Donald Trump’s Big Government Stick

Kurt Nimmo

From deficit spending on “infrastructure” to threatening American corporations for the crime of making their own business decisions, Donald Trump has signaled his administration will use government like a cudgel.

In a series of stitched together tweets, Trump lets business people know what they can expect:

If you think Trump is right and the government should engage in protectionism, I suggest you do some reading on the Smoot-Hawley Tariff, passed on the eve of the Great Depression. It kicked off a trade war with Spain, Italy, and Switzerland, and exacerbated the depression.

“This type of protectionist saber-rattling risks igniting not only a destructive international trade war but also, with the economy in the aftermath of a colossal bubble and the world’s banker growing restless with its hoard of depreciating IOUs, vastly more damage than the world is prepared to handle. Have we learned nothing from the past?” writes the Foundation for Economic Education.

Gary North argues people who call for protectionism are not thinking rationally.

The people who believe that tariffs are good for the nation are literally incapable of deductive economic reasoning. This argument has been used by mercantilists ever since the late 17th century. Adam Smith’s Wealth of Nations is a refutation of the mercantilist position. Nevertheless, people who are incapable of following a line of economic argumentation, and who get patriotic when they hear the word “nation,” rush to promote tariffs. Thus, the combination of an ignorant patriotism and an ignorant economic analysis produces the statement: “Protectionism is good for the nation.”

Protectionism is good for the state. It’s another form a coercive taxation.

“The insidious thing about tariffs is that the average man does not understand that tariffs are selective sales taxes,” North continues. “Defenders of tariffs believe that a man with a badge and a gun who sticks his gun in your belly as a consumer is a benefit to the nation. He is a benefit to is the state. He is a benefit to the bureaucrats who collect the tax. He is a benefit to the crony capitalists who elect the politicians who pass the tariff bills. The average American pays more for whatever he buys, and he is the loser.”

Protectionism will accelerate the process of turning America into a third world cesspool. It may also result in war as nations respond and tensions increase.

Only free trade creates prosperity.

Critics argue that free trade is a greedy corporatist scheme designed to rip people off.

Crony capitalists—heavily dependent on the state, its doled out privileges, and its violence—hate real free trade. State intervention in the economy is the ideology of eighteenth century mercantilism, nineteenth century socialism and nationalism, and twentieth century paternalistic welfare statism.

NAFTA and other “free trade agreements” cartelize and expand government control over the economy. They create monopolies on an international scale at the expense of the consumer.

Here’s a good example: In 2002, George W. Bush increased tariffs by 30% on imported steel. American steel producers exploited this and raised their prices. The Consuming Industries Trade Action Coalition, representing steel buyers, said the tariffs cost thousands of jobs.

Here’s another: in 2009, the Obama administration slapped a tariff on tires manufactured in China. This resulted in a trade war.

Gary Hufbauer and Sean Lowry of the Peterson Institute found that the tire tariffs may have saved 1,200 jobs in the tire industry. Consumers, however, ended up paying more than $900,000 in higher prices for every job saved.

If Donald Trump imposes tariffs and real free trade barriers, it will be like a sidewinder on the economy, the same way Smoot-Hawley was.