Protectionism and Environmental Protection
Imagine an alternative United States, where instead of federal income and payroll taxes, we had a honkin big national sales tax. Now imagine that this tax only applied to domestically made goods and services. If it says Made in China, it’s tax free.
Such a tax system would be surprisingly close to the system we have today!
If you make it here, the federal government collects corporate income tax, personal income tax on the stockholders, personal income tax on the employees, Medicare taxes, Social Security taxes, and unemployment insurance. Make it abroad and the government collects tariffs. The average tariff rate is around 3%. A sales tax capable of replacing the taxes on domestic goods would be on the order of 30%.
The United States does not have a policy of free trade. The US has a policy of subsidized outsourcing!
This is the reason why Donald Trump won the Presidency, not his charm or good looks.
Anti Protectionism is Destroying the Country
What happens when half the country cannot afford a doctor, lawyer, or functional local government?
Answer: Riots in the streets, calls for socialism, and a breakdown of democracy. Look at the news. It’s happening now.
With our anti protectionist tax system, government grows ever more expensive without providing more government service. Most government services are services which cannot be outsourced. Police and public school teachers need to be here to do their jobs. Local water and sewer systems can have parts made over there, but they need to be assembled and maintained here. Ditto for roads.
With our system of labor taxation and tax exempt imports, it becomes ever more difficult for factory workers to pay for local government. Say hello to potholes and poisonous water systems.
And since high end professionals like doctors can spend their fees on foreign goods and vacations in Costa Rica, Joe Six Pack cannot afford to pay for a doctor or lawyer. Calls for medical socialism grow ever louder. The accused rely on public defenders.
We are sinking in the direction of civil war. This could increase pollution.
Outsourcing vs. the Environment
China has gone from primitive and poverty stricken to an economic superpower in a few decades. See all those wonderful high speed rail systems and popup cities? The American working class paid for a big chunk of that. Way to take one for human progress, boys!
But also note those incredible clouds of coal dust, green rivers, and that gigantic pile of garbage floating in the Pacific. We subsidized that too.
Outsourcing is the easiest loophole around environmental regulations. Got a dirty business? Move it to a country that is too poor to care. Subsidized outsourcing speeds up the process.
There is a benefit to subsidized outsourcing. Subsidized outsourcing is a highly effective form of foreign aid. NAFTA has reduced immigration pressure from Mexico. Most Favored Nation status for China did help lift China out of poverty. We probably should continue this policy for the poorer countries of Africa. They need to industrialize. The population there has grown too high for them to go back to traditional ways.
But universal subsidized outsourcing is making fascism look good. The world sees China’s incredible economic growth and the downfall of the American working class. They see trains that run on time in China and Amtrak and potholes in the US. China is taking that economic might and converting it into diplomatic and military power. They are moving into an imperialist phase.
Do we really want the same nation that uses rhino horn for medicine to be heavily investing in Africa?
The Political Possibilities
Donald Trump was not the first to notice the problem. H. Ross Perot ran on a protectionist platform and came surprisingly close to winning as an independent candidate. Imagine if he hadn’t dropped out of the race. Imagine if he had a prepared running mate…
There have been protectionist politicians on the Democrat side of the aisle, especially those catering to the labor unions. Remember Dick Gephardt?
Even the Hippie Left can see problems with Globalization. Remember the WTO protests in Seattle? And take a look at the cute stores and food coops in a hip downtown. Buy Local is a common theme.
This is a great issue for courting swing voters – especially for a candidate who has a modicum of charm. Imagine a Reagan like politician explaining the problem of subsidized outsourcing to the nation...