Border Adjustment Tax Is Worthy of Support

[protectionist]

President Trump’s support in getting elected POTUS, in part, came from the proposal to slap outsource companies overseas, with tariffs on their imports. The idea being to make it uneconomical for those companies to operate outside the US.

Forcing them to return to the US, together with deporting illegal aliens, will indeed create more jobs (FOR AMERICANS), dramatically raise the amount of disposable income inside the US, and boost sales of US companies, creating the GDP growth we need.

Well. Now we have the naysayers. As with most critics, they are a varied group. First, there are those companies who ARE operating outside the US (and their stockholders), who don’t want to change. They only care about what’s good for THEM, and not the nation.

Then there’s the outsourcing lobby groups (Trilateral Commission, Council on Foreign Relations, etc). Then there’s opportunist politicians who support outsourcing for their own personal political gain (ex. Hillary Clinton). Last but not least there’s the Trump bashers who simply cling to an opposition of whatever Trump does, and then conjure up some ”reason” to oppose him.

Perhaps the main thrust of the tariff opponents, is the claim that they will harm the American consumers by causing prices to rise on the taxed imports. 40 years ago, as an economics teacher in the City University of New York, I taught how companies employ this myth as a scare tactic to anyone who never studied microeconomics, and doesn’t know the simple fact about how prices are established (and maintained).

Briefly, firms CANNOT just raise prices whenever they fell like it. As a former business owner myself, I know that each product has its MARKET price. This comes from the market, not us business owners. We actually have little to nothing to say about what our price will be.

The price is the highest price that can be charged, without triggering income reductions from reductions in SALES$$. A price is a number. It’s not just somebody’s lucky number. Or their birthday. Pricing experience reveals what the market price is, and any change up or down, results in reduced income.

This can be graphically shown by a bell-shaped curve, with income on the Y axis, and prices rising on the X axis. The market price (ei. the prices you see on the store shelves) are a point on the top of the curve.

Without a college course, people can just use their common sense. If firms could bring more money in (to compensate for some new expense), just by raising prices, why wouldn’t they have had those higher prices the month before ? And the month before that, etc ?

And why wouldn’t the price of every single item in Walmart be a million dollars ? Answer ? >> SALES.

 

[forkup]

President Trump’s support in getting elected POTUS, in part, came from the proposal to slap outsource companies overseas, with tariffs on their imports. The idea being to make it uneconomical for those companies to operate outside the US.

Forcing them to return to the US, together with deporting illegal aliens, will indeed create more jobs (FOR AMERICANS), dramatically raise the amount of disposable income inside the US, and boost sales of US companies, creating the GDP growth we need.

Well. Now we have the naysayers. As with most critics, they are a varied group. First, there are those companies who ARE operating outside the US (and their stockholders), who don’t want to change. They only care about what’s good for THEM, and not the nation.

Then there’s the outsourcing lobby groups (Trilateral Commission, Council on Foreign Relations, etc). Then there’s opportunist politicians who support outsourcing for their own personal political gain (ex. Hillary Clinton). Last but not least there’s the Trump bashers who simply cling to an opposition of whatever Trump does, and then conjure up some ”reason” to oppose him.

Perhaps the main thrust of the tariff opponents, is the claim that they will harm the American consumers by causing prices to rise on the taxed imports. 40 years ago, as an economics teacher in the City University of New York, I taught how companies employ this myth as a scare tactic to anyone who never studied microeconomics, and doesn’t know the simple fact about how prices are established (and maintained).

Briefly, firms CANNOT just raise prices whenever they fell like it. As a former business owner myself, I know that each product has its MARKET price. This comes from the market, not us business owners. We actually have little to nothing to say about what our price will be.

The price is the highest price that can be charged, without triggering income reductions from reductions in SALES$$. A price is a number. It’s not just somebody’s lucky number. Or their birthday. Pricing experience reveals what the market price is, and any change up or down, results in reduced income.

