Tariff Eliminations

Ever wonder how it came to be that everything we use and need, seems to be made in China? I often wondered, and now a fantastic piece by the Washington Post, explains it all. America, before FDR, supported its small central government by tariffs on imported goods. This supported the government, and protected American manufacturing.

If Otis made an elevator for $25,000, and a foreign nation offered one for $23,000, there might have been a $2,000 tariff on the import. That is only a theoretical illustration of course, but now that so called 'light rail' or trolley systems are coming back in vogue, all the new cars seem to be make in Japan and a few in Germany. America, at one time had two huge, profitable electric car manufacturers which are long gone. They were the J.G. Brill Co. of Philadelphia, and the St. Louis Car Co. of St. Louis. Were they killed a long time ago by eliminating a tariff on imported cars, made with cheap labor?

Are clothing manufacturers in the U.S. out of business by having tariffs removed on imported clothes? Individual tariffs, maybe on buttons, thread, or dye, which individually, when removed, made making clothes in America prohibitive. Are auto parts manufacturers in the U.S. out of business because auto parts manufacturers overseas have had various tariffs removed? The list is endless, and encompasses all manufactured goods which were once made in the USA, and now are made in China or elsewhere, and imported in thousands of containers each week, which return empty.

Each tariff removed, and there are thousands of them, or at least were thousands of them, have been removed on an individual basis by Congress. Wal Mart and other retailers have bribed Congress to place bills removing individual tariffs on thousands of manufactured goods, one at a time. Be it brass, cotton, or individual products, which at one time had a tariff on them, they have been systematically removed by Congress, for the benefit of manufacturers, so they can sell cheaply here. Nail clips? Tires? Lipstick? Loose leaf binders? Ball point pens? Underwear? Sheets? Pillows?

Tomatoes? Beef? Computers? Light bulbs? Tractors? Bottles? You name it, and the reason the manufacture of these consumer goods went overseas, is simply because thousands of protective tariffs have been individually removed by various Congressmen and women, who have been bribed or other wise convinced by lobbyists. The removals all had to be signed by the President to be removed.

As each tariff was and are still being removed, another American factory shuts down, and more workers get laid off. It was, and still is, a gradual process. If the tariffs on shoes are removed, shoes made in China by cheap labor are imported with no tariffs, and American shoe makers are out of business and their employees are out of jobs. I wrote about Electrolux a couple of weeks ago, doing the same thing. To say that it makes products cheaper for America to buy, is the general reasoning promulgated by lobbyists, and this is true to an extent. But so what?

With literally millions of American factory workers and associated employees out of jobs, where is the benefit? Remember, for every out of work factory worker, there are out of work clerical workers, maintenance workers, transport workers, packing workers, electric and other fuel workers, sales force, supervisors, etc. That defunct factory paid property taxes, with workers paying federal, state, fuel, electric, phone, and city taxes as well. The defunct factory paid lots of insurance premiums also. Workers at those defunct factories used transport to get to work, which resulted in taxes on fuel being paid as well as transport being used, be it public or private, which was revenue to the provider of transport and all its various components.

A nation which doesn't produce what it consumes, is doomed to eventual failure. Check the reasoning and logic behind this statement. If capital is shipped overseas to buy stuff produced overseas, where is the capital generated to send overseas? Profits and capital creation come from mining, making and growing things, and selling them at a profit to consumers of foods, and manufactured goods, be they at home or overseas. Miners, farmers, and manufacturers hire workers to make and grow things at a profit, and thereby create capital and jobs. If the capital creation generated by manufacturing and mining is eliminated, jobs are lost, and the salaries paid to those workers eliminated. The remaining capital creation, is merely by retailing, with mining and manufacturing capital creation gone overseas. Two thirds of capital creation is missing from the cycle, and instead of capital staying at home and being re-cycled, 2/3 of it goes overseas, thereby draining our land of capital at an alarming rate.

Huge amounts of agricultural capital creation has also gone overseas. It is said that 39% of America's food intake is produced overseas. Congress steadfastly refuses to require point of origin labels on food stuffs, which may eliminate a lot of that. Who bribed them to not require point of origin labels on foods? Which Congressmen removed agricultural tariffs? Millions of American farm acres lie fallow because of cheap food imports of questionable quality.

One has to understand cycles. Steam locomotives used a lot of water to make steam. That water wasn't recycled, but went out the stack with the smoke from the boiler fire. The steam condensed in the air and fell back to earth, so the water wasn't lost, but the locomotive required constant intakes of water. As steam autos came on the market, the used steam was condensed in a radiator, reused, and water wasn't lost. When a manufacturer used American goods and American workers in American factories, the wages stayed in America. The manufactured products, when sold, generated profits which stayed in America. The profits were used to increase productive capacity, retire debts, and give stockholders a dividend if the factory was a corporate entity. Lots of profits went to local charities such as parks, symphonies, schools, and other worthwhile beneficiaries. The salaries of mine workers who mined the iron, coal, copper, and raw materials used to make American goods, was used to buy American goods. The factory workers' salaries went to buy American food and American products. The salaries generated from selling American products to Americans, stayed in America, and was recycled over and over again, just like factory workers' salaries. Salaries of transport utility, shipping, and packaging workers stayed in America, and was used to buy American foods and products. The mining, manufacturing, selling, and consuming cycle stayed at home, and no capital went overseas.

America became the envy of the world, and extremely wealthy when the cycle of mining, manufacturing, selling, and consuming stayed at home. Then it all started to unravel, when legislators began to remove individual tariffs by the thousands on imports, as a result of lobbying and bribes, which went under the guise of lowering consumer costs. The cycle was broken, and America began its long plunge into bankruptcy, debts, and unemployment. Well paid workers were laid off and had to latch on to two or three low paying jobs to survive. Living standards went down, and the layoffs continue to this day, with no sign of decreasing. Pundits came up with the phrases of, "We don't need manufacturing, because we are in the information age." Or, "We're for free trade." Or, "Illegally do work Americans won't do." Various corruptions of basic economics are put forth daily by the gurus on CNBC, who have impressive degrees from Ivy league universities. These highly paid 'economists,' haven't a clue as to real economics, or they would have realized that America has been sabotaged from within by highly paid lobbyists and gullible Congressmen and women who care nothing about real economics, but are merely obsessed with remaining in office under the fake guise of having 'lowered prices,' and a host of other fake benefits and handouts, which have made the worthless proliferate, and our homeland decay. More next week.

September 28, 2006

Don Stott has been a precious metals dealer since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com