You’re incorrect about history. Mercantilism not only restricted foreign trade, but restricted domestic industrial development by requiring the colonies to sell raw materials to Britain and buy finished goods from the Britain. Tariffs were a core pillar of the Lincoln Republican Party.
There’s been an isolationist wing in tech as long as I’ve been in it (early 2000s). I remember chatting with someone at Cisco/Juniper in the late aughts about Huawei ripping off their router designs down to the silk screening. Of course today Huawei makes their own state of the art routers with their own silicon, and some lower-end Cisco/Juniper gear is white boxed foreign equipment. And of course tech folks were complaining about immigration and outsourcing back in the early 2000s when Republicans were enthusiastically supporting both.
Having access to cheap oversea steel allows Americans to focus on building companies with significantly higher value-add. Onshoring low-value industries is a massive human capital waste and an easy way to depress wages.
It allows a very small portion of Americans to build companies with significantly higher value-add.
It destroyed the futures of a larger number of Americans.
Then again, why do we make the distinction "American"? If you have people who became unfathomably wealthy by shipping off strategic industries to the lowest bidder regardless of geopolitical implications, does nationality matter anymore?
No, the analysis (and it’s not exactly rocket science) says just the opposite: Way more downstream manufacturing jobs that rely on steel as input are lost, vs. domestic steel production jobs gained.
Do "normal Americans" pay taxes? From the numbers I've seen, ~1/3 - ~1/2 of tax filers receive more money from the government than they pay. To them, "refund season" is a cause for celebration rather than a stressful event.
The on-average crossover between negative and positive net total federal income (individuals will differ because of individual circumstance beyond just income level) tax when taking into account refundable credits (most notably, but not exclusively, EITC) is a bit below the median personal income but not that far below it, so certainly lots of individual "normal" (by most reasonable definitions) Americans do not pay net federal income tax .
But even if they don't pay net federal income taxes, they probably still pay a net positive amount in a variety of state taxes, federal payroll taxes, and federal consumption taxes (e.g., gas tax.)
Withholding has everything to do with it. Why do you think $10 an hour comes down to 1200 instead of 1600/month?
You can choose to withhold more or less, but the default taxation on w-2's do generally give a bit of a refund. Better to take out too much when you don't need it than slam down a gigantic bill when at once a year later.
"Refund season" is mostly a thing because the default w2 withholdings are set at a level where you slightly overpay on each paycheque, to avoid a surprise tax bill at the end of the year.
The problem with taxes is that it's a prisoner's dilemma. You need global cooperation at some base level of taxes, otherwise companies move to more favorable tax jurisdictions in the long term and offshore from there, which would hurt the US even more. It doesn't have to be all-or-nothing, but any marginal dollar of increased taxes in one place will have some non-zero effect of encouraging the next investment dollar to be spent elsewhere.
To be clear, I do think capital gains taxes are criminally low in the US relative to income tax, so I'm not arguing in _favor_ of lower taxes. I'm just saying why raising taxes isn't a panacea.
Creating an underclass that relies on economic elites paying taxes rather than being economically independent because you want to optimize for "high value add industries" is a terrible long term strategy.
> tax those people appropriately and pump that money back into the economy
So make the US to be like a far less successful country? Kill your economy by increasing taxes? The US economy is singularly successful because it has incentives to build businesses - see YC.
Have you tried living in a country that doesn't encourage businesses? They are often great tourist destinations. I'm in New Zealand and too many ambitious young people leave here: we have an emigration problem because our economy sucks. The government fixes the economy with 30% immigrants (disclaimer: I love immigrants). I have many friends that are never coming back here except for holidays. I hate the New Zealand government incentives for businesses (taxation and regulation) and I can see no way to fix them. Even our "business" political party ACT is completely fucked (latest story - they will be selling everything profitable to overseas "investors" - destroying the economy).
Taxation incentives matter to businesses. Be careful what you ask for because the majority have little understanding and vote for the wrong incentives.
Even business owners don't seem to understand incentive systems that well. Perhaps game designers do?
However I believe that incentives need to be marginal. If you already have a lot perhaps you need a big carrot as your incentive? I don't know any billionaires that I can ask how they feel about taxation incentives: I reckon you are making assumptions about what you think they should feel.
What makes Tim Cook make the US more money?
Taxation cliffs are shit. In New Zealand our Green party decided that 1 million was enough. Why would you bother growing a business after you reached 1 million? Retirement? A business is defined as being about making money (albeit some people do run "businesses" for other outcomes - why is Warren Buffett still working?).
High marginal taxation is also shit IMHO.
The hard part is to design the incentives so that productive people build your economy for the benefit of everybody.
If a government discourages business then the economy is crap and everybody suffers. See other economies.