This can be graphically shown by a bell-shaped curve, with income on the Y axis, and prices rising on the X axis. The market price (ei. the prices you see on the store shelves) are a point on the top of the curve.

View attachment 130383

Without a college course, people can just use their common sense. If firms could bring more money in (to compensate for some new expense), just by raising prices, why wouldn’t they have had those higher prices the month before ? And the month before that, etc ?

And why wouldn’t the price of every single item in Walmart be a million dollars ? Answer ? >> SALES.

I'm not an economics professor so explain the fault in my reasoning. Walmart has low prices because they get their goods at places that have lower production costs. I think I read that the biggest cost of any good is labour costs. You suggest that Walmart move the production to the US thereby driving up labour costs. This would drive up prices for goods. More people get employed sure, but I don't think that increase in employment would even out the price of goods. Unemployment rate I just checked is 4,7 percent. not particularly high. Would being able to employ these people make up for the price hikes?

 

[shockedcanadian]

President Trump’s support in getting elected POTUS, in part, came from the proposal to slap outsource companies overseas, with tariffs on their imports. The idea being to make it uneconomical for those companies to operate outside the US.

Forcing them to return to the US, together with deporting illegal aliens, will indeed create more jobs (FOR AMERICANS), dramatically raise the amount of disposable income inside the US, and boost sales of US companies, creating the GDP growth we need.

Well. Now we have the naysayers. As with most critics, they are a varied group. First, there are those companies who ARE operating outside the US (and their stockholders), who don’t want to change. They only care about what’s good for THEM, and not the nation.

Then there’s the outsourcing lobby groups (Trilateral Commission, Council on Foreign Relations, etc). Then there’s opportunist politicians who support outsourcing for their own personal political gain (ex. Hillary Clinton). Last but not least there’s the Trump bashers who simply cling to an opposition of whatever Trump does, and then conjure up some ”reason” to oppose him.

Perhaps the main thrust of the tariff opponents, is the claim that they will harm the American consumers by causing prices to rise on the taxed imports. 40 years ago, as an economics teacher in the City University of New York, I taught how companies employ this myth as a scare tactic to anyone who never studied microeconomics, and doesn’t know the simple fact about how prices are established (and maintained).

Briefly, firms CANNOT just raise prices whenever they fell like it. As a former business owner myself, I know that each product has its MARKET price. This comes from the market, not us business owners. We actually have little to nothing to say about what our price will be.

The price is the highest price that can be charged, without triggering income reductions from reductions in SALES$$. A price is a number. It’s not just somebody’s lucky number. Or their birthday. Pricing experience reveals what the market price is, and any change up or down, results in reduced income.

This can be graphically shown by a bell-shaped curve, with income on the Y axis, and prices rising on the X axis. The market price (ei. the prices you see on the store shelves) are a point on the top of the curve.

View attachment 130383

Without a college course, people can just use their common sense. If firms could bring more money in (to compensate for some new expense), just by raising prices, why wouldn’t they have had those higher prices the month before ? And the month before that, etc ?

And why wouldn’t the price of every single item in Walmart be a million dollars ? Answer ? >> SALES.

I'm not an economics professor so explain the fault in my reasoning. Walmart has low prices because they get their goods at places that have lower production costs. I think I read that the biggest cost of any good is labour costs. You suggest that Walmart move the production to the US thereby driving up labour costs. This would drive up prices for goods. More people get employed sure, but I don't think that increase in employment would even out the price of goods. Unemployment rate I just checked is 4,7 percent. not particularly high. Would being able to employ these people make up for the price hikes?

I believe that a border tax would not increase prices significantly, it would simply decrease the profit margins of some businesses and, if businesses overprice it will allow other competitors to enter the market who are willing to accept smaller profit margins.

Also, said businesses would have to work harder to get better labour deals overseas in order to decrease their costs to offset the border tax.

