America’s retreat from free trade is weakening the economic foundation that sustained Pax Americana for generations.
On February 20, the Supreme Court handed the Trump administration a stinging rebuke. In a 6-3 decision, the justices ruled that the International Emergency Economic Powers Act (IEEPA) “contains no reference to tariffs or duties,” pouring cold water on Trump’s claim that the IEEPA grants him unilateral authority to impose sweeping taxes on all goods entering or leaving the United States.
But where one road closes, Trump’s tariff regime finds alternate routes. Within hours, Trump signed a new proclamation slapping a 10 percent global tariff under Section 122 of the Trade Act of 1974, with promises to ratchet it to 15 percent. While this new round of tariffs will require a higher legal bar to implement, the administration is falling in lockstep with those across the political aisle who are rejecting free trade. Once viewed as the cornerstone of the global trading system, the US is turning its back on the market forces that ushered in Pax Americana — an era defined by rising living standards and unprecedented economic growth.
That chapter has ended.
...read more at thedailyeconomy.org
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Easy to blame Trump, but Americans should really blame themselves.
For voting for Trump? ahaha
Actually, yes. For creating the conditions that our options were Trump and Biden, and Trump and Clinton before that.
But even more broadly, because I think the culture has gotten stupid, lazy, and immoral.
@delete in 24 hours
Its easy to fault the voter (I do it all the time), but to be fair democracy is a dumb unworkable system at scale.
The idea that "joe the plumber" needs to keep abreast of all the technical minutae and constantly engage in the political process otherwise they are told "too bad, you voted wrong so now we steal from you" shows how unworkable the system is.
There is no simple fix from where we are at, but in retrospect monarchies in which people can freely move from jurisdiction to jurisdiction are probably a better model at scale.
Along those lines, I suspect a better system would have indefinite term lengths but popular recall and veto mechanisms.
The issue is highlighted by Hans-Herman Hoppe in "rent vs owner" idea.
Politicians only "rent the use of power" so their incentives are all short term. Their goal become to bust out the current nation state for their short term gain (ie. they join congress with $0 and leave with $400M and who cares what happens afterwards).
Whereas with an "owner" (ie. king), it is considered their property. Therefore they have long term generational interest in preserving the value of their property so it forces long-term thinking.
I agree, but I think there’s room for a pressure relief valve that’s less extreme than full blown revolution.
Free trade is the ideal but if there are going to be taxes, tariffs are not as damaging as most.
Beyond that, its really a simple question.
If you were a retailer, suppose you were Gap, Inc and you were opening 2 different stores in 2 different shopping malls: Would you expect to pay more for rent in a upscale luxury mall that does 5x the volume of a lower tier mall in poorer area?
Point being is merchants already implicitly pay more to access higher end markets, thus tariffs don't really break the model that much.
A much larger and thornier question is: Is it really "free trade" if your trading partner uses slave labor to make their goods?
Agreed, I wrote about that here: #983054