Economic strategies can have conflicting objectives.

Strategies can have intended and unintended consequences as well as short and long-term ramifications. In our polarized political environment, this presents difficulty for decision-makers because it creates multiple results for every strategy.

In the last 10 years we have become the economic backbone and “bedroom” country for the world. Literally every country relies on our economy for the success of their own. For most, including those perceived as enemies, we are their largest consumer and largest supplier. This magnifies the effect of any economic strategy such as tariffs.

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The initial motive for any tariff is to raise the price of imported goods in relationship to those produced domestically. Typically, imported goods are less expensive because of cheaper labor and other dictatorially controlled costs. The tariff results in increased sales of domestic goods facilitating many positive economic results:

• Keeping money in the US, which reduces our balance of payments and enables the multiplier effect generating an additional 3-5 times more money;
• Encouraging domestic and foreign companies to develop additional domestic manufacturing facilities(factories) employing more US citizens, which reduces governmental expenses by decreasing the number receiving unemployment benefits, reduces our reliance on foreign governments increasing our economic independence and reduces transportation costs;
• Increasing governmental revenue through increased taxable employee payroll, increased taxable company profits and receiving tariffs from foreign countries.

Additionally, tariffs can serve as considerable leverage to encourage another country to work with us on relevant issues such as illegal immigration, drug production and transportation, discriminatory or anti-humanitarian actions and access to local resources.     

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Between 1998 and 2019, 71,000 manufacturing facilities closed, resulting in 5.2 million lost jobs. A closed factory, by its nature, is difficult to convert to another use, but are readily available and suitable for conversion to another product. Any new construction is economically positive.

In science, we learned that for every action, there is an equal and opposite reaction. Same is true in life and economics. The unintended, but no less valid, consequences of tariffs are:

• Inflationary pressure because the tariff will be reflected in the price of imported goods, decreased supply and competition result in higher price;
• Retaliatory tariffs. Affected countries may place tariffs on our exports decreasing sales, profits, tax revenue and increasing the possibility of layoffs;
• Decreased employment in affected countries resulting in their unemployed seeking jobs here through immigration;
• Decreased influence on and the possibility of decreased cooperation from an affected country;
• Increased requests for foreign aid.

The world contains millions who view themselves as oppressed. This oppression is largely a result of lack of economic opportunity or humanitarian treatment in their home country. Others feel the need for asylum because of religious persecution, discrimination, control by drug cartels, ineffective police, and lack of education having created an environment where families don’t feel safe. Consequently, our open borders have facilitated our becoming a “bedroom” country for the world.

Most don’t have any other location to seek this safety and economic opportunity. To our country, however, immigration is more than a humanitarian issue. It is an economic, security and resource issue. This creates limitations in what we can do and maintain the nature of our country and the very reasons everyone desires to come here. Common sense tells us all those entering our country do not have our best interests at heart. Terrorists and insurgents with the goal to eliminate both people and our system are arriving and become imbedded.

Economic strategy also affects immigration, but again there are conflicting results.

Given that the main reason people immigrate is economic welfare and opportunity, one strategy is to encourage US companies to build factories in those countries. Local job availability and wages would be higher motivating people to stay home. Additional educational opportunities would also result. The argument becomes unless we provide them opportunity they will continue to come to our shores.

It would further ensure those countries stay friendly, willing to promote our interests and provide the country and its people with firsthand positive exposure to our economic and political system. The argument becomes the best way to ensure world peace is to have a worldwide presence.

Again, there are equal and opposite ramifications. It would increase our dependence on a foreign country, giving them a degree of control. Money would leave our country to fund foreign construction and payroll. It would reduce jobs here. For a company to invest, we would have to guarantee the country would not nationalize the business and keep the revenue for itself; possibly requiring military intervention. The argument becomes the best way to protect our country is complete self-sufficiency.

Economic independence has its own conflicting strategies. If every country were economically and basic need dependent upon the rest, there wouldn’t be conflict. Originating during the Cold War, many economists felt Russia was not an actual threat because we supplied the majority of their food. No one bombs the grocery store.

The opposite can be equally argued. It is preferable to do whatever necessary to be completely economically independent because any element of dependence gives other countries a degree of control. Food and energy could be weaponized against our system.

To deal with our issues, economic strategies are a valuable and effective tool. Sadly, there aren’t any easy or guaranteed answers regarding relative effectiveness. It’s our personal responsibility to become knowledgeable and examine all sides before forming our opinions. It’s also our personal responsibility to willingly listen to differing opinions in a rational as opposed to emotional manner and  to adjust if results dictate the need for change.

Bryan Whiting feels most of our issues are best solved by personal responsibility and an understanding of non-partisan economics rather than government intervention. Comments and column suggestions to: bwpersonalresponsibility@gmail.com.