In theory, a border tax would not be good for consumers, but, when operating in the current heavily skewed climate of extremely UNDER priced wages and currencies in places like China, such a tax would be wise and effective without impacting consumer costs much if at all. It would also balance out abuses of trading partners like Canada who enter American businesses in Canada and are in fact socialist. Free markets and socialist markets don't mix, so why pretend it's an even playing field?

 

[protectionist]

I'm not an economics professor so explain the fault in my reasoning. Walmart has low prices because they get their goods at places that have lower production costs. I think I read that the biggest cost of any good is labour costs. You suggest that Walmart move the production to the US thereby driving up labour costs. This would drive up prices for goods. More people get employed sure, but I don't think that increase in employment would even out the price of goods. Unemployment rate I just checked is 4,7 percent. not particularly high. Would being able to employ these people make up for the price hikes?

You/ like many others, are hoodwinked into thinking there will be price hikes ? Reread the OP.

 

[forkup]

I'm not an economics professor so explain the fault in my reasoning. Walmart has low prices because they get their goods at places that have lower production costs. I think I read that the biggest cost of any good is labour costs. You suggest that Walmart move the production to the US thereby driving up labour costs. This would drive up prices for goods. More people get employed sure, but I don't think that increase in employment would even out the price of goods. Unemployment rate I just checked is 4,7 percent. not particularly high. Would being able to employ these people make up for the price hikes?

You/ like many others, are hoodwinked into thinking there will be price hikes ? Reread the OP.

So you are saying that labour costs have no influence on pricing? Explain it like I'm dumb, (which I very likely will be)

 

[protectionist]

So you are saying that labour costs have no influence on pricing? Explain it like I'm dumb, (which I very likely will be)

I'm saying what I said. Read the OP.

 

[toomuchtime_]

I'm not an economics professor so explain the fault in my reasoning. Walmart has low prices because they get their goods at places that have lower production costs. I think I read that the biggest cost of any good is labour costs. You suggest that Walmart move the production to the US thereby driving up labour costs. This would drive up prices for goods. More people get employed sure, but I don't think that increase in employment would even out the price of goods. Unemployment rate I just checked is 4,7 percent. not particularly high. Would being able to employ these people make up for the price hikes?

You/ like many others, are hoodwinked into thinking there will be price hikes ? Reread the OP.

So you are saying that labour costs have no influence on pricing? Explain it like I'm dumb, (which I very likely will be)

So you think it's an all or nothing proposition? Either labor costs are the largest cost of production or they don't matter at all?

Some industries are labor intensive and some are not. Even in industries that are presently labor intensive where labor costs are higher, often technology can reduce the need for many workers, and this has the added bonus of boosting our manufacturing sector. For decades we have heard we can't get along without illegals to harvest our crops, but when Arizona passed tough laws that chased most of the illegals away, farmers found that they could be easily and cheaply replace them with machinery and when that happened the agriculture jobs that remained paid higher wages because they required skills to operate and maintain the new equipment and not just to pick produce.

A border adjustment tax will spur price competition among American producers and that will lead to the use of technology to achieve greater efficiency, thus not only providing more jobs and taxes in the first industry but also in the industries providing the technology.

 

[HenryBHough]

Let us not forget basic Democrat economics:

When the owner of a business sees similar opportunities to grow that business:

Opportunity #1 will increase sales and expand the business through automating part of it and employing more people overall though more efficiently than under the old model. End result: more highly paid (trained) workers and increased profit.

Opportunity #2 will expand the business but will use antiquated manufacturing techniques to maximize hiring but of unskilled, minimum-wage workers. It also is cleverly designed to maximumize the amount of tax due to government rather than enrich the workers or generate evil profits.

Which would The Democrat Party ordain as "fair" and "responsible"?

 

[busybee01]

A border adjustment tax is a stupid idea. It is another name for a tariff. It will invite retaliation. In addition, it will increase costs for consumers and consumers will have fewer choices. Taxes are paid by consumers not corporations so the idea that consumers will not suffer is ridiculous. Businesses cannot operate at a loss no matter what kind of curve you use.

