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The Libertarian Argument for Tariffs
Posted on 4/4/25 at 10:05 pm
Posted on 4/4/25 at 10:05 pm
2nd Amendment
National Security. Libertarian philosophy typically recognizes the state’s role in providing a common defense for its people. Protecting national sovereignty and defending the free market within the nation are core responsibilities of the state. To fulfill these responsibilities, the state must ensure its capacity for self-reliance, particularly in critical industries such as defense manufacturing and energy production. Dependence on foreign suppliers not only poses risks to national security but also undermines the stability of the domestic market.
INSIGHT
National Security. Libertarian philosophy typically recognizes the state’s role in providing a common defense for its people. Protecting national sovereignty and defending the free market within the nation are core responsibilities of the state. To fulfill these responsibilities, the state must ensure its capacity for self-reliance, particularly in critical industries such as defense manufacturing and energy production. Dependence on foreign suppliers not only poses risks to national security but also undermines the stability of the domestic market.
INSIGHT
2
Posted on 4/4/25 at 10:08 pm to QboveTopSecret
Actual libertarian argument on the issue
Milton Friedman
quote:
In the light of all this analysis, let us consider some current issues. Take the case of steel. What about the argument of steel that we need a steel industry for our national defense? You know there was a famous statement by, I think it was Emerson, that patriotism is the last resort of the scoundrel. I don't want to call the steel people scoundrels, they're not. They're perfectly decent human beings. They're like you and me and like you and me they know very well that what's good for them is good for the country. We are all sincere about that. The greatest human capacity we have is not to reason but to rationalize.
But what of the validity of that argument? Well, there are two things to be said about it. First, if we had complete free trade in steel, there is not the slightest chance in the world that the U.S. steel industry would disappear. The advantages of being close to sources of supply, to sources of fuel, and to the market would certainly guarantee that we would have a very large steel industry. It might be that foreign imports would amount to 15, 20, 30 percent of the total. But so far as our national defense needs are concerned, insofar as we cannot satisfy them by importing steel from abroad, we would always have a domestic steel industry. Second, ask a steel man whether before he builds a factory he gets estimates of the cost of building it. He'll look at you as if you're mad and say, "Of course, of course I get estimates." And I will say to him, well now tell me do you get estimates of building it just one way? "Oh no, we get estimates of building it in a variety of alternative ways and then pick the best." And my standard answer to the steel man who gives the national defense argument is to say that when the steel industry presents to this country cost estimates of alternative ways of providing for our national security I will believe that its argument is sincere and not simply an excuse for self-interest.
Because there are many ways. You can stockpile steel. It's the easiest thing in the world to stockpile. Some of it may rust but that's not a very serious problem. Aside from stockpiling it, you can maintain some steel plants in mothballs the way we maintain ships in mothballs, and so on. There are lots of alternatives. Have you ever seen a cost estimate by the steel industry of how much it would cost to protect our national security one way or the other?
The same thing has been true over the years of the continuous argument by the oil interests that we ought to have, at one point, an oil import quota, or percentage depletion, or all sorts of other things on national security grounds. I believe that is an excuse and not a reason.
Milton Friedman
Posted on 4/4/25 at 10:09 pm to SlowFlowPro
Actual Libertarian argument:
Hans-Hermann Hoppe, Democracy: The God That Failed
Hans-Hermann Hoppe, Democracy: The God That Failed
Posted on 4/4/25 at 10:38 pm to QboveTopSecret
While hardly a ringing endorsement of tariffs, noted libertarian and Loyola Professor Walter Block argues that tariffs may be a lesser evil compared to the income tax:
Tariffs Are Awful, But The Income Tax May Be Worse…
by Walter E. Block
Every fiber of my economic being cries out against tariffs. If they are so good, why doesn’t each state in the US have one against the products of all of the other 49? That is, Ohio could “protect” its industries against the incursions from Arizona. This is obviously silly. One of the important reasons America is so prosperous is that we have a gigantic, internal, free trade area.
Donald Trump supports them on the ground that the McKinley administration was prosperous, and relied upon tariffs. But this is to commit the post hoc ergo propter hoc logical fallacy: that since A precedes B, A must be the cause of B. No, America did indeed become rich during this epoch, but that was in spite of tariffs, not due to their benign influence. If you are looking for a historical episode to shed light on this matter, the Smoot-Hawley Tariff of 1930 will do far better: it greatly worsened an already bad recession, plunging our economy into a deep depression.
