WEBVTT 00:00.110 --> 00:02.090 Hey guys, this is the Bishop with Radio Rothbard. 00:02.190 --> 00:04.930 Thank you for listening to Radio Rothbard. 00:05.030 --> 00:07.850 Always great to hear from our fans out there. 00:07.890 --> 00:10.250 And I wanted to let you guys know that we are still 00:10.250 --> 00:13.270 in our year-end fundraising drive. 00:13.770 --> 00:15.810 Yes, 2024 has flown by. 00:15.990 --> 00:18.050 We are excited for big, big things in 2025, 00:18.450 --> 00:20.650 but we need help from people like you. 00:20.830 --> 00:22.490 We have no billionaire donors. 00:22.950 --> 00:24.990 We certainly receive no government money. 00:25.050 --> 00:27.430 We are only supported by people that care 00:27.430 --> 00:29.890 about the mission of the Mises Institute. 00:29.890 --> 00:33.010 You can donate today throughout the end of the year 00:33.010 --> 00:36.950 at Mises.org slash Radio Rothbard 24. 00:37.190 --> 00:38.770 You donate $25 and more. 00:38.910 --> 00:41.330 You'll get a copy of Tom Dillerin's newest booklet, 00:41.690 --> 00:45.290 The Axis of Evil, America's Three Worse Presidents. 00:45.710 --> 00:47.870 Again, thank you for being a listener throughout this year. 00:47.970 --> 00:50.630 Have a very merry Christmas, and we'll see you in 2025. 00:57.250 --> 00:59.150 Welcome back to Radio Rothbard. 00:59.290 --> 01:02.790 I'm Ryan McMakin, executive editor at the Mises Institute. 01:03.630 --> 01:06.950 And joining me today is Tom DiLorenzo, 01:07.150 --> 01:09.370 our president here at the Mises Institute. 01:10.090 --> 01:12.010 And if you don't already know, of course, 01:12.230 --> 01:15.010 Tom's been before he was president of Senior Fellow 01:15.010 --> 01:19.170 for decades and has been in many ways 01:19.170 --> 01:22.150 our go-to guy on tariffs. 01:23.030 --> 01:25.170 And so we're gonna talk a little bit about tariffs today 01:25.170 --> 01:29.030 because in spite of, I don't know, the hundreds, 01:29.650 --> 01:30.990 maybe thousands of articles 01:31.590 --> 01:36.870 we have published on Mises.org over the last nearly 30 years, 01:37.930 --> 01:39.890 we apparently still have a long way to go 01:39.890 --> 01:42.810 when it comes to people understanding tariffs 01:42.810 --> 01:44.910 and how they work and their nature as taxes, 01:45.070 --> 01:47.170 their coercive nature, all of that stuff. 01:48.150 --> 01:50.730 Because I think the rise of Trump has contributed a bit 01:51.230 --> 01:53.670 to a lot of confusion over it and a lot of people 01:53.670 --> 01:55.290 because of political allegiances 01:55.290 --> 01:58.030 have decided that tariffs aren't that bad. 01:58.030 --> 02:01.830 So we'll just talk about some of the fundamentals 02:03.990 --> 02:04.910 involved there. 02:05.250 --> 02:07.530 Now, before we get to that, 02:08.200 --> 02:09.410 just wanna make sure a couple of things 02:09.410 --> 02:10.390 going on at the Mises Institute. 02:10.470 --> 02:15.090 If you have not ever subscribed 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publication and other invitations. 03:00.630 --> 03:03.490 So head on over to Mises.org if you have just a minute. 03:04.890 --> 03:08.190 Now, Tom, I just continue to see, 03:08.410 --> 03:10.270 and I'll basically just ask you questions 03:10.270 --> 03:12.410 along these lines, continue to see 03:12.410 --> 03:14.590 just ongoing confusion about tariffs. 03:14.730 --> 03:18.130 And I can tell you that when I am out 03:18.130 --> 03:22.130 in among a broader audience, 03:22.330 --> 03:26.310 say at when the Mises Institute might be present 03:26.310 --> 03:29.690 at other events that aren't strictly Mises events, 03:30.170 --> 03:32.750 that people will come by our table or booth 03:32.750 --> 03:36.070 and strike up a debate with me about tariffs. 03:36.430 --> 03:39.550 And it's amazing the theories people have about tariffs 03:39.550 --> 03:41.730 and about how they're really not a tax, 03:41.850 --> 03:45.710 they're really not a problem economically. 03:47.070 --> 03:51.010 It's pretty common, I would say, for this to happen, 03:51.090 --> 03:52.210 at least in recent years. 03:52.310 --> 03:54.330 It didn't come up nearly as much prior to Trump. 03:55.830 --> 03:57.950 But one thing, and so I've just got a series of questions 03:57.950 --> 04:00.090 here for you to help us clarify these issues. 04:01.050 --> 04:03.950 And one thing that I noticed that comes up historically 04:03.950 --> 04:08.470 and is relevant to your most recent article for us, 04:08.590 --> 04:10.850 which came out on the 26th, 04:10.850 --> 04:11.750 and this was an article called 04:11.750 --> 04:15.490 Our History of Protectionist Tariff Train Racks. 04:15.850 --> 04:17.430 And I think this is a good starting point. 04:17.930 --> 04:19.590 It offers some historical analysis, 04:19.730 --> 04:22.810 but the key adjective I think in the title there 04:22.810 --> 04:24.670 is protectionist tariff train racks. 04:25.150 --> 04:27.090 And these are two different things 04:27.090 --> 04:28.470 you could be discussing, right? 04:28.590 --> 04:30.310 We could be talking about revenue tariffs 04:30.310 --> 04:32.450 or we could be talking about protectionist tariffs. 04:33.690 --> 04:35.630 In policy, those things, 04:36.050 --> 04:38.650 they have different motivations and different outcomes 04:38.650 --> 04:40.610 and manifest themselves differently. 04:40.610 --> 04:44.950 But I think if we're just gonna continue along those lines, 04:45.050 --> 04:47.150 maybe a good place to start is just to have you clarify 04:47.150 --> 04:50.870 the difference between a protectionist tariff 04:50.870 --> 04:52.850 and a revenue tariff. 04:52.870 --> 04:54.770 Maybe in terms of economic analysis, 04:54.830 --> 04:56.850 there's not a difference, but in application, 04:57.370 --> 04:58.770 there's a real difference, right? 04:59.390 --> 04:59.910 Yeah, right. 05:00.690 --> 05:02.730 Well, at the beginning of the American Republic, 05:04.730 --> 05:06.770 tariffs were constitutional 05:07.370 --> 05:10.630 and we didn't get an income tax until 1913. 05:11.690 --> 05:13.170 And so at the beginning of the Republic, 05:13.730 --> 05:17.290 a revenue tariff was just a low tariff for maybe 10%. 05:17.950 --> 05:21.910 And it wasn't enough to really significantly deter 05:22.570 --> 05:24.050 competition from abroad. 