Comment by coderenegade | Hacker News Reader

Comment by coderenegade | Hacker News Reader

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Tariffs are a tax that buys you (at least) three things, all of which are difficult to quantify, and usually overlooked by economists:

1. Security. You make your own bullets. You're able to make and maintain your own military hardware. When another country cuts supply lines in their own self interest, you have options to advocate for yours, either through trade, making it yourself, or, yes, even force.

2. Economic opportunity for your children and grandchildren. And no, not just "factory jobs" as is commonly sneered, but a community of experience and expertise. An engineer that gets to interact with the products they design in that kind of environment is a better engineer. A country that gets to see and interact with the products it makes has a sense of pride and better social cohesion.

3. Social buy-in and consequences for companies. A Chinese car manufacturer doesn't give a shit if cutting costs killed your grandfather. A local company has to, because the executives and workers are all members of the community. I was in Germany during dieselgate, and the sense of disgust at the company was obvious. They felt that.

These things are, imo, important to the health of any country, but they can only really be valued in retrospect. So yeah, tariffs are a tax, but some things are worth paying for even if what's being purchased isn't necessarily obvious or easy to quantify.

Yes those are all good things. Tariffs aren't the only and almost never are the most sustainable long-term way to get them. I'm not old enough to remember the protections against japanese cars, but I know they didn't solve the problems with US auto industry, for example.

I would guess the optimal course to those ends would include some targeted tariffs. I am damn near certain that the optimal course isn't tariff-centric. Every option in a global economy (or any economy) is coupled and never limited to the first-order obvious effect.

As a very simple example that I see ignored often on here: High paying jobs are good, but increase the cost of the ouput. Consumers are also people, they benefit from lower prices. You can never turn one dial independently. There are pretty magical dials though, like education and trade. Some dials are better than other. All dials treated coarsely are worse than dials treated as the multidimensional optionalities they are.

I generally favor increasing productivity and QoL via net-positive interactions. I default to disliking fixed-pie-slicing until convinced otherwise. With all of the caveats to this position as above.

The only repeatable path to industrialization and the benefits thereof is the combination of protectionist policies -- be they tariffs or subsidies -- with a focus on exporting goods and competing in the global market. This is historically true, essentially without exception. You need both, because without global exports, protectionism makes companies lazy, and without protectionism, you risk exposing strategic national assets and supply chains to what is essentially unfair competition.

I mean, I admit that I'm not competitive with people desperate enough to work 12 hour days, 7 days a week, while the grandparents raise the kids in a 10 person household. But I'm probably capable of more sophisticated work due to my education and ability to specialize. Removing all barriers to trade essentially forces companies to offshore and train up nations that may not have your sovereign interests at heart in order to compete and provide a return for investors. It's a short term sugar hit that erodes the nation-state. This is why we strictly limit offshoring for certain strategic industries, but the truth is that all manufacturing industries are strategic to some extent, because they form part of a logistical web.

As for whether or not such a system is sustainable, it's worked for the world's manufacturing powerhouses for decades. The reason they're all falling to China now is because enough of the global supply chain has shifted there that it's now impossible to compete. Assuming those nations don't want to become services-based economies (which has been a disaster for Australia and the UK, neither of which can manufacture a tin of beans), protectionism is the only path forward. And indeed, China is utterly diligent in protecting it's own industries. This isn't fixed-pie-slicing, it's just pragmatic recognition that a government really does want to be able to fix the fighter jets when it needs to, and at some point, that means having enough industry in place to train the guy who does it. And economists, who don't really believe in or care about the problems of nation-states, probably aren't the right people to listen to when that's a concern.

And the feckless executive of a lame duck administration applying them on a whim will accomplish this?

Where did I say anything about politics? My only beef is with the notion that tariffs and protectionism are inherently bad.

Thing is, absolutely none of what you’re saying applies to Trump’s tariffs. Because he’ll remove them two weeks from now if the right person flatters him the right way.

So there will be no build out of manufacturing capacity. You’d be a fool to spend tens of millions on that when at literally any moment the market will revert back to the norm.

This administration’s policy making is insane. I’m surprised folks are still trying to sanewash it.

I didn't say anything about politics. Whether or not industry believes this is a permanent state of affairs, or destined to end with this administration, has no bearing on whether or not tariffs can be a useful tool. My issue is with trivially wrong economic dogma.

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