I’ve been predisposed for a week or so and it’s now time to get caught up on some things. There’s been a lot in the news lately regarding Trump administration policies on immigration and trade. I’m extremely pleased with what’s happening on immigration, less so with what I hear about Trump waffling on the idea of a “border tax” (another name for tariffs).
But I’ll start with the above-linked story that came out last week because this is a perfect example of the divergence of interests that takes place when a nation becomes “economically over-populated” or takes on the characteristics of such an economy through free trade with a badly overpopulated nation. For the benefit of those unfamiliar with this concept, this divergence of interests is one of the consequences of the inverse relationship between population density and per capita consumption. As a society becomes more densely populated, the need to crowd together and economize space begins to erode per capita consumption. As per capita consumption declines, so too does per capita employment. The result is rising unemployment and poverty. It’s in individuals’ best interest – in the best interest of the common good – that this situation be avoided. (To better understand this concept, I encourage you to read Five ShortBlasts.)
However, while per capita consumption may begin to decline as a population density reaches a certain level, total consumption continues to rise with a growing population. Who benefits from that? Anyone in the business of selling products. Not only do they benefit from the increase in sales volume, but they benefit further as the labor force grows faster than demand, putting downward pressure on wages. Thus, it’s in corporations’ best interest to see population growth continue forever, and to pursue more markets through free trade.
So it’s in the best interest of the common good that we avoid meshing our economy through free trade with nations whose markets are emaciated by overcrowding and who come to the trading table with nothing but bloated labor forces hungry for work. But it’s in corporations’ best interests to grow the overall customer base through free trade with those same nations. So it comes as no surprise that a big-business coalition is eager to steer lawmakers away from any tax plan that would include a “border tax” (a tariff) that might shut them out of their foreign markets.
They call themselves “Americans for Affordable Products,” making it sound as though it is individual Americans who make up this coalition and not global corporations. They want us to believe that products will become less affordable. While prices for imports may rise, they want you to forget that those increases would be more than offset by rising incomes and falling tax rates. They don’t care if the border tax benefits you. All they care about is that it may not necessarily benefit them.
So which of these competing interests will lawmakers heed – their wealthy corporate benefactors or the angry Americans who swept the Trump administration into power on his promise to enact a border tax and bring our manufacturing jobs back home? Money talks and I fear that groups like this coalition are having an effect. Trump and Republicans would be wise to ignore them. Democrats paid the price for ignoring the plight of middle-class Americans when Obama betrayed his promise of “hope and change.” Those same middle-class Americans will pull the trigger on Trump too if he doesn’t come through.