05:24.610 --> 05:27.770 Its purpose was to raise enough funds 05:27.770 --> 05:30.870 to finance the constitutional functions of government. 05:31.670 --> 05:36.470 And then of course, once that was available, 05:37.350 --> 05:40.170 beginning in the 1820s, if not sooner, 05:41.170 --> 05:44.050 protectionists who wanted protection from competition 05:44.990 --> 05:47.250 started pushing for protectionist tariffs, 05:47.630 --> 05:50.550 40, 50, 60% on average. 05:51.490 --> 05:55.670 And one of the first big victories was in 1824 05:56.630 --> 05:58.710 and they pushed the average tariff 05:58.710 --> 06:01.090 rate up to around 45%. 06:01.730 --> 06:03.470 And then that means that some things 06:03.470 --> 06:07.730 had like woolen blankets would have had like 100% tariff. 06:08.450 --> 06:10.430 And so if somebody from England 06:10.430 --> 06:13.070 is shipping woolen blankets to America 06:13.850 --> 06:16.050 and they have to pay 100% tariff, 06:16.610 --> 06:19.310 the American manufacturer of woolen blankets 06:20.050 --> 06:24.230 can raise its price by say 80 or 90% 06:24.230 --> 06:28.090 and still out compete the guy from England. 06:28.870 --> 06:30.790 And so everybody's prices go up. 06:31.210 --> 06:34.850 And there's an old saying that what protectionist tariffs 06:34.850 --> 06:37.950 protect us from is lower prices. 06:38.850 --> 06:41.950 And that's when this all started. 06:42.650 --> 06:44.910 And so that all throughout the 19th century, 06:44.970 --> 06:47.050 that was one of the big economic debates. 06:48.470 --> 06:53.190 And unfortunately, Donald Trump is on the wrong side of it 06:53.730 --> 06:55.330 when he was president the first time 06:55.330 --> 06:59.750 his first economic speech, he went to Lexington, Kentucky 06:59.750 --> 07:02.130 because that's where Henry Clay was from. 07:02.450 --> 07:06.050 And Henry Clay was a big 19th century proponent 07:06.510 --> 07:07.850 of protectionist tariffs. 07:08.290 --> 07:11.990 And he called his program the American system. 07:12.570 --> 07:14.230 And so Trump apparently thought, well, 07:14.350 --> 07:17.370 he likes, you know, America first, make America great. 07:17.950 --> 07:20.910 And so, but he doesn't seem to have an understanding 07:20.910 --> 07:23.030 of even Econ 101 about tariffs 07:24.350 --> 07:29.370 because Henry Clay himself was a large slave plantation 07:29.370 --> 07:31.570 owning hemp grower. 07:31.990 --> 07:34.430 And he wanted protectionist tariffs on hemp 07:34.430 --> 07:35.550 coming in from abroad. 07:36.650 --> 07:38.750 That's, he actually said that's what got him 07:38.750 --> 07:40.230 into politics in the first place. 07:40.490 --> 07:42.810 See if he wanted to be able to put high tariffs on 07:42.810 --> 07:45.090 to kill the competition for his hemp 07:45.530 --> 07:48.990 in that he was growing on his slave plantation 07:48.990 --> 07:49.770 in Kentucky. 07:50.510 --> 07:54.670 And so, and so Trump thinks that's great. 07:54.790 --> 07:55.950 Well, that's not good for Americans. 07:56.230 --> 07:57.690 That might have been good for Henry Clay, 07:58.310 --> 08:00.390 but it would be it's bad for people 08:00.390 --> 08:02.770 who buy the products for sure. 08:03.830 --> 08:06.470 And, you know, fast forward to today 08:06.470 --> 08:09.610 if Trump puts the higher tariffs on steel. 08:10.670 --> 08:14.510 Well, yeah, that'll temporarily help out the steel workers 08:14.850 --> 08:18.150 in the steel industry, but it'll harm the car industry. 08:18.150 --> 08:20.910 We use a lot of steel to make cars. 08:21.470 --> 08:24.070 So it'll make the American car industry less competitive 08:24.070 --> 08:25.230 on international markets. 08:26.230 --> 08:30.890 And basically protectionist tariffs are, you know, 08:30.970 --> 08:32.530 they protect us from lower prices. 08:32.750 --> 08:34.170 It's against your self-interest. 08:34.650 --> 08:35.970 It's against my self-interest. 08:36.450 --> 08:37.810 But for hundreds of years, 08:39.430 --> 08:42.190 propagandists and publicists for the protectionists 08:42.690 --> 08:46.570 have beat this drum of trying to convince us 08:46.950 --> 08:49.870 that things that are against our own self-interest 08:49.870 --> 08:52.250 are really in our self-interest. 08:52.890 --> 08:54.890 And they've been pretty successful at it. 08:54.890 --> 08:57.830 And they usually appeal to xenophobia 08:58.690 --> 09:01.490 or, you know, China is gonna invade America 09:01.490 --> 09:02.690 or something like that. 09:03.170 --> 09:05.250 And people tend to become dumb 09:05.630 --> 09:08.470 when they become fearful of a foreign invasion, 09:09.050 --> 09:11.290 even if it's an economic invasion 09:11.290 --> 09:12.870 and not a military invasion. 09:14.790 --> 09:18.950 Well, and also from a revenue tariff standpoint, 09:20.090 --> 09:22.750 right, you could see how that would be 09:22.750 --> 09:24.410 just a totally different argument, right? 09:24.470 --> 09:26.150 Because now we're constantly seeing 09:26.150 --> 09:28.710 the two things mixed together, right? 09:28.910 --> 09:31.310 Where, okay, we've got Trump coming in 09:31.310 --> 09:33.390 and saying I'm gonna abolish the income tax 09:33.390 --> 09:37.270 and replace it with the revenue, with a tariff. 09:38.550 --> 09:40.310 Okay, well, he's arguing in that case 09:40.310 --> 09:41.390 for a revenue tariff. 09:41.390 --> 09:42.990 Now, I don't know who actually believes 09:42.990 --> 09:46.230 that he's going to abolish the income tax. 09:46.350 --> 09:47.810 We do know that he'll raise tariffs 09:47.810 --> 09:49.210 and then maybe get around later 09:49.210 --> 09:50.890 to getting rid of the income tax. 09:50.930 --> 09:52.490 Seems to be the order of operations 09:52.490 --> 09:56.670 that they're planning on, which of course is terrible. 09:57.090 --> 09:58.950 Get rid of the income tax first 09:58.950 --> 10:00.890 and then I can talk about tariffs, fine. 10:02.330 --> 10:03.890 But revenue tariffs, right? 10:03.990 --> 10:08.690 There's a certain motivation to keep them low enough 10:08.690 --> 10:11.550 that people continue to buy imports, right? 10:11.650 --> 10:13.490 Because if you just raise it to 100%, 10:13.490 --> 10:15.070 people will stop buying the imports 10:15.750 --> 10:17.530 and then you're not getting any of the revenue. 10:17.910 --> 10:20.110 So the federal government would have a motivation 10:20.110 --> 10:22.770 to keep revenue tariffs at a reasonable level, right? 