Higher Cost, Less Available

Subsidies and tariffs are always a terrible, disruptive, dishonest, demeaning, artificial aberration that should be discontinued very quickly in phases for the illusion of value (subsidy) and roadblocks (tariff) to fair trade they create and because of the terrible damage this kind of falsity and deceit have on the psyche of those who realize their work is worthless and their job is artificial.

Embargoes should be included with tariffs, although embargoes don’t usually have official fees since they are officially prohibitions from trading in particular goods or services, but bribes occur amounting to tariffs as a cost of commerce (smuggling).

Government bail-outs are just another form of subsidy and should not occur. Support systems and entitlements are in place to support and retrain displaced workers. No subsidy of business is needed, only frameworks within which to conduct lawful business well or fail. They have either planned and operated their businesses well and will prevail, or they have not and will be eliminated. The investors knew the risks when they chose to participate and deserve no special support, and should not expect any.

Agriculture, finance, auto makers, unions, manufacturers, fisherman, academia, broadcasting, newspapers, lodging, tourism, state and city governments, investors and many non-profit entities, have not earned and do not deserve subsidies, product tariffs, regulatory and tax exemptions, or market protection by their governments. When these measures are undertaken, artificial manipulation occurs causing false expectations, sending signals that cause the misallocation of people and resources, delay reallocation to requested goods and services, delaying reemployment, falsely inflating prices, diminishing profit and tax revenue. These actions delay price adjustments to demand and produce false supply that is unwanted and wasteful.

The costs of unfair markets are born by consumers and fellow citizens; Taxation to provide subsidies, higher process costs caused by tariffs, waste and deceit caused by misallocation of resources to non-competitive products, or illicit costs fostered by embargoes and prohibitions.

It may seem like a deal at first. A small price to keep family and friends employed or paying less than seemed right for something you wanted, or not having to work more efficiently because your competitor is being taxed more just to get access to your marketplace. Eventually you and your taxpaying countrymen will discover they are paying more. And if they can, they will stop buying the domestic product and arrange to get it a better value for a better price from an un-manipulated supplier. It might be cigars from Cuba, milk directly from a dairyman, or cars produced by non-union workers, or air travel from an employee owned airline.

All that is needed are rapid adjustments based upon millions of customer transactions in fair market place responding to the laws of supply and demand. Not avoided or false costs and restrictions that come with subsidies, tariffs and embargoes. And not bailouts disguised as investments that would not have been made by any prudent investor.

If a business is not viable for any combination of reasons; unpopular products, poor services, foolish management, lazy or otherwise nonproductive employees, or punitive regulation, these costs should all be reflected in the price of its production. If true costs are not shown, if unwarranted investments are not reported, if competitors are restricted or taxed by tariff, then that is not a fair market and when you buy that product its true costs are not included. Yes, you’ve gotten a deal, but the products revenue will not cover its costs. Monies must come from elsewhere to pay employees salaries and the government’s taxes, licenses and fees. So, others who did not want that product and didn’t care if you did, and certainly were not going to help you obtain it, are now forced to help you buy it by paying part of the wages of people whose work did not produce a wanted product, and make up for the taxes that would have been paid by the consumer, if a desired and viable product had been produced and sold.

Subsidies or tariffs are not free, both are expenses. Some would say tariffs are revenue, they are not. Tariffs are a tax and revenue only to the entity that enforces them. They are an expense to the producers and consumers and must be added to the cost of a product or a loss occurs. Consumers pay for the tariff in the price. If a tariff is high enough the restricted product will not be available in that market; therefore, a noncompetitive domestic product of lesser value or a higher price must be purchased. An example is the $3,700 tariff on imported vehicles put in place to lessen competition for American auto workers about 40 years ago. It didn’t work. American companies and workers squandered the opportunity to improve while they were protected. Foreign companies gained market share from abroad and built plants in American employing non-union workers in areas new to vehicle manufacturing. Now a huge price will be paid by all for this cruel, expensive, demeaning, wasteful, punishment of American workers and taxpayers, and the tragic denial of customer demands for more than forty years.

And now sadly, cataclysmic economic adjustments that could have been minor labor and product changes spread over many years satisfying customers, workers, management, and government revenue needs with out major suffering and terrible losses that will now occur for all.