Our President also claims that the US is victimized by a negative balance of trade: we buy more from Canada and other countries than they purchase from us. However, I have a horrid balance of trade with McDonald’s and Wal-Mart. I acquire several hundreds of dollars’ worth of their products every year, and neither has yet seen fit to reciprocate with any of my economic services (hint, hint!). On the other hand, I have a very strong positive balance of trade with my employer, Loyola University New Orleans. They pay me a decent salary; apart from a few lunches in their cafeteria, my expenditures to them fill their coffers to a zero degree. Should anyone worry about this sort of thing? Of course not. Ditto for international trade. If Country A buys more from B than it sells to it, money will flow from the former to the latter, reducing prices in the former and raising them in the latter, until matters balance out.
Everyone realizes the foolishness of tariffs when it comes to absolute advantage. No Canadian objects to the importation of bananas from Costa Rica. Producing this tropical product in the frozen North would be financially prohibitive (gigantic hothouses). Ditto for maple syrup in the country to the south. The only way they could produce this item would be to place maple trees in gigantic refrigerators. Ludicrous and prohibitively expensive.
But when it comes to comparative advantage, all too many people are out to lunch insofar as the teachings of Economics 101 are concerned. They fear that other countries might be more efficient than we are; with free trade, they would produce everything, we, nothing, and we would all starve to death from massive unemployment.
To dispel this myth, let’s consider a thought experiment. A lawyer is as good a typist as his secretary. He can produce $1,000 per day by practicing his profession. But for every such day, he needs a certain amount of typing. He can produce $200 worth each day. In two days, he can thus earn $1200 on his own. If he hires a typist, he can earn $2,000 from lawyering in two days, but must pay his secretary $200 daily for a total of $400. If he trades with her, he will come out with $2,000-$400=$1,600, an appreciable gain for him.
So is there any economic case for tariffs, given the foregoing? Yes, paradoxically, there is — in a way, if the alternative is a tax that’s even worse.
At the start of his second term, President Trump initially fired 6% of the employees of the Internal Revenue Service. He is now looking to end the employment of some 50% of them. Suppose he follows this up by getting rid of all of the rest of the IRS bureaucrats, eliminating the dreaded income tax, and achieving revenue neutrality with tariffs. His motto might be: “Let’s turn back the clock to 1912,” the year before this tax was implemented (when it ranged from 1% to 7%!).
What would the benefits be thereof? First of all, there are many intelligent, productive people who work for the IRS. There are some 90,000 of them. If dismissed by their employer, they would be freed up to produce goods and services desired by the populace. Ditto for the many accountants and tax lawyers who devote all or part of their time to helping their clients wrestle with complicated IRS regulations. Further, many of us fill out our own tax forms. This takes hours, days in some cases, time that could be better spent on leisure or productivity.
The benefit here is that it takes relatively little labor to run a tariff system. Hey, we already have tariffs in place. An increase in their level would hardly call for much more manpower, likely hardly any more at all.
Halfway measures will avail us little. But if Mr. Trump completely eliminates the IRS and the hated income tax along with it, there may be a reasonable case for increasing tariff rates. Not to present punitive levels, though.
To put it another way, if we accept that there has to be a government, and it therefore needs some revenue to function, this might be the least-bad option.
Should we worry about so many people becoming unemployed? Not at all. A similar sort of thing occurred when the car replaced the horse and buggy, when the cell phone substituted for Kodak, when we switched from typewriters to computers, etc. We are all the richer for this sort of thing, and will be in this case too.
Tariffs Are Awful, But The Income Tax May Be Worse…
by Walter E. Block
Every fiber of my economic being cries out against tariffs. If they are so good, why doesn’t each state in the US have one against the products of all of the other 49? That is, Ohio could “protect” its industries against the incursions from Arizona. This is obviously silly. One of the important reasons America is so prosperous is that we have a gigantic, internal, free trade area.
Donald Trump supports them on the ground that the McKinley administration was prosperous, and relied upon tariffs. But this is to commit the post hoc ergo propter hoc logical fallacy: that since A precedes B, A must be the cause of B. No, America did indeed become rich during this epoch, but that was in spite of tariffs, not due to their benign influence. If you are looking for a historical episode to shed light on this matter, the Smoot-Hawley Tariff of 1930 will do far better: it greatly worsened an already bad recession, plunging our economy into a deep depression.