10:23.490 --> 10:23.950 Yeah, right. 10:24.630 --> 10:29.970 Well, unless it's all a matter of who's bribing who, 10:31.430 --> 10:36.530 because the industry is at what the 100% tariffs, 10:36.530 --> 10:38.630 if they pour enough millions 10:39.150 --> 10:41.730 into the coffers of the Democrat and Republican parties, 10:42.410 --> 10:45.150 well, they might think, well, we could always print money. 10:46.150 --> 10:48.090 Yeah, we'll lose a little bit of tariff revenue, 10:48.170 --> 10:50.430 but we'll just get the Fed to print more money for us 10:50.430 --> 10:52.010 and we'll do it that way. 10:52.750 --> 10:54.310 And so, of course, there's not like a bright, 10:54.410 --> 10:57.590 shining line between a revenue and protectionist tariff, 10:57.770 --> 10:57.850 I suppose. 10:57.850 --> 10:59.430 And when you think about it, 10:59.570 --> 11:03.330 think about war, what do countries do to each other 11:03.850 --> 11:05.110 when they go to war? 11:05.110 --> 11:07.370 Well, they try to impose a blockade. 11:07.610 --> 11:11.310 They try to starve the economy of the enemy. 11:12.330 --> 11:14.990 And so in the American Civil War, for example, 11:15.110 --> 11:17.370 one of the very first things Abraham Lincoln did 11:17.810 --> 11:20.690 was to commence a blockade of the Southern ports 11:21.310 --> 11:23.690 to try to starve the Southern economy. 11:24.290 --> 11:26.610 And the same is true, World War I, 11:26.750 --> 11:29.010 World War II, attempts at blockades. 11:29.530 --> 11:31.530 So basically with protectionist tariffs, 11:31.890 --> 11:34.310 we do to ourselves in peacetime 11:34.790 --> 11:37.510 what our enemies would like to do to us in wartime, 11:37.950 --> 11:39.270 starving our own economy. 11:39.930 --> 11:42.970 And so it's this bombardment of propaganda 11:43.710 --> 11:46.550 that actually convinces millions of Americans 11:47.350 --> 11:49.810 that things that are against their self-interest 11:49.810 --> 11:51.370 are really in their self-interest. 11:51.790 --> 11:53.070 It's very Orwellian. 11:53.550 --> 11:55.510 I'd forgotten about that argument, right? 11:55.950 --> 11:58.470 If the argument that cutting down on imports 11:58.470 --> 11:59.550 is good for your economy, 11:59.610 --> 12:01.010 well, then the Confederate economy 12:01.010 --> 12:03.110 should have gone gangbusters, right? 12:03.110 --> 12:05.750 Yeah, they should have won the war in about two months. 12:06.770 --> 12:08.190 Because they couldn't import anything 12:08.190 --> 12:09.830 and ruin their local economy. 12:10.350 --> 12:13.470 Yeah, so the fact that an embargo is an act of war, 12:13.970 --> 12:17.490 right, the Germans should have been just fat and comfortable 12:17.490 --> 12:20.390 after the starvation blockade was imposed on Germany. 12:20.830 --> 12:21.190 World War I. 12:22.010 --> 12:25.550 Yeah, that would seem to contradict the idea 12:25.550 --> 12:28.550 that imports are bad for your economy. 12:29.030 --> 12:32.270 And which I think brings us to an important issue here 12:32.270 --> 12:34.210 which probably is foundational as well 12:34.210 --> 12:36.230 is I continue to see headlines 12:36.230 --> 12:39.310 that they're phrased in a way where it says, 12:39.490 --> 12:42.990 well, Trump plans to raise tariffs, 12:43.090 --> 12:44.530 but he plans to cut taxes. 12:45.070 --> 12:48.110 Or how tariffs are different from taxes. 12:48.430 --> 12:50.830 These are like actual headlines I've seen. 12:51.030 --> 12:52.030 Well, I mean, correct me if I'm wrong, 12:52.390 --> 12:53.870 isn't a tariff just a tax? 12:54.650 --> 12:55.610 Well, sure it is. 12:55.770 --> 12:57.010 That's why we have customs houses. 12:57.310 --> 13:01.090 If you ship goods into, say, 13:01.090 --> 13:02.530 Charleston, South Carolina, 13:03.510 --> 13:05.850 you can see the old customs house right there 13:05.850 --> 13:08.030 on the water in Charleston Harbor. 13:09.110 --> 13:11.150 It's, I'm not sure, I don't think it's in use anymore. 13:11.310 --> 13:12.290 It's like a museum. 13:12.810 --> 13:14.950 But the real customs house is still there. 13:15.450 --> 13:17.470 You gotta pay a tariff, the Port of Baltimore, 13:17.730 --> 13:19.970 you gotta pay tariffs on things 13:19.970 --> 13:23.590 that are where there are tariffs imposed on things. 13:24.450 --> 13:26.990 And so it's a tax, it'd be more clear 13:26.990 --> 13:28.750 if we just called it the tariff tax 13:29.210 --> 13:30.370 and not just tariff, 13:30.370 --> 13:31.770 because that's kind of a weird word. 13:32.350 --> 13:34.670 And the people who are not economically educated, 13:34.810 --> 13:36.050 they don't know what that is. 13:36.690 --> 13:38.090 But yeah, of course it's a tax. 13:38.670 --> 13:41.070 If it's collected by the government, it's a tax. 13:42.810 --> 13:44.410 Well, it is, and by force, right? 13:44.490 --> 13:45.290 It's not like they're optional. 13:45.310 --> 13:45.630 That's right. 13:45.830 --> 13:47.090 If you wanna buy those goods. 13:47.710 --> 13:48.450 That's right, that's right. 13:49.130 --> 13:51.210 Now, I mean, the very same people 13:51.210 --> 13:53.150 who tell me in many cases, right, 13:53.210 --> 13:55.270 you'll see all this at the time in domestic politics, right? 13:55.430 --> 13:57.590 Oh, some government, state government, 13:57.770 --> 13:59.010 local government, federal government, whoever, 13:59.010 --> 14:01.750 they want to impose a sales tax on a good. 14:01.970 --> 14:04.550 So when you purchase that, the merchant has to collect, 14:05.070 --> 14:08.090 the merchant is responsible for paying that tax. 14:08.150 --> 14:10.330 So they collect an additional sales tax from you. 14:11.090 --> 14:14.730 And what is often argued is, oh, well, 14:15.350 --> 14:20.170 the sales tax is just passed on to the consumer. 14:21.210 --> 14:24.550 And so we shouldn't have sales taxes 14:24.550 --> 14:27.470 because the consumer just ends up paying for it. 14:27.990 --> 14:31.210 And which actually isn't totally true, right? 