“Race to the Bottom” Author Endorses Tariffs to Reduce Trade Deficit

http://finance.yahoo.com/tech-ticker/the-high-cost-of-%27free%27-trade-obama-%22doesn%27t-understand-fundamental-reality%E2%80%9D-expert-says-535581.html?tickers=FWI,EEM,EWJ,EPP,EWY,PIN,INP

Thanks to Mike Folkerth for sending me the above link to a video of an interview of Alan Tonelson, author of Race to the Bottom.  Mr. Tonelson makes the point that no economic recovery in the U.S. will be possible until we make major changes in trade policy, implementing tariffs to massively shift from offshore production to domestic production of the products that we consume.  Mr. Tonelson says that doubling exports will do nothing to help the economy – that what’s really needed is a boost of net exports, which means reducing the trade deficit.  I couldn’t agree with him more.  It’s a great interview.  Enjoy! 

(Thanks again, Mike!)

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5 Responses to “Race to the Bottom” Author Endorses Tariffs to Reduce Trade Deficit

  1. hungry4food says:

    How do we write a Trade Policy that works with this scenario ????

    It is a slow day in the small village of William’s Town , and streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.

    A rich tourist visiting the area drives through town, stops at the hotel, and lays a $200 on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

    As soon as he walks upstairs, the hotel owner grabs the note and runs next door to pay his debt to the butcher.

    The butcher takes the $200 and runs down the street to retire his debt to the pig farmer.

    The pig farmer takes the $200 and heads off to pay his bill to his supplier, the Farmer’s Co-op.

    The guy at the Farmer’s Co-op takes the $200 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit.

    The hooker rushes to the hotel and pays off her room bill with the hotel owner.

    The hotel proprietor then places the $200 back on the counter so the rich traveller will not suspect anything.

    At that moment the traveller comes down the stairs, states that the rooms are not satisfactory, picks up the $200 and leaves town.

    No one produced anything. No one earned anything… However, the whole town is now out of debt because of the circulation of money. Everyone in town now looks to the future with a lot more optimism.

    And that, ladies and gentlemen, is how the the economic recovery happens when you start by spending $200.

    • Pete Murphy says:

      Great story, Hungry! However, in the end, while the townfolk may be more optimistic having been relieved of their debt, they still have no more money than they had before the stranger came to town. The effect won’t last. Each will borrow from each other again until they’ve returned to their original state of debt and pessimism. And that, ladies and gentlemen, is how the next recession begins.

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