Losing allies, higher prices possible with U.S. protectionism

Americans are beginning to pay more for what we buy, the result of high tariffs levied under a policy meant to protect jobs by making foreign goods more expensive. 

Even without this policy, unemployment is historically low. The U.S. already enjoys a favorable balance in services and receives hundreds of billions of dollars in investment from outside the country. 

But President Trump focuses only on the balance of trade in goods.  If the U.S. buys more from a country than it sells, he wants to even out the balance by reducing imports.  He has launched protectionism, an approach gradually and successfully abandoned by industrialized nations since World War II.

Protectionism has been used to help new countries develop some of their own production before facing competition with long-established economies.  After the American Revolution, the U.S. adopted protectionist policies, which were reduced over time.

In 1929, the U.S. returned to massive protectionism.  High tariffs were a major cause of the Great Depression.  " 'Make America Great Again' shouldn’t mean 'Make America 1929 Again,' " Nebraska GOP Sen. Ben Sasse said last week. About Trump’s policy, he said bluntly, “This is dumb.”

Mark Carney, the Canadian who is Governor of the Bank of England, argued, “This focus on goods trade … is not the right focus in a hyperconnected world where most of the economic activity, most people work … in the service sector.  In other words, Trump should look beyond trade in goods.

Perhaps the most important word Carney used to help understanding of why the 1929 approach won’t work was “hyperconnected.”  National economies are no longer isolated but are linked in thousands of ways.  People care more about the cost and quality of goods and services than about their country of origin.

If you are reading this column in the print edition of a newspaper, you may pay more or get less newspaper thanks to a tariff increase of as much as 32 percent, slapped on the paper from Canada on which it is printed.  U.S. newsprint production is in the West, so newspapers in the eastern U.S. must pay more to keep importing from Canada.

Of course, some trade is unfair.  China should be blocked from stealing trade secrets – called the theft of intellectual property – and using them to produce exports that will be sold in the very countries that were robbed.

Greater care is needed to prevent China from forcing companies to disclose their secrets before being allowed to do business there.  Similarly, Chinese researchers and “students” here must be more carefully monitored. 

Labor unions and environmentalists are justified in objecting to trade deals from countries keeping pay low and causing pollution from which Americans may suffer.  Such problems can be targeted without tossing out entire trade relationships, especially with close allies.

The U.S. is on less solid ground when it targets foreign government subsidies for some industries.  This country is now the world’s largest oil producer, and oil companies get vast government breaks.  Coal is supported, despite its related pollution.

Another problem in levying higher tariffs on trade is that such moves may harm broader American relationships with important allies.  The problem with steel is Chinese overproduction, but higher tariffs hit Canadian steel, because depending on that country supposedly threatens national security.  If that’s true, we are really alone.

Even worse, other countries are retaliating by increasing their tariffs on U.S. exports.  That leads to a trade war in which each round of retaliation leads to another.  American jobs are lost when exports are cut and also when handling imports is reduced.

There’s an alternative to imposing tariffs with the risk of a trade war with friends.  Instead of buying less, sell more. Carney suggested it would be better to lower barriers on trade in services instead of raising them on trade in goods.  And the U.S. could emphasize trade promotion more rather than focusing on tariffs.

At this week’s meeting of top finance officials from the major industrialized countries, other countries expressed their “unanimous concern and disappointment” with U.S. tariff increases on steel and aluminum.  The major decline in trade relations with allies could affect cooperation in other areas. 

American trade policy is pushing other countries into closer alliances and economic relationships with one another as their links to the U.S. decline.  Once that happens, it may be difficult to restore the leading American role, not only in trade.

Continuing current trade policy, like any other government action, will have costs.  The first will be higher prices, but it could cost the U.S. some allies.

‘Administrative state’ exists, but it's not a liberal conspiracy

Government is too complicated.

People dislike government that is remote, bureaucratic and burdensome. Some conservatives believe we live under “the administrative state,” many regulations are written by anonymous agency staff.

Is government under the control of bureaucrats who cannot be held politically accountable and probably have a liberal agenda?

An easier and more obvious explanation of why government seems to have become disconnected from average voters is that it results from the current legislative process. Members of Congress and state legislators empower bureaucrats by the laws they pass – or don’t pass.

Let’s say Congress, composed of the elected representatives of the American people, decides the government should do more to protect air quality. It passes a law expressing that intention, but leaves it to executive branch agencies to produce the regulations necessary to achieve the new law’s goal.

Because we believe that many issues are complicated and technical, legislators accept that they cannot deal with the details but must leave them to experts who will act in good faith to carry out legislative directives. They routinely ignore the possibility that a simple mandate would not need detailed rules.

Legislators can give voters the impression of being responsive to popular sentiment, while allowing the moneyed interests that support their campaigns the opportunity to influence the regulations. 

Action by major interests, represented by an army of lobbyists, may be the true lawmaking.

The most suspicious critics call rulemaking by civil servants and powerful interests “the deep state.” 

Unlike Congress, the regulatory process takes place outside of the public view.

The result is not a simple new law, but many complicated regulations, quite far from the original statute. The intent to improve air quality may be lost.

In the end, issues may end up in court where judges are asked to tell us what legislators meant. That’s why we now pay great attention to the political views of Supreme Court justices. They have been forced to legislate, because Congress has intentionally avoided making unambiguous statements of law.