Few people understand the incentives of others, and few people understand how wealth is created for all: the hoi polloi dismiss the wealthy as vampiric money grubbers. Anyone who uses the word capitalist in a derogatory way has been brainwashed. Most everything that makes our economies work is invisible non-monetary rewards. https://news.ycombinator.com/item?id=43162596
I can speak for my own financial incentives. My perception is that I have an effective tax rate of well over 50% in New Zealand (any retirement savings are not safe because our demographics and governments will screw our economy).
I do not feel the incentive to work in a business - My attitude means I now produce marginally less than I could for the New Zealand economy (I still pay taxes so they are advantaged but they could get a lot lot more from me). I now mostly selfishly concentrate on those closest to me. Why should I work if it isn't marginally beneficial enough for me? I'm no more selfish than my retired friends that I know (a wide variety of people from many walks of life).
(Reëdited to expand and clarify).
We can't decide how much is fair. Compare yourself to a dead king - what is fair? We can design systemic incentives so that we each make the world better for everyone. Not that that it is easy... Trite thoughtless dismissals of the most productive members of society are not helpful.
Edit 2: I guess this discussion is as close to work as it gets for me. Too much adulting. Should I get into politics? Are morals an impediment to helping others? There are too few politicians I admire, and too many I wouldn't want to shake hands with or be associated with. Every idiot has political opinions - how much of an idiot am I? Every politician is smart enough to win an election - they are not stupid yet they make too many horrific mistakes. What about the cryptically smart ones? I see how systems affect people that join a system. What would I become if I join our political system? Understanding our different systems is hard because they grow so weirdly with vestigial complexities due to history, complex interactions, and reflexivity.
So What Does Drive Political Disagreement?
If you’ve read The Psychopolitics Of Trauma, you already know my answer to this: it’s all psychological. People support political positions which make them feel good. On a primary level, this means:
\* Successful people want to hear that they deserve their success.
\* Unsuccessful people want to hear that successful people don’t deserve their success, lied / cheated / nepotismed their way to the top, and are no better than they are.
\* People want to knock down anyone who makes a status claim to be better than them.
People want to feel like their own identity group is heroic net contributors, and that their outgroup are villainous moochers.
People want to feel like their own identity group deserves more power.
* People want to feel like their preferred lifestyle and policies have no negative implications at all and they don’t have to feel guilty about them.
* People want to feel like they’re part of a group of special people poised to change the world, and everyone else is hidebound bigots who resist temporarily but will eventually be forced to recognize their genius.
People want to virtue-signal: demonstrate that they have the good qualities that their ingroup considers most important.
* But people also want to vice-signal: demonstrate their willingness to breezily dismiss the supposedly good qualities that the outgroup considers important.
>Do Medicare and Medicaid exist without businesses?
In a purely technical sense, yes. Because you don't necessarily need an American salary to pay taxes that cover these facilities.
It was very much a concerted effort for most other non-govt Healthcare to be tied to often American jobs. Which of course causes a cacophony of problems when less employers are even offering full time work.
>Why do you look at money as though that is all that matters?
It does not, but business these days sucked up enough money that it's starting to affect basic survival, let alone any pursuit of happiness. There's no point finding upsides when the common person is is so low on the totem pole.
Making hypotheticals of "well look on the bright side, you're not dead" doesn't help either. When America starts using that wealth to make sure no one in a first person country isn't dying on the street, we can discuss the subtleties of capitalism.
>Every poor person I've met avoids taxes.
Well I can't speak for New Zealand. You can't tax a poor person with no income. That's how bad the situation is here.
> Because you don't necessarily need an American salary to pay taxes that cover these facilities.
That is a weirdly employee centric view. I'm talking about the US economy. American salaries depend on American businesses. America has some of the best healthcare available in the world. If US businesses are fucked due to the beliefs of citizens (or whatever else), then the US socialised healthcare is fucked too. There's plenty of poorly run countries to compare against (including Cuba where I discovered their lies about their healthcare first-hand as a tourist). NZ socialised healthcare is okay but our economy is not improving and regardless of our desires for more, the social benefits have no choice but to match our economic output.
> it's starting to affect basic survival, let alone any pursuit of happiness
Only if you're one-eyed. US citizens are the rich. In a fair world we would tax all Americans at 90% and redistribute that to the poor in the rest of the world. Maybe same for NZ too (Wikipedia shows that NZ's disposable median income is ⅔ that of the US however it also strangly says that NZ's median wealth is nearly double that of the US -- I'm guessing because houses are more unaffordable in NZ). Income is usually a better measure within an economy of useful output (economies can't really save for next year). The US federal poverty line is about $16000 for one person - a hell of a lot of money for people in many countries.
> Making hypotheticals of "well look on the bright side, you're not dead" doesn't help either.
I guess you're referring to my comment "Compare yourself to a dead king - what is fair?".