14:31.370 --> 14:33.470 The tax is partially passed on, 14:33.730 --> 14:34.790 but are also partially paid. 14:34.970 --> 14:36.250 I mean, at least that's what we were taught 14:36.250 --> 14:38.270 in Principles of Econ. 14:40.610 --> 14:42.930 But then these exact same people will say, 14:43.290 --> 14:45.710 oh, well, if you impose a tax on imports, 14:45.870 --> 14:48.270 which strikes me as a type of sales tax, 14:48.450 --> 14:50.070 it's a transactional tax on a sale. 14:50.530 --> 14:52.470 They don't say, oh, the consumer, 14:52.710 --> 14:54.870 that is the American side of the transaction, 14:55.470 --> 14:57.170 it just gets passed on to the Americans. 14:57.170 --> 14:59.470 No, they then tell me the opposite. 14:59.710 --> 15:01.330 They then tell me that the Chinese pay 15:01.780 --> 15:04.450 the full brunt of the tariff. 15:05.530 --> 15:08.630 Right, this is, they should apply in both cases. 15:09.190 --> 15:11.970 Right, they're passing on a large part of that 15:11.970 --> 15:13.190 just to the American consumer. 15:13.530 --> 15:17.910 Of course it does, they can't pass on all of it, 15:17.970 --> 15:20.150 but they have to eat a good bit of it. 15:20.810 --> 15:22.310 And another thing that happens is, 15:22.450 --> 15:24.550 when the price goes up, as they always do, 15:24.630 --> 15:26.870 that's the whole purpose of protectionist tariffs, 15:26.870 --> 15:27.870 to raise prices. 15:29.230 --> 15:32.430 We know the law of demand says people will consume less 15:32.430 --> 15:33.430 of whatever it is. 15:34.050 --> 15:37.490 And so we do without, a lot of people just do without 15:37.490 --> 15:38.610 because they can't afford it. 15:39.170 --> 15:41.650 Or if they can't afford it, they just choose not to have it 15:42.230 --> 15:43.710 for whatever, because it's too expensive, 15:43.870 --> 15:44.510 they don't need it. 15:45.070 --> 15:47.890 And so the economists call that a deadweight loss. 15:48.150 --> 15:50.050 It's kind of a clunky economics term. 15:50.510 --> 15:52.290 But the way to think about it is, 15:53.110 --> 15:54.350 well, we have to do without. 15:55.310 --> 15:57.510 It's going to reduce our standard of living. 15:57.790 --> 16:02.070 When they say inflation is a measure of the standard of living, 16:02.750 --> 16:08.330 well, yeah, you can't afford as much stuff in your life 16:08.330 --> 16:09.930 if everything gets more expensive, 16:10.510 --> 16:14.850 and tariffs make certain things more expensive for you. 16:16.150 --> 16:19.150 Now, I mean, some will argue then that that's okay 16:19.150 --> 16:22.210 because it encourages more people to then save. 16:22.210 --> 16:24.470 I mean, you'll even get people in our corner of things, 16:24.490 --> 16:27.470 right, saying is that, well, if you got to have a tax, 16:27.630 --> 16:29.290 sales tax better, so tariffs better 16:29.290 --> 16:30.610 than other types of taxes. 16:31.110 --> 16:33.430 I mean, I guess I kind of see where they're coming from. 16:34.550 --> 16:37.250 But I made to really make a judgment about that, 16:37.290 --> 16:40.010 aren't you engaging in a type of central planning then? 16:40.530 --> 16:42.550 Right, because what you're saying is that, 16:42.830 --> 16:44.310 okay, you've got all these goods and services, 16:44.450 --> 16:46.410 which small business people may be using 16:46.410 --> 16:51.130 to build their companies and essentially build capital. 16:51.130 --> 16:53.890 But we're saying, oh, it's okay to tax those. 16:54.370 --> 16:56.150 It just seems that there's this common misconception 16:56.150 --> 17:00.410 that tariffs are only imposed on end product goods, right? 17:00.530 --> 17:03.530 Like, oh, now people won't be able to buy this Chinese junk. 17:03.930 --> 17:05.710 But what if I'm buying stuff for my small business 17:05.710 --> 17:07.130 that I need to build things? 17:07.670 --> 17:12.450 Oh yeah, capital goods, the majority of tariffs 17:12.450 --> 17:15.690 are actually on so-called inputs, 17:16.050 --> 17:18.870 things that are used to produce other products. 17:19.250 --> 17:20.870 Like I mentioned, steel earlier, 17:21.230 --> 17:22.350 you want to tariff on steel, 17:22.810 --> 17:25.530 steel is used to produce a million different things. 17:25.990 --> 17:28.470 So all those things will be more costly to produce. 17:28.850 --> 17:31.870 And that's gonna hurt your bottom line 17:31.870 --> 17:36.150 if you're in business and the consumers have to pay more 17:36.590 --> 17:37.990 if the price goes up. 17:38.490 --> 17:41.230 And that's true, there are many thousands of things 17:41.230 --> 17:43.470 that have tariffs on them over the years 17:43.470 --> 17:44.950 that have had tariffs on them 17:45.450 --> 17:47.750 that are inputs into the production process 17:47.750 --> 17:48.770 of the final goods. 17:49.870 --> 17:52.410 And so like in the late 19th century 17:52.410 --> 17:56.450 when we had high tariffs of in a 50% range 17:56.450 --> 17:59.730 after the Civil War, that was a big hindrance 17:59.730 --> 18:01.390 to the Industrial Revolution 18:02.230 --> 18:04.910 because even if foreign trade accounted 18:04.910 --> 18:08.290 for maybe 10% or less of the whole economy, 18:08.550 --> 18:10.350 but still a lot of the inputs 18:10.350 --> 18:11.670 and a lot of the capital goods 18:12.030 --> 18:14.170 that they were being taxed with a tariff tax 18:14.530 --> 18:18.270 made it harder for American companies to compete back then. 18:19.250 --> 18:21.770 And so, and a lot of people make, 18:22.710 --> 18:24.990 Pat Buchanan used to be famous for making 18:24.990 --> 18:28.730 the post hoc, ergo, proctor hoc fallacy argument 18:28.730 --> 18:35.150 that high tariffs existed, America prospered 18:35.150 --> 18:39.250 in about 30 or 40 years after the Civil War economically. 18:39.910 --> 18:42.330 Therefore, the tariffs caused the prosperity. 18:43.090 --> 18:46.670 That's like saying the rooster crows in the morning, 18:47.050 --> 18:48.270 the sun comes up in the morning, 18:48.390 --> 18:51.090 therefore the rooster crowing causes the sun to come up. 18:51.870 --> 18:53.370 But that's a fallacy. 18:54.170 --> 18:56.010 Well, the other classic example would be 18:56.730 --> 18:59.170 that ice cream sales cause homicides, right? 18:59.230 --> 19:00.650 Because there's more homicides in the summer. 19:01.470 --> 19:03.870 And yeah, that was essentially gonna be 19:03.870 --> 19:06.170 my next question is, right, we see that all the time. 19:06.350 --> 19:07.850 When I'm sure you get the same emails 19:07.850 --> 19:09.550 if you write an article on tariffs 19:09.930 --> 19:12.730 is, well, America had high tariffs in the 19th century 19:12.730 --> 19:14.390 and that's when America was really prosperous. 