Some Links
President-elect Donald Trump’s proposed tariffs would result in higher prices, lower economic growth, less investment in the United States, reduced productivity by American workers, and fewer exports.
On the other hand, they would marginally reduce the federal budget deficit.
Those are the trade-offs presented in a Congressional Budget Office (CBO) report analyzing Trump’s campaign trail promises to slap higher taxes on just about everything that Americans buy from abroad—with extra high taxes on goods imported from China. The CBO’s report echoes findings from several non-governmental reviews of Trump’s agenda, but it represents the first time that a federal entity has outlined the trade-offs involved.
And those trade-offs skew heavily towards costs, rather than benefits.
If we can introduce a few facts, Mr. Trump’s claim that Panama is gouging Americans is unfounded. Every vessel, regardless of its flag, pays the same rate according to tonnage and type. Container ships, which carry finished goods, pay more than bulk carriers. About 75% of the total price is a toll and 25% is for services like tugboat or locomotive escorts.
When the U.S. ceded the canal to Panama in 1999 under a treaty negotiated in the 1970s by Jimmy Carter, there was concern that the country couldn’t run the vital transit way. But the Panama Canal Authority has done well by guarding its institutional independence from the government and running as a business.
The canal’s budget is reviewed by its board of directors, the president’s cabinet and Panama’s congress, and excess earnings are transferred to government coffers. But the canal authority is financially and managerially independent of the state. A third set of locks, which opened in 2016, was planned and built by the canal authority, not Panama.
People living in capitalist countries, even if less than perfectly free, don’t think about it. As customers, they place orders with their suppliers. As producers, they satisfy the orders of their customers. Consumers are the bosses, producers are at their service. And producers happily accept this role because they want money to, in their turn, order goods as consumers on markets. A free rather than less free economy naturally organizes itself around this principle because we produce in order to consume and not the other way around.
For Christmas, you gave orders to your suppliers, not the other way around. A producer could not order you to buy from him. Only public producers—governments or suppliers backed by governments—can do this.
Wall Street Journal columnist Gerard Baker passes out some prizes for 2024. A slice:
• The Al Gore Award for Convenient Untruths About the Climate. Again the media crowd had strong contenders here, but the president himself prevails with this one. In July Mr. Biden told us that “extreme heat is the number one weather-related killer in the United States.” Data actually show that cold kills far more.
• The Herschel Walker Political Newcomer of the Year Award. Tim Walz, a man who combines the vision of Mr. Magoo with the moderation of Bill Ayers, would have claimed this award, but as governor of Minnesota he is no newcomer. Instead the prize goes to Lt. Gov. Mark Robinson, the failed Republican candidate for governor of North Carolina. I can’t begin to imagine in what circles you’d have to move to think describing yourself as a “black Nazi” would appeal, but evidently it is not the electorate of the Tar Heel State, whose voters sent Mr. Robinson to the obscurity from which he should never have escaped.
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