 

[Brain357]

And the reality is:
2009 tire tariffs cost US consumers $926K per job saved and led to the loss of 3 retail jobs per factory job saved • AEI

According to our calculations, explained in this policy brief, the total cost to American consumers from higher prices resulting from safeguard tariffs on Chinese tires was around $1.1 billion in 2011. The cost per job manufacturing saved (a maximum of 1,200 jobs by our calculations) was at least $900,000 in that year (see table above).

 

[forkup]

I'm not an economics professor so explain the fault in my reasoning. Walmart has low prices because they get their goods at places that have lower production costs. I think I read that the biggest cost of any good is labour costs. You suggest that Walmart move the production to the US thereby driving up labour costs. This would drive up prices for goods. More people get employed sure, but I don't think that increase in employment would even out the price of goods. Unemployment rate I just checked is 4,7 percent. not particularly high. Would being able to employ these people make up for the price hikes?

You/ like many others, are hoodwinked into thinking there will be price hikes ? Reread the OP.

So you are saying that labour costs have no influence on pricing? Explain it like I'm dumb, (which I very likely will be)

So you think it's an all or nothing proposition? Either labor costs are the largest cost of production or they don't matter at all?

Some industries are labor intensive and some are not. Even in industries that are presently labor intensive where labor costs are higher, often technology can reduce the need for many workers, and this has the added bonus of boosting our manufacturing sector. For decades we have heard we can't get along without illegals to harvest our crops, but when Arizona passed tough laws that chased most of the illegals away, farmers found that they could be easily and cheaply replace them with machinery and when that happened the agriculture jobs that remained paid higher wages because they required skills to operate and maintain the new equipment and not just to pick produce.

A border adjustment tax will spur price competition among American producers and that will lead to the use of technology to achieve greater efficiency, thus not only providing more jobs and taxes in the first industry but also in the industries providing the technology.

So you are saying that labour costs have no influence on pricing? Explain it like I'm dumb, (which I very likely will be)

I'm saying what I said. Read the OP.

For a former professor you seem to not want to really explain yourself further. So I'll explain your position in a nutshell, if I get it wrong feel free to correct me.
Companies will not hike prices because prices are set at the maximum level people can afford.
If that's your position I have news for you. They will hike prices and people will be able to afford it. How, you may ask? Simple by the same means people in America succeed now in living beyond their means. They call it credit. What is you think the more likely scenario. Companies swallowing their loss of revenue or a massive credit program?

 

[protectionist]

A border adjustment tax is a stupid idea. It is another name for a tariff. It will invite retaliation. In addition, it will increase costs for consumers and consumers will have fewer choices. Taxes are paid by consumers not corporations so the idea that consumers will not suffer is ridiculous. Businesses cannot operate at a loss no matter what kind of curve you use.

This dopey post was completely refuted in the OP.

If American businesses cannot afford to operate in America and pay a standard American decent wage, then they cannot afford to be in business at all, and they shouldn't be. They should be doing just what all the rest of us who also can't afford to own our own business do >> GET A JOB!

 

[protectionist]

And the reality is:
2009 tire tariffs cost US consumers $926K per job saved and led to the loss of 3 retail jobs per factory job saved • AEI

According to our calculations, explained in this policy brief, the total cost to American consumers from higher prices resulting from safeguard tariffs on Chinese tires was around $1.1 billion in 2011. The cost per job manufacturing saved (a maximum of 1,200 jobs by our calculations) was at least $900,000 in that year (see table above).

There is NO SUCH THING as "higher prices resulting from safeguard tariffs" No firm can raise the price of its product above its market price. To do so will put it out of business.

There is tons of propaganda that is to the contrary of this simple economic reality >> it is designed for the ignorant. That is what your link is. Nothing more.

