Wall Street Journal columnist Andy Kessler is correct: “Tariffs are for losers.” Two slices:
Who said this? “To really rebuild the industrial heartland of America, you need a committed national policy of tariffs, of protecting American industries.” It was J.D. Vance during his successful 2022 campaign for U.S. Senate. This thinking is dangerous and pervasive—bipartisan battiness. In reality, tariffs impose costs on all Americans to subsidize a few jobs.
Missouri Sen. Josh Hawley, also a Republican, has proposed the Raising Tariffs on Imports from China Act. All he’s missing is a colleague named Smoot to reprise the Smoot-Hawley Tariff Act and cause a market crash and depression. Mr. Hawley said in June that “in the last 20 years in the state of Missouri, we have lost 60,000 jobs to the People’s Republic of China—that number nationwide is almost four million.” No mention of the better jobs that were created. There were 130 million nonfarm payroll jobs in 2003 vs. 156 million today.
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In October, the Journal ran an article by Oren Cass of American Compass titled, “Why Trump Is Right About Tariffs.” It’s filled with dime-store economic thinking, claiming that tariffs are for raising government revenue and that our service economy is about “cutting hair” and “serving fast food.” Mr. Cass completely ignores that phones, medical equipment and other imports are often designed in the U.S. Sure, they are assembled overseas, but their value, usually software, is created here. Should we put tariffs on search engines and social networks? Of course not. China blocks ours to force its citizens to use inferior products. Tariffs denote weakness, not strength.
With tariffs, you get false price signals and less innovation. They misallocate capital and human resources by having entrepreneurs chase fake opportunities. Domestic manufacturers love tariffs, which allow them to raise prices, but the rest of us have to overpay for goods while manufacturers become lazy. The largest and lowest-cost electric-vehicle manufacturer in the world, China’s BYD, is effectively kept out of the U.S. by Trump and Biden tariffs, and we now have a glut of unprofitable and expensive domestic EVs.
If all the chips in an iPhone were made in the U.S., I calculate we would be paying close to $2,000 for one and unit sales would decline 50%. Would you upgrade at that price?
Margins matter. Capital flows to its highest returns. Trade-deficit figures don’t tell you how profitable manufacturing is. Foxconn, which assembles phones for Apple, had an operating profit margin of 2.63% in 2022. Apple’s was 30.2%.
More revealing, however, was what came later. As [Harvard president] Ms. [Claudine] Gay again contradicted the words she had spoken at the hearing, she explained what had gone wrong. “I got caught up in what had become at that point, an extended, combative exchange about policies and procedures,” she said. “Substantively, I failed to convey what is my truth.”
Few phrases are as reliable as “my truth” for identifying seasoned purveyors of cant and doubletalk. Truth isn’t something that can be identified or modified by a possessive pronoun. If my truth is different from your truth and your truth is different from her truth, these aren’t truths. “My truth” is the device deployed to elevate the particular viewpoint of a member of a particular group or identity, by claiming the validation of the “truth” for a narrow ideological cause.
And this is what we saw last week at that hearing—the narrow, exclusive intolerance of the ideology that has our universities in its grip.
Pierre Lemieux explains that economics is a useful tool for identifying and escaping “blobby ideas.”
David Henderson recently spoke on Adam Smith as moral philosopher.
Bob Graboyes writes an open letter to his left-of-center friends. A slice:
Right-wing antisemites hold little sway over conservative politicians, while left-wing antisemites have an electoral hammerlock over many left-of-center politicians. The opposite may have been true in the 1930s, 1950s, or 1970s, but those days are long gone.
Arnold Kling suggests that the supply of “social justice activists” now exceeds its demand.