Our President also claims that the US is victimized by a negative balance of trade: we buy more from Canada and other countries than they purchase from us. However, I have a horrid balance of trade with McDonald’s and Wal-Mart. I acquire several hundreds of dollars’ worth of their products every year, and neither has yet seen fit to reciprocate with any of my economic services (hint, hint!). On the other hand, I have a very strong positive balance of trade with my employer, Loyola University New Orleans. They pay me a decent salary; apart from a few lunches in their cafeteria, my expenditures to them fill their coffers to a zero degree. Should anyone worry about this sort of thing? Of course not. Ditto for international trade. If Country A buys more from B than it sells to it, money will flow from the former to the latter, reducing prices in the former and raising them in the latter, until matters balance out.
Everyone realizes the foolishness of tariffs when it comes to absolute advantage. No Canadian objects to the importation of bananas from Costa Rica. Producing this tropical product in the frozen North would be financially prohibitive (gigantic hothouses). Ditto for maple syrup in the country to the south. The only way they could produce this item would be to place maple trees in gigantic refrigerators. Ludicrous and prohibitively expensive.
But when it comes to comparative advantage, all too many people are out to lunch insofar as the teachings of Economics 101 are concerned. They fear that other countries might be more efficient than we are; with free trade, they would produce everything, we, nothing, and we would all starve to death from massive unemployment.
To dispel this myth, let’s consider a thought experiment. A lawyer is as good a typist as his secretary. He can produce $1,000 per day by practicing his profession. But for every such day, he needs a certain amount of typing. He can produce $200 worth each day. In two days, he can thus earn $1200 on his own. If he hires a typist, he can earn $2,000 from lawyering in two days, but must pay his secretary $200 daily for a total of $400. If he trades with her, he will come out with $2,000-$400=$1,600, an appreciable gain for him.
So is there any economic case for tariffs, given the foregoing? Yes, paradoxically, there is — in a way, if the alternative is a tax that’s even worse.
At the start of his second term, President Trump initially fired 6% of the employees of the Internal Revenue Service. He is now looking to end the employment of some 50% of them. Suppose he follows this up by getting rid of all of the rest of the IRS bureaucrats, eliminating the dreaded income tax, and achieving revenue neutrality with tariffs. His motto might be: “Let’s turn back the clock to 1912,” the year before this tax was implemented (when it ranged from 1% to 7%!).
What would the benefits be thereof? First of all, there are many intelligent, productive people who work for the IRS. There are some 90,000 of them. If dismissed by their employer, they would be freed up to produce goods and services desired by the populace. Ditto for the many accountants and tax lawyers who devote all or part of their time to helping their clients wrestle with complicated IRS regulations. Further, many of us fill out our own tax forms. This takes hours, days in some cases, time that could be better spent on leisure or productivity.
The benefit here is that it takes relatively little labor to run a tariff system. Hey, we already have tariffs in place. An increase in their level would hardly call for much more manpower, likely hardly any more at all.
Halfway measures will avail us little. But if Mr. Trump completely eliminates the IRS and the hated income tax along with it, there may be a reasonable case for increasing tariff rates. Not to present punitive levels, though.
To put it another way, if we accept that there has to be a government, and it therefore needs some revenue to function, this might be the least-bad option.
Should we worry about so many people becoming unemployed? Not at all. A similar sort of thing occurred when the car replaced the horse and buggy, when the cell phone substituted for Kodak, when we switched from typewriters to computers, etc. We are all the richer for this sort of thing, and will be in this case too.
Posted on 4/4/25 at 10:49 pm to SlowFlowPro
quote:
The essence of capitalism's foreign policy is free trade—i.e., the abolition of trade barriers, of protective tariffs, of special privileges—the opening of the world's trade routes to free international exchange and competition among the private citizens of all countries dealing directly with one another.
Btw Slow, this wasn’t happening and wasn’t going to happen under anyone you voted for.
Posted on 4/4/25 at 10:50 pm to dgnx6
quote:
and wasn’t going to happen under anyone you voted for.
That's why I voted for RFK
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