19:15.410 --> 19:19.450 The classic correlation must mean causation argument, 19:19.950 --> 19:21.510 but not mentioned, of course, 19:21.610 --> 19:24.110 is that the United States had no income tax in that period. 19:24.370 --> 19:27.650 The regulatory state was virtually non-existent. 19:28.370 --> 19:30.930 What, the first three letter agency came in 19:30.930 --> 19:33.150 and I think the 1880s with the railroad regulate, 19:33.370 --> 19:34.410 or the 1870s perhaps. 19:35.410 --> 19:35.930 1887. 19:36.590 --> 19:37.910 Okay, so I mean nothing. 19:37.910 --> 19:39.570 The Interstate Commerce Commission, yeah. 19:39.950 --> 19:42.750 There was nothing before that in terms of federal regulation. 19:43.150 --> 19:44.870 So I'm supposed to believe that it was the tariffs 19:44.870 --> 19:47.190 that drove all that regulation. 19:47.290 --> 19:48.330 I guess we should just say, well, 19:48.350 --> 19:49.850 get rid of federal regulation. 19:50.370 --> 19:52.750 Hey, hey guys, you can even still have state regulation 19:52.750 --> 19:53.310 if you want. 19:53.770 --> 19:55.230 Get rid of that, get rid of the income tax. 19:55.650 --> 19:58.670 And hey, then you can raise tariffs 19:58.670 --> 20:00.350 and then we'll see how prosperous we are. 20:00.470 --> 20:02.390 Maybe we'll be, but again, that's different from arguing 20:02.390 --> 20:04.410 that the tariffs caused the prosperity. 20:05.110 --> 20:06.470 Yeah, that's foolish. 20:06.870 --> 20:10.790 It's economically ignorant and it's ahistorical as well. 20:11.670 --> 20:15.070 Well, I mean, another aspect of the tariff thing, of course, 20:15.190 --> 20:18.470 is that he's using it or in policy, Trump is. 20:19.130 --> 20:22.610 And we've seen this a couple of times just in recent weeks. 20:22.690 --> 20:24.090 So there's all these different arguments, right? 20:25.210 --> 20:26.750 We've of course said 20:27.330 --> 20:30.010 that there's no economic argument in favor of tariffs. 20:31.070 --> 20:33.990 Because boy, we can slap those down all day 20:33.990 --> 20:36.270 in terms of very good economic theory. 20:36.730 --> 20:38.170 Those are the easy ones, I think, 20:38.330 --> 20:40.650 in terms of building an argument. 20:40.830 --> 20:42.610 However, people will come back 20:42.610 --> 20:44.050 with more speculative arguments. 20:44.350 --> 20:46.390 These are the political arguments, 20:46.710 --> 20:49.590 the national defense arguments such as, 20:49.730 --> 20:51.730 oh, we have to produce all of our own steel 20:52.350 --> 20:55.110 because then an enemy, whoever that might be, 20:55.190 --> 20:57.270 would cut us off from steel. 20:57.270 --> 20:58.910 We wouldn't be able to buy warships 20:58.910 --> 21:00.990 or build warships, et cetera, et cetera. 21:01.050 --> 21:03.110 Now I've argued against that too. 21:03.250 --> 21:04.670 And even the Pentagon has said 21:04.670 --> 21:07.790 the US doesn't need to worry about its sources of steel. 21:08.390 --> 21:11.470 There are many such sources and they're not tied to China. 21:12.150 --> 21:14.290 Nevertheless, people continue along 21:14.290 --> 21:15.570 with these political arguments. 21:15.910 --> 21:18.650 And now Trump very innovatively is coming up 21:18.650 --> 21:20.210 with other ways to use tariffs, 21:20.290 --> 21:22.110 just basically as a foreign policy threat, 21:22.830 --> 21:24.410 involving all sorts of things, 21:24.410 --> 21:25.710 one of which is, hey, Mexico, 21:26.030 --> 21:29.570 stop immigrants from making it to the northern border 21:29.570 --> 21:35.110 or I'll slap a 100% tariff on all of your goods 21:35.110 --> 21:37.130 that might go to the US. 21:37.610 --> 21:40.290 And I'm sure he's coming up with other things as well 21:40.290 --> 21:41.870 that he can say, hey, just take orders 21:41.870 --> 21:43.810 from the United States or we're gonna slap 21:43.810 --> 21:46.850 huge tariffs on them. 21:47.110 --> 21:48.790 I mean, essentially though, 21:51.610 --> 21:57.230 I'm at a loss for the way Americans are willing 21:57.230 --> 21:59.850 to accept this so easily is that right 21:59.850 --> 22:01.410 because what he's saying is, hey, America, 22:01.610 --> 22:04.890 I'm gonna double the cost of, hey, small businessman, 22:05.090 --> 22:07.030 I'm gonna double the cost of your goods 22:07.030 --> 22:09.270 that you need to import in order to make your stuff 22:09.790 --> 22:12.470 until Mexico does what I say. 22:13.990 --> 22:17.190 I mean, I guess checkmate to Trump 22:17.190 --> 22:19.450 because I can see how politically popular 22:19.990 --> 22:23.130 this position could be, but I guess it's only popular 22:23.130 --> 22:24.590 because people don't see that tariffs 22:24.590 --> 22:26.170 are essentially attacks on them. 22:27.090 --> 22:30.330 But I'm impressed with it from a political standpoint. 22:31.170 --> 22:33.150 Yeah, it's a slick political maneuver. 22:33.870 --> 22:37.150 Like I said earlier, people tend to become dumb 22:37.650 --> 22:41.290 when politicians start talking about patriotism 22:41.290 --> 22:42.210 and waving the flag. 22:42.870 --> 22:44.030 It's kind of like one of the things 22:44.030 --> 22:47.970 in the famous essay, War is the Health of the State 22:47.970 --> 22:49.170 by Randolph Bourne. 22:49.830 --> 22:51.470 He said, what's the government declares 22:51.470 --> 22:53.870 that there's an enemy plotting to attack us? 22:54.370 --> 22:56.490 People, he said, people become childlike 22:56.890 --> 22:59.250 and they want mommy and daddy to protect them. 22:59.750 --> 23:02.170 And in that case, mommy and daddy is the government. 23:02.910 --> 23:04.850 And I think we have some of that that goes on 23:05.350 --> 23:09.090 when we have presidents talking about the foreign threat 23:09.090 --> 23:12.650 over the border from economic threat, 23:12.650 --> 23:14.310 not necessarily a military threat. 23:15.030 --> 23:18.950 And as far as the argument that we need protectionism 23:18.950 --> 23:21.450 so that we can produce steel at war time, 23:22.110 --> 23:24.370 well, I grew up in Western Pennsylvania, 23:24.590 --> 23:27.690 North of Pittsburgh in the 1960s and 70s, 23:27.690 --> 23:30.170 right in the middle of the decline of the steel industry 23:30.630 --> 23:33.410 and it was the heavily protected steel industry. 