 

[protectionist]

For a former professor you seem to not want to really explain yourself further. So I'll explain your position in a nutshell, if I get it wrong feel free to correct me.
Companies will not hike prices because prices are set at the maximum level people can afford.
If that's your position I have news for you. They will hike prices and people will be able to afford it. How, you may ask? Simple by the same means people in America succeed now in living beyond their means. They call it credit. What is you think the more likely scenario. Companies swallowing their loss of revenue or a massive credit program?

The fallacy of your post is the word "afford" It's not a matter of affording. It is simply what people WILL pay based on what they perceive to be a correct price.

If you go above your market price, your sales fall - like a lead ball.

 

[percysunshine]

.
Price controls never work.

Go try to find a roll of toilet paper in Venezuela.

 

[The Sage of Main Street]

A border adjustment tax is a stupid idea. It is another name for a tariff. It will invite retaliation. In addition, it will increase costs for consumers and consumers will have fewer choices. Taxes are paid by consumers not corporations so the idea that consumers will not suffer is ridiculous. Businesses cannot operate at a loss no matter what kind of curve you use.

This dopey post was completely refuted in the OP.

If American businesses cannot afford to operate in America and pay a standard American decent wage, then they cannot afford to be in business at all, and they shouldn't be. They should be doing just what all the rest of us who also can't afford to own our own business do >> GET A JOB!

Blue-Collar Yellow

The plutocratic parasites could have outsourced a hundred years before they did, but they waited until Americans became economic wimps before daring to do so.

 

[busybee01]

A border adjustment tax is a stupid idea. It is another name for a tariff. It will invite retaliation. In addition, it will increase costs for consumers and consumers will have fewer choices. Taxes are paid by consumers not corporations so the idea that consumers will not suffer is ridiculous. Businesses cannot operate at a loss no matter what kind of curve you use.

This dopey post was completely refuted in the OP.

If American businesses cannot afford to operate in America and pay a standard American decent wage, then they cannot afford to be in business at all, and they shouldn't be. They should be doing just what all the rest of us who also can't afford to own our own business do >> GET A JOB!

It was not refuted in the OP. The OP was a bunch of garbage. You also need to look at the demand curve. When you raise prices, that means that demand goes down. When demand goes down, that means jobs are lost. The fact is that Larry Kudlow calls this voodoo economics. I would rather be taught by Kudlow.

The fact is that businesses are not in business to provide Americans jobs. They produce goods and services and the consumer decides. Take your idiotic comments and go to HELL!!

 

[Brain357]

And the reality is:
2009 tire tariffs cost US consumers $926K per job saved and led to the loss of 3 retail jobs per factory job saved • AEI

According to our calculations, explained in this policy brief, the total cost to American consumers from higher prices resulting from safeguard tariffs on Chinese tires was around $1.1 billion in 2011. The cost per job manufacturing saved (a maximum of 1,200 jobs by our calculations) was at least $900,000 in that year (see table above).

There is NO SUCH THING as "higher prices resulting from safeguard tariffs" No firm can raise the price of its product above its market price. To do so will put it out of business.

There is tons of propaganda that is to the contrary of this simple economic reality >> it is designed for the ignorant. That is what your link is. Nothing more.

We have many years of examples like the one I posted. Tariffs have never worked. Your claims don't match reality.

 

[Brain357]

New tariffs on imports are boosting steel prices in the U.S., offering a lifeline to beleaguered American steelmakers but raising costs for manufacturers of goods ranging from oil pipes to factory equipment to cars.

US Steel Tariffs Against China Are Working: Americans Losing Jobs, Becoming Poorer As A Result

 

[Norman]

A border adjustment tax is a stupid idea. It is another name for a tariff. It will invite retaliation. In addition, it will increase costs for consumers and consumers will have fewer choices. Taxes are paid by consumers not corporations so the idea that consumers will not suffer is ridiculous. Businesses cannot operate at a loss no matter what kind of curve you use.

You don't understand, it's not a zero sum game. As a result Trump can reduce other taxes.