President Trump last week announced action to cut back on the job protection of federal employees. It looks like an erosion of the non-political civil service, which may make it more vulnerable to political control.

Americans take pride in government employees who follow the law. They are supposed to act without pushing their own views or following directives of elected officials that violate the law’s intent. But the law may have allowed Trump to remove employees arbitrarily. His action may end up in court.

The new tax law requires too many rules. For example, it could have directly addressed how far states might go to work around the newly restricted deduction for property taxes. Instead, Congress left it to the states and the IRS to work it out.

The Federal Communication Commission decides on “net neutrality,” the system that prevents Internet search providers from charging more or providing less service to some consumers. The law should have made that determination without leaving any discretion to regulators.

Laws should not leave loose ends. Civil service laws, environmental protection and consumer financial safeguards should not be subject to change by the will of executive branch officers or powerful interests.

Congress needs to make clear and simple policy decisions and to ensure that their meaning does not depend on who is applying the law. That requires legislators to be more hands-on rather than passing responsibility on to bureaucrats.

Incomplete lawmaking happens at the state level as well, though for different reasons. The fact that Mainers will use ranked choice voting in June while at the same time deciding if they want to suspend it pending constitutional action reflects the failure of the Legislature to make a simple and clear decision.

Proponents of referendums and bond issues seem to believe that the governor will follow the popular will and not his personal views. They continue to propose bonds without stripping away his discretion to refuse to issue them. Similarly, voters pass Medicaid expansion, but the proposed bill lacks funding.

The political problem with seeking legislative clarity is that legislators may more readily be held responsible when voters understand their actions. That’s a risk of leadership.

Popular confidence in government could grow if legislators chose to make the laws more simple and clear. If problems arise in the application of the law, they can be fixed by legislators, not by courts.

The “administrative state,” though not a liberal conspiracy, is a real threat. To halt its growth, Congress and state legislators must take more responsibility.

Can any constitutional right be ‘absolute’? How about the Second Amendment?

I support the Second Amendment.

Despite what you may hear, almost everyone does.

That’s because it is part of the Constitution, and it would be hard to find any American who does not support the Constitution. It contains seven original articles and 27 amendments, and virtually every American supports all still in effect – including the Second Amendment.

Just because you support the Constitution may not mean that you like all of it. The Fifteenth Amendment, adopted in 1870, supposedly assured voting rights for African Americans. Because of opposition in some states, that right did not begin to take full effect until 1965.

Though bound by the Constitution, some states refused to apply it for about a century. There’s little sign that people who favor background checks on gun purchasers would say the Second Amendment should simply be nullified under state laws, as was the Fifteenth.

Are there any movements to repeal parts of the Constitution? Yes, there are people now ardently advocating repeal of a part of the Fourteenth Amendment giving American citizenship to any person born within the boundaries of the United States. They oppose citizenship for such children if their parents are illegal or undocumented immigrants.

But it is much harder to find similar groups devoting their efforts as actively to repealing or even amending the Second Amendment. Even people who are unhappy with the Supreme Court decision on firearms have accepted it.

So why do some politicians and gun organizations attack those favoring limits as not supporting the Second Amendment?

In 2008, the Supreme Court ruled in favor of people’s right to own and use guns. The decision was written by the late Justice Scalia, a conservative judge. It overruled a District of Columbia law that could undermine that right even in your own home.

The Court said, “Like most rights, the right secured by the Second Amendment is not unlimited.”

In the decision, Scalia wrote for the Court that “nothing in our opinion should be taken to cast doubt on longstanding prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings, or laws impos ing conditions and qualifications on the commercial sale of arms.”

The decision also confirmed the government’s right to control “dangerous and unusual weapons.”

Gun control opponents, while applauding the Court’s ruling on firearm ownership and use, disagree. They believe that the Second Amendment, unlike other constitutional rights, guarantees an “absolute” right on which no limits may be placed.

The argument about whether you support the Second Amendment turns on this point.

Without much evidence, “absolute” gun supporters charge that those favoring limits want to repeal the Second Amendment and would start by requiring background checks on purchasers. Simply because they propose any limits, they are supposedly on the slippery slope to outright repeal.

Absolutists may worry about what followed the Supreme Court ruling that women may have abortions. Some state governments disagree, and they have created increasingly restrictive ways to reduce or eliminate abortions through limits clearly intended to overrule the Supreme Court decision.

After mass shootings of innocent people, defenders of an absolute Second Amendment argue against new limits, claiming we should focus exclusively on the shooters and not place any obstacles on their easy access to guns.

Can we reasonably expect to identify in advance every mentally ill or deeply disturbed person in a country of 320 million people? Impossible. So access to guns, which can be used to quickly kill groups of people, might be made a little more difficult.

 

The issue could be seen as a conflict between the right to “life, liberty and the pursuit of happiness” for ourselves and our children, promised by the Declaration of Independence, and the Second Amendment right to “keep and bear arms.”

Which right would come closer to being absolute? Must we accept the killing of school children, followed only by routine and pious expressions of official sympathy, because the Second Amendment cannot be subject to any limits?

We cannot ignore the Constitution, including the Second Amendment, and remain “united.” But, as a civilized people, we should not ignore the increasing plight of innocent school children shot down by killers with easy access to guns.

The obvious answer in the vast and diverse American democracy must be compromise, which would involve some limits, at least including full-scale background checks, but not repeal.

I support the Second Amendment. But I cannot accept that it is the Constitution’s only absolute, unlimited right.