23:33.950 --> 23:36.050 And the reason why it was declined 23:36.050 --> 23:39.790 and the same with cars was it was so heavily protected. 23:40.150 --> 23:42.230 You protect businesses from competition, 23:42.750 --> 23:44.290 they become fat and lazy. 23:44.990 --> 23:46.810 And that's what happened to the steel industry 23:46.810 --> 23:48.290 and that was happening to the car industry. 23:49.390 --> 23:51.010 And so without competition, 23:51.990 --> 23:55.510 and when the unions wanted a dollar an hour raise 23:55.510 --> 23:57.610 every year for the next three years, 23:58.250 --> 24:00.450 the company just said, sure, no problem. 24:01.530 --> 24:03.650 We don't have any competition to speak of 24:03.650 --> 24:04.610 so we'll give you the raise. 24:05.190 --> 24:08.290 And no strike, so you don't need a bloody strike. 24:08.690 --> 24:10.450 You know, year after year you do that 24:10.450 --> 24:12.270 that all of a sudden the Japanese show up 24:12.850 --> 24:16.710 and clean their clocks as far as competition. 24:17.470 --> 24:20.170 So if you want to be prepared 24:20.170 --> 24:21.690 for national defense purposes, 24:21.850 --> 24:24.450 you want to subject your industries to competition. 24:24.650 --> 24:26.270 You don't want to protect them from competition. 24:26.870 --> 24:29.210 And I would argue you would want low tariffs 24:29.210 --> 24:32.450 or no tariffs and not the opposite. 24:33.470 --> 24:36.690 And of course, Trump seems to assume 24:36.690 --> 24:39.530 that other countries are not going to retaliate 24:40.270 --> 24:42.210 as they have no ability to retaliate. 24:42.510 --> 24:44.950 He can just walk around there and bluster and threaten. 24:45.790 --> 24:48.570 But, you know, the lesson of the famous 24:48.570 --> 24:53.250 smooth holly tariff of 1930 is that a dozen other countries 24:53.250 --> 24:57.830 immediately slapped very heavy tariffs on American products. 24:58.690 --> 25:00.410 And so in the next three years, 25:01.290 --> 25:04.210 a world trade, the international trade across the world 25:04.210 --> 25:08.610 shrunk by 80% because of an international trade war. 25:09.310 --> 25:11.810 And I'm not saying that Trump's tariffs on Mexico 25:11.810 --> 25:13.190 will do the same thing like that, 25:13.370 --> 25:16.690 but they could smart, you know, Mexico can retaliate 25:16.690 --> 25:18.690 and he's also threatened Canada. 25:19.150 --> 25:21.430 So Mexico and Canada could both retaliate. 25:21.570 --> 25:24.250 They don't need to necessarily sit back and take it 25:24.250 --> 25:27.870 because he's Donald Trump as far as that's concerned. 25:28.450 --> 25:30.110 Well, it seems like a weird strategy 25:30.110 --> 25:31.670 to make it as difficult as possible 25:31.670 --> 25:33.130 to do business with Americans. 25:33.670 --> 25:36.210 And to act like, that's interesting. 25:36.610 --> 25:39.350 That can be seen also in the BRICS threat, right? 25:39.510 --> 25:41.470 So these BRICS people who are getting together 25:42.150 --> 25:44.990 and they're trying to create an alternative to the dollar, 25:45.050 --> 25:46.150 which I don't think is imminent, 25:46.150 --> 25:49.530 but it's a longer term geopolitical project 25:49.530 --> 25:50.410 that they've got going. 25:51.070 --> 25:53.210 And they're trying to create some sort of alternative 25:53.750 --> 25:55.550 to the dollar and Trump turns around and says, 25:55.570 --> 25:56.990 well, I'm going to slap huge tariffs 25:56.990 --> 25:59.350 on all you BRICS countries if you do anything 25:59.350 --> 26:02.950 to try and diminish the influence of the dollar. 26:03.350 --> 26:06.450 This yet again, I'm going to make it as difficult as possible. 26:06.970 --> 26:09.130 I'm going to put anyone who does business 26:09.130 --> 26:10.790 with the United States under threat. 26:10.970 --> 26:13.910 And this is the same way with US sanctions, right? 26:14.310 --> 26:17.310 Is anyone who uses the American dominated swift system, 26:17.430 --> 26:18.670 anyone who uses the dollar, 26:18.850 --> 26:21.730 we reserve the right to steal all of your deposits 26:21.730 --> 26:24.890 like we did with Russia and do whatever we want with them. 26:25.210 --> 26:27.750 All he's doing is telling the world, don't use dollars, 26:27.750 --> 26:29.750 don't trade with the United States. 26:30.370 --> 26:31.730 And in the short term, 26:31.830 --> 26:33.370 you're not going to see much of a distinction. 26:33.750 --> 26:36.510 And I guess if you're serving a four year presidential term, 26:36.590 --> 26:38.110 then that's probably not going to be a problem. 26:38.470 --> 26:40.250 But if the US just keeps saying, 26:40.370 --> 26:43.570 hey, trading with us using our currency, 26:44.350 --> 26:46.850 we're just going to use that as leverage against you 26:46.850 --> 26:48.410 to accomplish political ends. 26:48.730 --> 26:50.430 It's like, that is so the opposite 26:50.430 --> 26:52.790 of the old Washington doctrine of just, 26:52.930 --> 26:55.530 hey, have friendly market relations with everybody 26:55.530 --> 26:56.970 and don't get involved in their politics. 26:56.970 --> 26:58.830 Trump's like the opposite of that, right? 26:58.930 --> 27:03.990 I'm going to use tariffs to impose my dollar policy, 27:04.190 --> 27:06.770 my trade policy on everybody. 27:07.250 --> 27:10.590 And it's hard to see why that wouldn't have 27:11.430 --> 27:13.510 longer term repercussions. 27:13.790 --> 27:20.890 But again, I guess it can be very, very popular politically. 27:21.430 --> 27:24.530 And also Trump can just do this seemingly 27:24.530 --> 27:26.030 without any intervention 27:26.030 --> 27:29.170 from the rest of the federal government. 27:30.130 --> 27:32.410 I saw that recently Trump's coming in, 27:32.470 --> 27:33.730 he's talking about, I'm going to do this with tariffs, 27:33.870 --> 27:34.790 I'm going to do that with tariffs. 27:35.690 --> 27:38.490 Because apparently the president can, due to convention, 27:38.790 --> 27:41.590 obviously the constitution does not allow this. 27:41.670 --> 27:43.430 The constitution says that the Congress 27:43.430 --> 27:45.630 shall have total control of all imposts, 27:45.910 --> 27:48.230 duties, taxes, et cetera. 