning money to the wealthy at no interest which they use in speculation, stock price manipulation, and insider trading, we could loan money at no interest at new businesses which would create jobs, stimulate the economy, and generate tax revenues.
[This, in turn, could rejuvenate the derelict Small Business Administration, one of the most important and successful government programs, a fact which made it the target of Republicans everywhere, for there is nothing a Republican hates more than seeing vital new business spring up — new businesses which will take market share from their own moribund monopolies and cartels, digging into their unearned income and undeserved profits.]
This will help put the American economy on the road to recovery, and do so in a fair and responsible manner. The crooks who destroyed this nation in their Wall Street board rooms and corporate headquarters won’t be able to profit twice from their crimes.
This is the answer. Listen to what PCR has to say.
(chs 01-20-2020 1534 -0500)
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The US/China “Trade Deal”?
By Paul Craig Roberts
ICH “Information Clearing House”
January 18, 2020
The first thing to understand is that it is not a trade deal. It is Trump backing off his tariffs when he discovered that the tarrifs fall on US goods and American consumers, not on China. Trump is covering his retraction by calling it a trade deal. China’s part of the deal is to agree to purchase the US goods that it already intended to purchase.
The purpose of tariffs is to protect domestic producers from foreign competition by raising the price of imported goods. What Trump, his administration, and the financial press did not understand is that at least half of the US trade deficit with China is the offshored goods produced in China by such corporations as Apple, Nike, and Levi. The offshored production of US global corporations counts as imports when they are brought into the US to be sold to Americans. Thus, the cost of the tariffs were falling on US corporations and US consumers.
Tariffs are not an effective way to bring offshored US manufacturing home. If Trump or any US government wants to bring US manufacturing back to the US from its offshored locations, the way to achieve this result is to change the way the US taxes corporations. The rule would be: If a US corporation produces in the US with US labor for US markets, the firm’s profits are taxed at a low rate. If the corporation produces products for the US market abroad with foreign labor, the tax rate will be high enough to more than wipe out the labor cost savings.
As I have emphasized for years, the offshoring of US manufacturing has inflicted massive external costs on the United States. Middle class jobs have been lost, careers ended, living standards of former US manufacturing workers and families have dropped. The tax base of cities and states has shrunk, causing cutbacks in public services and undermining municipal and state pension funds. You can add to this list. These costs are the true cost of the increased profits from the lower foreign labor and compliance costs. A relatively few executives and shareholders benefitted at the expense of a vast number of Americans.
This is the problem that needs to be addressed and corrected.
Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, How America Was Lost, and The Neoconservative Threat to World Order. Donate and support Dr, Roberts Work.