My obfuscated point is that few people (maybe narcissists) would give up their modern life to live in past poverty. Antibiotics, freedom, technology, access to the intellectual output of the world. We are mostly a lot better off than the past. Most people don't value that instead they are money-centric (as many of your comments are). Most people seem to compare themselves to people that are wealthier than themselves and then complain about how they are not getting their fair share. Few people compare themselves against the global poor and then talk about how much they should share their wealth downwards. They talk about how others should share their wealth - they rarely seem to consider how they should share their own wealth. Especially ironic given that it appears that the majority of commenters on HN are the wealthy of the world (and often part of the tech overlords - e.g. YC).
The US is often a parasite upon other countries. If you were to say that the US pays it back to poor countries with technology (mostly from rich companies), then you would be implicitly arguing that wealthy US companies deserve to be wealthy. I recall that weapons are the biggest US export (nice!)
I guess I'm saying is really take care not to kill your geese laying golden eggs (even if you think the geese seem to be keeping too much golden egg to themselves): the socialised good that you have depends on those geese (US businesses). The bad is bad but don't destroy the good.
An economy is a delicate balance - as shown by many failed economies.
> When America starts using that wealth to make sure no one in a first person country isn't dying on the street
I get the value add argument, but lots of people just need income to pay for living expenses. Without an income, those people become disaffected and sometimes violent. Then they embrace right-wing protectionism because, while their gadgets are cheaper, they have no income to buy cheap gadgets.
Nor can they move to these offshore places (where the cost of living is lower) because immigration laws exist in part to control worker mobility.
> Having access to cheap oversea steel allows Americans to focus on building companies with significantly higher value-add. Onshoring low-value industries is a massive human capital waste and an easy way to depress wages.
That's the talking point, but it's bullshit. A lot of those "low-value industries" are fundamental capabilities, and China sure as hell isn't going to let the US own the "higher value-add" areas. They dominate those next, and the US free-trade business elites will be fine with it as long as they get to make some money for themselves.
Being a high value-add area is endogenous to how hard it is for others i.e. China to reproduce. In other words, if it were easy to make GPUs they wouldn't be so damn expensive.
> Being a high value-add area is endogenous to how hard it is for others i.e. China to reproduce. In other words, if it were easy to make GPUs they wouldn't be so damn expensive.
China's going to put the money into making GPUs, and they're going to get it right, probably sooner than later. Then they'll drive the American manufacturers out of business, like they've done in many areas before. Their government isn't beholden to the profit-focused capitalist attitude that is one of the West's biggest vulnerabilities.
Also, it's pretty foolish to 1) forget power and security doesn't come from rarefied high value-add stuff, 2) that there are a lot of people that can't be employed doing stuff like making GPUs.
>> Isn't this why we declared independence in the first place? To get away from the British restricting free trade?
No. I'm not sure where you got that idea. If you look at something like the Boston Tea Party, it wasn't high taxes on tea that were being protested against, it was lowered taxes on tea that undercut the smuggling operations of people like Sam Adams and John Hancock. "No taxation without representation" makes better press than "No undercutting my smuggling operation" though.
In the early years of the US, between 80 and 90 percent of federal revenue came from tariffs. Not exactly free trade.
> In the early years of the US, between 80 and 90 percent of federal revenue came from tariffs...
To be fair, the Federal Budget back then was 2%-ish of GDP. And their political consensus gave the Federal Gov't very few things that it had the power to tax.
Govt spending as a share of GDP is probably a good measure of how involved the government is in the economy. There are arguments that too much government involvement leads to stagnation, which considering many of the economies the US regularly out-grows have higher share of govt spending as a % of GDP has some merit. Its an interesting economic question what level that would be which changes depending on how you approach the problem.
I want to say “that’s not what isolationism means”, but I realize it starts to feel vague just like the word “fascism”, used when convenient but varies wildly in rhetorical meaning… to be more specific is better, I like what George Washington had to say about it in his farewell address because it shows the nuance of the topic across the spectrum, it’s not as simple as isolation good vs bad:
The great rule of conduct for us in regard to foreign nations is, in extending our commercial relations to have with them as little political connection as possible. So far as we have already formed engagements let them be fulfilled with perfect good faith. Here let us stop.
Europe has a set of primary interests which to us have none or a very remote relation. Hence she must be engaged in frequent controversies, the causes of which are essentially foreign to our concerns. Hence, therefore, it must be unwise in us to implicate ourselves by artificial ties in the ordinary vicissitudes of her politics or the ordinary combinations and collisions of her friendships or enmities.
Our detached and distant situation invites and enables us to pursue a different course. If we remain one people, under an efficient government, the period is not far off when we may defy material injury from external annoyance; when we may take such an attitude as will cause the neutrality we may at any time resolve upon to be scrupulously respected; when belligerent nations, under the impossibility of making acquisitions upon us, will not lightly hazard the giving us provocation; when we may choose peace or war, as our interest, guided by justice, shall counsel.