27:48.890 --> 27:50.310 But, and I don't know if you know the history of it, 27:50.430 --> 27:51.510 I have not looked this up. 27:51.570 --> 27:53.770 At what point the president just started deciding 27:53.770 --> 27:56.590 that he could just set tariff rates, 27:56.810 --> 27:58.330 however he felt like it. 27:58.590 --> 28:00.210 But that seems to be where we are now. 28:00.790 --> 28:03.170 And then shockingly, I saw Rand Paul to his credit, 28:03.310 --> 28:06.090 gets up and says, hey, I think we should pass legislation 28:06.090 --> 28:08.990 in Congress saying that presidents can't just impose taxes 28:08.990 --> 28:11.510 on imports whenever and wherever they feel like it. 28:11.870 --> 28:12.710 And he was attacked. 28:13.250 --> 28:15.410 Rand was attacked all over the place by MAGA people 28:16.990 --> 28:18.890 for hating America, essentially, 28:19.110 --> 28:20.670 because Rand wanted to, you know, 28:20.730 --> 28:22.830 stick to the US constitution on that aspect. 28:23.510 --> 28:26.530 So it's just amazing what these Trump supporters are saying. 28:26.630 --> 28:28.890 Screw the constitution, just support Trump 28:28.890 --> 28:30.170 so he can impose more taxes. 28:30.310 --> 28:30.990 It's very bizarre. 28:31.570 --> 28:33.290 Yeah, it's because of the rise 28:33.290 --> 28:35.070 of these so-called executive orders. 28:36.610 --> 28:40.750 And that probably, I don't have the statistics in front of me, 28:40.830 --> 28:45.470 but I'm guessing that that probably ballooned out 28:45.470 --> 28:47.050 during the Lyndon Johnson years, 28:47.330 --> 28:49.490 executive orders, because we had a war going on. 28:49.490 --> 28:52.490 And so in the last 60 or 70 years, 28:52.590 --> 28:55.510 you've had this accumulation of these executive orders, 28:55.770 --> 28:59.030 which is pretty much saying the constitution doesn't matter. 28:59.470 --> 29:01.670 And so it finally, that's where we are. 29:02.150 --> 29:07.810 You might remember one of Clinton's flunkies once said 29:08.350 --> 29:11.790 something like stroke of the pen, law of the land. 29:12.070 --> 29:13.770 Pretty neat, you know, I just, 29:14.130 --> 29:15.430 I forget who that was that said that. 29:15.510 --> 29:16.970 I think it was one of Clinton's people. 29:18.770 --> 29:21.010 Like Hitler, Stalin, Mussolini, 29:21.410 --> 29:23.090 stroke of the pen, law of the land. 29:23.250 --> 29:25.630 Who needs a legislature if you can do that? 29:26.150 --> 29:27.730 And then there's the czars. 29:27.970 --> 29:30.810 I've been reading that Trump is already appointing czars, 29:31.370 --> 29:34.110 a new czar, when I was, 29:34.610 --> 29:36.290 one of my courses that I used to teach, 29:36.870 --> 29:40.690 I used to put up on the screen in a classroom a list of, 29:41.010 --> 29:43.190 this online list of all the czars. 29:43.190 --> 29:47.870 And we've, you know, we have like a salmon fishery czar 29:47.870 --> 29:51.630 and everything under the sun, there's a czar now. 29:52.390 --> 29:54.010 And these people don't have to be, 29:54.130 --> 29:56.890 go through the Senate confirmation process. 29:57.110 --> 29:59.830 They give us sort of mini dictatorial powers 30:00.420 --> 30:01.990 to do whatever the president wants. 30:02.150 --> 30:02.750 So he uses that. 30:03.330 --> 30:04.750 He'll probably have a tariff czar. 30:04.930 --> 30:06.670 I don't think there is a tariff czar yet. 30:07.690 --> 30:10.290 Well, do you know, when did you notice 30:10.290 --> 30:12.310 we were using this word czar 30:12.310 --> 30:17.370 to refer to basically these government agents? 30:17.650 --> 30:20.330 Cause it seems weird to me that you would want to name 30:20.690 --> 30:22.170 an American government office 30:22.170 --> 30:24.370 after like a despotic Russian monarch. 30:24.770 --> 30:26.950 So I don't know when that started. 30:28.130 --> 30:32.270 Yeah, well, they, the people in Washington liked the idea 30:32.270 --> 30:34.790 of being a despotic monarch, 30:35.190 --> 30:39.350 but they want to be despotic American monarchs. 30:39.870 --> 30:42.570 And probably, you know, I've looked this up, 30:42.650 --> 30:44.570 you go look it up on the web, the czars. 30:45.430 --> 30:47.790 And then, and you can find, they'll tell you when they started, 30:48.450 --> 30:50.390 I think probably in the 1960s, 30:50.390 --> 30:53.430 they started really proliferating of all these czars. 30:56.570 --> 30:58.550 It's just one of those times that the true nature 30:58.550 --> 31:01.390 of American politics peeks through the veil, I suppose, 31:01.750 --> 31:02.650 as we're calling ourselves. 31:02.930 --> 31:06.410 I mean, why not, why not make it the tariff furor? 31:06.410 --> 31:09.230 Maybe that would be more appropriate. 31:09.790 --> 31:12.530 Wow, I was disappointed when they called it 31:12.530 --> 31:14.250 the Department of Homeland Security 31:14.250 --> 31:16.570 and not the Department of Fatherland Security. 31:17.730 --> 31:19.070 I thought that would have been more accurate. 31:20.270 --> 31:22.150 Yes, they, well, and of course, 31:22.290 --> 31:25.810 the outcome is exactly what we expected from that department. 31:26.430 --> 31:28.110 But no talk about abolishing that. 31:29.430 --> 31:32.370 But I, yeah, I just think it's very remarkable 31:32.370 --> 31:35.550 where we are in terms of talking about raising taxes 31:35.550 --> 31:38.390 and any talk about Trump as a tax cutter 31:38.970 --> 31:40.990 just really is kind of a joke 31:42.090 --> 31:45.950 as long as we're talking about raising taxes on imports. 31:46.170 --> 31:48.250 And yet it seems that a lot of his supporters 31:48.250 --> 31:50.130 are continuing to push that narrative 31:50.130 --> 31:51.350 that he's a tax cutter. 31:51.450 --> 31:53.650 And remember that it seems to me, 31:53.690 --> 31:55.390 all of these new tariffs that he's talking about 31:55.390 --> 31:57.230 are on top of essentially his tariffs 31:57.230 --> 32:00.430 from the first term, 32:00.450 --> 32:02.990 because Biden really didn't do anything 32:02.990 --> 32:05.570 about the Trump tariff. 32:05.770 --> 32:07.350 So we're now going on, 32:07.470 --> 32:08.710 we're gonna be looking at 12 years 32:08.710 --> 32:10.530 of pretty significant tariff increases. 32:11.070 --> 32:13.110 Yeah, I guess these people are all graduates 32:13.110 --> 32:14.410 of Trump University. 32:14.530 --> 32:16.170 Didn't they have some Trump University? 32:16.850 --> 32:18.770 They got sued and they had to pay a lot of money, 32:18.870 --> 32:22.690 big fine, because of sort of a bogus paper mill, 32:23.150 --> 32:24.570 diploma mill type of thing. 