Gary North’s Reality Check
This is a recent discussion between the Export Tariff Guy and the Free Trade Guy.
ETG: What this country needs is an export tariff.
FTG: How would it work?
ETG: Every exporter would pay a tariff on the retail price of everything it exports.
FTG: So, it’s a sales tax on exports.
ETG: That’s correct.
FTG: And why should the government do this?
ETG: It needs the money.
FTG: So, you are in favor of added taxes.
ETG: Extra export sales taxes, yes.
FTG: So, you want the government to spend more money.
FTG: So, you are a Keynesian.
ETG: Of course not. I am a defender of free enterprise.
FTG: You think that free enterprise is promoted by raising taxes.
ETG: Yes. Sales taxes. On exports.
FTG: Any other taxes?
ETG: Sales taxes on imports.
FTG: So, you want bigger government to help promote free enterprise.
FTG: So do Keynesians.
ETG: But Keynesians are not supporters of real free enterprise.
FTG: What is real free enterprise?
ETG: Free enterprise that is promoted by high sales taxes on exports.
FTG: And imports.
FTG: How do taxes on exports promote free enterprise?
ETG: Because they reduce the number of exports.
ETG: By raising prices to foreigners.
FTG: So, they will buy less from American exporters because post-tax prices are higher.
FTG: Why is that good for free enterprise?
ETG: Because it makes available more American-made goods for Americans to buy.
FTG: Because the goods are not shipped to foreigners.
ETG: Correct. So, consumer prices will fall in America.
FTG: So, this is a subsidy to American buyers of American-made goods.
FTG: This subsidy is paid for by Americans who want to buy foreign goods, but who will cut back because of reduced imports due to reduced exports.
FTG: So, free enterprise requires government subsidies to one group of American buyers at the expense of another group of American buyers.
(For the rest of my article, click the link.)