Why forego the advantages of so peculiar a situation? Why quit our own to stand upon foreign ground? Why, by interweaving our destiny with that of any part of Europe, entangle our peace and prosperity in the toils of European ambition, rivalship, interest, humor, or caprice?
It is our true policy to steer clear of permanent alliances with any portion of the foreign world, so far, I mean, as we are now at liberty to do it; for let me not be understood as capable of patronizing infidelity to existing engagements. I hold the maxim no less applicable to public than to private affairs that honesty is always the best policy. I repeat, therefore, let those engagements be observed in their genuine sense. But in my opinion it is unnecessary and would be unwise to extend them.
>when belligerent nations, under the impossibility of making acquisitions upon us, will not lightly hazard the giving us provocation; when we may choose peace or war, as our interest, guided by justice, shall counsel.
Ironic that as a Canadian, the US is moving from the nation that would be guided by Justice into the belligerent nation in this situation.
It also serves as a lesson to us that we should have learned from you and George Washington, and stood on our own first and ensured our own security before cooperating with others. We have a long way to go to get back there now, unfortunately under the position of potentially our closest ally and economic partner being belligerent, untrustworthy and unreliable.
I believe the body of people who are promoting such a narrative (and it’s clearly coordinated) have major conflicts of interests, they want to maintain the status quo for their own enrichment at the expense of any specific nation, because in reality plain old paying attention shows nearly the exact opposite is true in every sense.
They are very good at their propaganda which is exactly how they got in that position but they are not looking out for your interests in the slightest, they just want to “manufacture consent” for the forward march of the global hegemony, that oligarchy… nobody in their right mind, with eyes unclouded by hate, would come to these conclusions naturally.
It’s probably the scariest thing too, and it’s nothing new! Go read Chomsky’s book by the same name “manufacturing consent” and he lays out many examples that were happening in the 70s-80s, and they are following the same playbook today just with Ukraine and Gaza instead of Colombian Jungles and Vietnam.
>I believe the body of people who are promoting such a narrative (and it’s clearly coordinated) have major conflicts of interests,
I'm a Canadian. Operating SOLELY on the actions and statements of your executive branch, not the media's reporting but the wording of the government, their executive orders, their direct public statements. your government is increasingly belligerent, untrustworthy and unreliable.
Belligerant -> Constantly making subtle threads of annexation. Calling the Prime Minister of Canada the "Governor" of Canada. Constantly lying about trade deficits that are surpluses and drug and migrant problems that are actually a bigger problem moving north across the border than south.
Untrustworthy -> After renegotiating NAFTA to USMCA and hailing that as a great agreement, now its a shit agreement and he's putting tarrifs on to get more from Canada under the threat (and likely actuality) of causing economic harm to both our countries.
Unreliable -> You were our biggest and staunchest ally. Electing an administration that is actively hostile to our government and sovereignty means you are no longer reliable as an ally.
> they want to maintain the status quo for their own enrichment at the expense of any specific nation, because in reality plain old paying attention shows nearly the exact opposite is true in every sense.
The current actions of the administration are destroying hundreds of thousands of lives in order to enrich a few thousand at the top. They are alienating ally's, destabilizing peace and almost guaranteeing more conflict and war in the near future.
Chomsky warned of the damage a demagogue supported by a disenfranchised, hurting and angry populace can have on a country. This is happening now, and half the country is burying their head in the sand claiming its propaganda.
>This is total nonsense, nobody thinks they can annex Canada…
Trump defies typical expectations and does things everyone else thinks would never happen. Often because to do so would be very damaging and idiotic, but that never actually stops Trump.
However you do NOT threaten to annex, take over or otherwise threaten the sovereignty of an ally or friend. That is geo-politics 101, so regardless of how serious he is about doing it, the act of threatening it is belligerent and shows he isn't a reliable trading partner or ally.
Outside of annexing, the trade war is also actively hostile on top of being perpetuated on complete lies.
>they just want to “manufacture consent” for the forward march of the global hegemony, that oligarchy… nobody in their right mind, with eyes unclouded by hate, would come to these conclusions naturally.
The oligarchy has taken over. The few that benefit from the "global hegemony" you refer to, which is largely the 'interests of the rich' are now completely in control of the US.
The US administration absolutely is not looking out for the interests of the average Americans. Most of what they are doing directly hurts most or all Americans in one way or another, and the few things they do that help Americans benefit the rich the most.
Now is the time much of the US populace has always claimed it would stand up against tyranny, an oppressive "lord" class and kings. They are watching it and cheering it on instead.
China's economic power is certainly not rooted in their isolationist social policies. They're just as bullish about foreign investment as the US was at the height of the free trade era.