32:25.390 --> 32:27.910 And maybe that's where they got their economic education. 32:29.430 --> 32:30.810 Well, and of course here at the, 32:30.810 --> 32:32.390 as I've said in a lot of our, 32:32.490 --> 32:35.190 just our meetings about editorial policies and stuff 32:35.190 --> 32:41.210 is just like, it's very hard to win on the tariff issue 32:41.990 --> 32:45.190 because if you, on certain things, 32:45.250 --> 32:46.830 anytime we say anything nice about Trump, 32:46.890 --> 32:49.830 we're then accused of being like crazed MAGA cultists. 32:50.510 --> 32:52.990 And then we turn around and we might criticize 32:52.990 --> 32:55.270 some economic policy of Trump and we say, 32:55.550 --> 32:56.670 hey, tariffs are bad. 32:56.910 --> 32:58.390 Then we get a showering of emails 32:58.390 --> 32:59.930 from people talking about how we all have 32:59.930 --> 33:01.310 Trump derangement syndrome. 33:01.810 --> 33:04.470 So it's, I mean, you just, 33:04.690 --> 33:06.370 we can't win on the tariff issue, 33:06.390 --> 33:08.310 but the fact of the matter is, is we're not gonna change. 33:08.990 --> 33:10.850 Our position on tariffs has been the same 33:10.850 --> 33:12.390 since for 40 plus years 33:13.110 --> 33:14.950 because the reality of tariffs hasn't changed. 33:15.150 --> 33:17.750 We're against tax increases at the measles too, 33:17.810 --> 33:19.230 but it's amazing how many people 33:19.230 --> 33:23.090 that seem confused by that. 33:24.110 --> 33:24.550 Conservatives. 33:25.370 --> 33:26.310 Right, no less. 33:26.310 --> 33:28.550 People who tell me how they're against big government 33:28.550 --> 33:32.230 come on and tell me why we should need tax increases. 33:32.510 --> 33:34.970 But again, right, abolish the income tax 33:34.970 --> 33:36.950 and then come back and we can start to negotiate 33:36.950 --> 33:39.770 about what your tariffs can be. 33:40.090 --> 33:41.910 But no one's really talking about doing that. 33:42.110 --> 33:43.030 Crucial step first. 33:43.630 --> 33:46.090 So, and one friend of mine, 33:46.150 --> 33:48.730 he said really that he thinks that the discussion 33:48.730 --> 33:53.590 about replacing the income tax with tariffs 33:53.590 --> 33:55.970 and holding out tariffs as this substitute 33:55.970 --> 33:58.450 for income taxes is really just a tactic 33:58.450 --> 34:02.310 to get people to think more kindly toward tariffs, right? 34:02.370 --> 34:04.370 There's no plan to get rid of the income tax 34:04.370 --> 34:05.430 in any meaningful way. 34:05.890 --> 34:08.810 It's just a way to speak more favorably about tariffs 34:09.850 --> 34:11.930 and to get people more accepting of the idea. 34:12.030 --> 34:12.870 And I think he's probably right. 34:13.690 --> 34:18.310 Yeah, well, we have a history of replacing tariffs 34:18.310 --> 34:21.650 with the income tax and vice versa. 34:22.870 --> 34:25.990 We had income tax temporarily during the Civil War 34:25.990 --> 34:28.470 and it was ended and so we went back to tariffs 34:28.470 --> 34:29.610 raising most of the money. 34:30.770 --> 34:34.710 And tariffs are always historically been most harmful 34:34.710 --> 34:38.970 to farmers, disproportionately harmful to farmers 34:39.510 --> 34:41.730 because if our trading partners overseas 34:43.110 --> 34:46.050 become impoverished by protectionist tariffs, 34:46.810 --> 34:50.170 they don't have enough dollars or as many dollars 34:50.710 --> 34:52.230 to buy American goods. 34:52.590 --> 34:53.310 And what are they buying? 34:53.450 --> 34:54.570 They're buying a lot of agriculture, 34:54.930 --> 34:57.430 a lot of agricultural goods, exports from America. 34:58.450 --> 35:00.210 And so farmers have always known, 35:00.530 --> 35:03.690 even in the 19th century and all my studying that era 35:03.690 --> 35:08.310 of the economic history is even if they were unschooled, 35:08.310 --> 35:10.550 literally going to school and learning economics, 35:10.630 --> 35:13.650 they understood that whenever the tariffs were jacked up, 35:13.830 --> 35:15.490 their business in Europe dried up 35:15.990 --> 35:18.050 and they lost a lot of money. 35:18.650 --> 35:20.370 And that happened after the Civil War 35:20.370 --> 35:21.670 when we had these high tariffs 35:21.670 --> 35:24.750 in the 55, 60% range on average. 35:25.790 --> 35:29.170 And the farm lobby became more and more powerful 35:29.890 --> 35:31.130 and they struck a deal. 35:31.730 --> 35:33.750 The advocates of the income tax struck a deal 35:33.750 --> 35:35.650 with farmers saying, 35:35.810 --> 35:38.110 we'll cut the average tariff rate down 35:38.110 --> 35:41.170 to something more reasonable, maybe 18 or 20%. 35:41.590 --> 35:45.250 If you, the farmers politically support an income tax 35:45.610 --> 35:47.890 and income taxes only could be on the rich people 35:47.890 --> 35:51.410 anyway, the top rate originally was 7%, 35:51.910 --> 35:56.090 but you had to make a half a million dollars in 1913 35:56.090 --> 35:57.490 to pay 7%. 35:58.190 --> 36:00.510 So the farmers bit, they went for it. 36:01.230 --> 36:04.270 And so by the time you get to, that's 1913, 36:04.970 --> 36:08.850 by the time you get to 1920 and World War II has ended, 36:09.930 --> 36:13.430 the top income tax rate was 77%. 36:14.170 --> 36:17.490 And shortly thereafter, the tariff rate went up. 36:17.930 --> 36:22.210 In 1929, the average tariff rate went up to about 60% 36:23.430 --> 36:25.330 because of the smooth holly tariff. 36:25.710 --> 36:29.590 So the farmers ended up with a much higher income tax rate 36:29.590 --> 36:31.050 than they thought they were gonna get 36:31.050 --> 36:34.970 and high tariffs after that whole incident. 36:35.510 --> 36:37.050 And that's what's gonna happen again 36:37.050 --> 36:38.290 if we don't do, like you said, 36:38.650 --> 36:40.090 abolish the income tax first 36:40.090 --> 36:41.490 and then we can talk about tariffs. 36:42.150 --> 36:45.030 Yeah, in the history of political bait and switches, 36:45.290 --> 36:46.870 that's one of the most horrible. 36:47.990 --> 36:49.790 So we'll go ahead and wrap up with that 36:49.790 --> 36:51.610 for this episode of Radio Rothbard. 36:51.870 --> 36:54.570 Thank you, Tom, for joining me today. 36:54.970 --> 36:57.710 We'll be back more next week and we'll see you next time.