Last week’s article went over the first three dimensions of taxation: finance, information, and ownership. We saw how tariffs can be arranged to comport to the moral requirement God gives in each area, besides addressing some practical concerns regarding finance. This week we’re concluding the analysis by looking at the control tariffs give to the government, how it can be too large, how we can arrange tariffs to honor His law in this area.

Control

Is the control inherent to tariffs configurable in a moral way?

Tariffs, let’s be honest, are not being promoted as the most moral or most financially (for the government) effective option. They’re being promoted because of how they effect the economy of these United States. There, it is true what the libertarian-free market analysts say: tariffs have a negative effect on the overall economy, if by ‘overall economy’ you mean the world’s economy. They remove money from its market-optimized place, diverting it into government functions; if we could operate the government without such, the market would be more ideal.

Well, we can’t. The government needs money- and in cost-benefit analysis, we must remember the problems that arise with a lack of public order such as government is mean to provide. Taxes are unpleasant; violent theft and irremediable fraud are eventually lethal, personally and economically. Somalia can testify as much. So the question is not whether the government will be a drag on the Idealized Economy but where it should be a drag- governmental drag being preferable to anarchy.¹ In other words: are tariffs a viable form of taxation?

Let me give another qualified victory to the libertarians. Tariffs calibrated to protect specific industries are, by and large, a bad idea. They induce a nation’s people to put their labor in a less-productive direction than they otherwise would, to nobody’s long-term benefit. That argument convinces me- but not without reservations. More convincingly, such industry-specific tariffs present an opportunity for corruption at scale, as we see in the current regulation-lobbyist industry which works to ‘restrain’ businesses in ways that consistently hurt smaller competitors. This rises from the fact that the government has no moral right to favor specific industries or companies in the economy (except in certain circumstances, as seen below).

Tariffs are protectionist; we know that. But how does the protectionism work? The general story is this: tariffs incentivize domestic trade by punishing international trade, resulting in consumers funding American industry. That’s true, in a sense. Tariffs have less of a price-raising effect on a free market than most assume- after all, supply-demand economics dictate that the price being asked is already the price which maximizes revenue (not profit). Thus, passing the cost of the tariff along to the consumer would actually harm the profit of the company. The tariffs can increase price (especially since markets are always slightly inefficient, meaning some companies can actually successfully raise price), but largely by causing producers to drop out of the market, decreasing the supply (increasing rarity). Of course, this would incentivize domestic industry to start up (and China shows that significant domestic industry can be a matter of months and years, not decades), particularly in America, which has plenty of expertise available, not to mention labor.

By stimulating people to spend inside the country, tariffs fund internal industry. Internal industry, in turn, provides people with more opportunities to produce and earn money. Contrast this with the recent globalist system of American economics. To paraphrase Robert Barnes, in the no-tariff, open-border-trade system you can get peanut butter at Walmart for $3 a pop (the jar is sized by your imagination), but you don’t have a job to get the money (or at least your job is, bluntly, not a well-paying position). In the tariff system, the effect is to get you a job (or the opportunity for a better one), at which point the fact that peanut butter costs $6 dollars is not really a concern, because now you actually have money.

The effect on employment, incidentally, also helps drive down debt-based life and welfare-reliance, two plagues which are killing America. The difference between relying on government bribery for your livelihood and working your way to sustainability by your own efforts, now that’s a different which, however non-quantifiable, will massively change the nature of the nation it takes hold of. Tariffs are anti-welfare not because they cut welfare directly (which is politically untenable, as a rule) but because they provide people the chance to leave welfare behind on their own, promoting a better work ethic and thus greater spiritual health. Indeed, apart from this, the spiritual (mental and emotional) benefits of being self-sustaining in a steady job are reason enough for tariffs.

Tariffs do harm businesses which relies on foreign industry and investors relying on the same. All taxes have negative effects, as noted already. This effect is part and parcel of turning investment inward, of re-establishing domestic import. If we want these good things, we must accept that some people’s finances will suffer- and that if we concern ourselves with supporting foreign industry, via a no-tariff policy, we’re harming the nation as a whole instead. Frankly, the government has a responsibility to care for its own citizens, not to support the economies of other countries, even if it has incidental benefits to some.

Protectionist tariffs, I said, are dangerous. But we still have three viable alternatives to protecting unworthy industries, three types of tariffs we can employ simultaneously. First, we have reciprocal tariffs. Putting a tariff on nations which engage in unfair practices (slave labor) or in their own tariffs, that’s just evening the playing field for American industry. If Paraguay puts a 10% tariff on imports of American widgets, American workers will have to outcompete their Paraguayan rivals by at least 10% more than otherwise, without the true comparative advantage at all changing. If America reciprocates, however, and tariffs Paraguayan stidget exports by 10% (assuming parity on the widget-stidget trade)…. Well, saying the situation is evened would be naïve, as economics are more complicated than that. It is, however, closer to even, closer to a true free market in comparative advantage at least. That’s why the Trump tariffs were not calibrated according to tariffs but according to long-term trade imbalances (between import and export).

Second, national security protectionism is absolutely valid and even desirable. Keeping food, fuel, and militarily-relevant manufacturing inside one’s own nation is a benefit, as it prevents not only losing it in war time but being pressured by threat to it in peace time. Protectionist tariffs to incentivize the free market to build this infrastructure inside these United States is part of protecting the United States against foreign powers, whether from diplomatic or military pressure. We’ve seen the importance of these industries in Russia, whose ability to supply their own fuel and food (to export, I believe, both) has allowed their economy to weather Western sanctions (it’s actually grown),² allowing them to pursue their perceived national interests in Ukraine. It’s like stocking up food and weaponry in a house on the frontier back in the 1800s in anticipation of Indian raids and wildfires: preparation for a siege or starvation is best accomplished prior to said siege or starvation.

Third, while specific protectionism is not a good idea outside of the national security context, general protectionism is itself good, as I think I demonstrated in describing it. While not an unmitigated benefit (costs do rise and many stocks will drop), in the long term a flat-percentage tariff on all imports (not exports, as that hurts America’s trading power) can be a benefit (up to a point). Protecting American industry and thus American jobs (through diminishing the advantages of foreign industry in comparison) is a good thing for the country- without the undue control (and massive potential for corruption) that industry-specific tariffs present.

Conclusion

Tariffs can be good. Industry specific tariffs are bad, though, and tariffs can be used in other deleterious ways- excessive privacy invasion and the life. In considering all four axes of taxation, though, we find that tariffs have potential to provide the benefits we want without violating God’s moral law. They can fund the government in part. They do not necessarily trespass into being unrighteous surveillance. They can be justified (again, within limits) as not granting the government immoral property interests, as comporting to individual property rights. They can be arranged so as to avoid immoral control of the economy by the government.

All it takes (besides a willing populace and government) is wisdom- and for that we need to turn to God.

God bless.

Footnotes

1. To outright anarchocapitalists: I like you, but God directs us to have a government. Anarchism can therefore be known to not work. Honestly, I believe government would have emerged (albeit without a criminal justice system) in a world without a Fall, as a coordinative and record-keeping measure. ↩︎
2. I don’t know the Russian tariff program and am not asserting them as an example of national security tariffs; they’re an example here of what national security tariffs should promote. ↩︎