This page has been archived and commenting is disabled.

Should You Be Subsidizing Executive Compensation In The Name Of Job Creation?

lizzy36's picture




 

On Friday every main stream media organization was hyperventilating over the amazing NFP number and the Unemployment rate. Three years after the great recession ended JOBS were created. Hallelujah - end of story. But has anyone really thought about what kinds of jobs are being created (other than Zerohedge). Has anyone thought about how their tax dollars are being used to support the very generous compensation packages of Executives (higher stock prices are always good for executives who are compensated in stock) while the “newly employed” are compensated with barely sustenance level wages and NO benefits. Has anyone raised the notion in this election cycle about how the “soft landing” in American living standards, is going to affect GDP growth going forward, considering that the US is an economy based 70% on consumption.

On Friday Caterpillar announced they were closing a factory in Canada. They had wanted the workers to take a 50% pay-cut plus a substantial cut to benefits. The workers understandably were not excited at the prospect of going from earning $67,000 a year to $28,000. One might think that Caterpillar was a struggling company, asking workers to accept a 50% pay-cut, one couldn’t be more wrong. Profit was up 36% in 2011 vs 2012. Oddly the CEO’s (also Chairman of the Board) pay package in 2010 (latest available numbers) was quadrupled from 2009, to a total of $22.5 million including a $16 million stock grant.

Caterpillar's decision, ending a standoff with locked-out workers huddled around barrels of burning scrap wood outside the London factory gates, may benefit another downtrodden manufacturing city: Muncie, Ind., where Caterpillar last year opened a locomotive plant and where it is trying to fill jobs at about half the pay workers in Ontario received. At a job fair in Muncie Saturday, Caterpillar will be offering jobs at that plant at wages ranging from $12 to $18.50 per hour. Wages for most workers at the Ontario plant are about 35 Canadian dollars an hour.

If Caterpillar does move theses jobs to Munice what does it stand to get from the City and the State?

When Caterpillar agreed to revitalize a former Westinghouse electrical-equipment plant in Muncie that had been idle for 12 years, state and city officials provided incentives that could reach about $28 million, assuming Caterpillar meets its goals for adding as many as 650 jobs. Those incentives include tax credits, infrastructure improvements and worker-training funds.
If Caterpillar increases its investment in Muncie to replace the Ontario capacity, Muncie officials said it may qualify for further incentives. "We're going to do all we can to help them," said Jay Julian, chief executive officer of the Muncie-Delaware County Economic Development Alliance.

So the State will pay $28 millon for the privilege of having Caterpillar employee 650 people at about an average yearly salary of $24,000 (a level that the federal government defines as just a hair above the poverty level)? By the way, the CEO could pay all 650 salaries for one year and still have almost $8 million left over.

Some will say a job is a job is a job. But is a skilled labour job that barely pays $100 a day before taxes (state taxes),really something state’s should be begging for?  Does the USA really want to start applauding the creation of poverty level jobs? Are new households created on $24,000 a year? Is demand stimulated with $24,000 a year.

Further who do you think is going to be left to pay the tab for these workers’ medical care, and pension benefits? Yes dear taxpayer that would be you. You, who paid for the privilege of having these jobs placed in your state to begin with, are now subsidising the compensation (benefit) packages of all the “newly employed”. The Corporation, well they don’t really pay as much taxes as they used to (corporate tax receipts as a share of profits are at their lowest level in at least 40 years), all those tax breaks/loopholes etc, really do add up.

U.S. companies are booking higher profits than ever. But the number crunchers in Washington are puzzling over a phenomenon that has just come into view: Corporate tax receipts as a share of profits are at their lowest level in at least 40 years.
Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30, according to the Congressional Budget Office. That's the lowest level since at least 1972. And well below the 25.6% companies paid on average from 1987 to 2008.

This is reverse socialism. It is the redistribution of wealth from the lower to the upper class with explicit State support. It is the sort of wealth redistribution that if allowed to go unchecked leads to social instability.

So in this the election season, we will all be told which Person or Party will be the best job creator. President Obama will take a victory lap as a “job creator in chief.” We will hear much about the “re-shoring” of jobs.We will hear about GE revitalizing manufacturing in the USA (they have closed 29 factories in the US since 2009). We will cheer the amazing profitability of GM ($45B tax break courtesy of the US taxpayer).The narrative on taxation will include the common line that Corporate taxes are to high and capital gains tax should be zero. What we won’t hear about is Corporations, like Caterpillar, taking money from workers and taxpayers, to enrich Corporate profits, and Corporate executives. We won’t hear about a CEO who got his pay quadrupled, and in turn cut his workers salary by 50%. Most of all we won’t hear about the soft landing in living standards for 80% of Americans.

 

Sources:

http://online.wsj.com/article/SB10001424052970203889904577200953014575964.html

http://online.wsj.com/article/SB10001424052970204662204577199492233215330.html

http://online.wsj.com/article/SB20001424052748704462704575590642149103202.html

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 02/07/2012 - 15:49 | 2135025 Dermasolarapate...
Dermasolarapaterraphatrima's picture

Watch your Money Market Fund:

 

"Nearly 60 percent of institutional investors surveyed by Fidelity said they would move all or some of their assets out of money funds if the net asset value were allowed to fluctuate. And 47 percent of retail investors said they would do the same."

 

http://finance.yahoo.com/news/fidelity-money-fund-clients-react-13143937...

Tue, 02/07/2012 - 14:35 | 2134609 RKDS
RKDS's picture

But but but if the super smart independent hardworking executives don't get a fat handout from mommy government they can't cremate any jobs for the completely useless working people!

Tue, 02/07/2012 - 14:43 | 2134634 JW n FL
JW n FL's picture

 

 

http://www.investorplace.com/2012/01/wall-street-bonuses-down-30-percent/

Wall Street needs to cut more Jobs to protect that bottom line and maybe even get a POP! for a little extra Bonus Monies!! this year!

Cut the FAT!

Bonus Money is the trickle down that tickles the fat fucks on Wall Street!

Tue, 02/07/2012 - 14:15 | 2134506 JW n FL
JW n FL's picture

 

 

Save the Job Creators!!!

or Gods Work will go un-done on Wall Street!

Tax Breaks!

Tax Credits! (that can be monetized with other Tax Dollars Collected) Like General Electric paid NO! Taxes and then got back another $3 Billion in Cash thru monetizing the Tax Credits that had been given to them!

Subsidies!

.25% Federal Window to Draw down from that is a net gain come tax time! Paid to barrow money!

POMO / SOMOM / STOMO.. any Open Market Operation in which the FED buys stock to PUMP UP! the market! the FED is not buyign stock to force the market lower!

No Criminal Laws Apply to Wall Street!

Just Civil Laws!

and the White House standing between Wall Street and the Pitch Forks!

 

Hurry!

help the executives on Wall Street!! they are struggling!!

LULZ!

Tue, 02/07/2012 - 14:30 | 2134580 trav7777
trav7777's picture

workers unionized...in response, executives bought union leaders and legislators and enacted trade treaties to facilitate the move to non-union slave labor nations.

Tue, 02/07/2012 - 14:37 | 2134615 JW n FL
JW n FL's picture

 

 

and lets not forget this little Nugget!

 

Flakmeister

You might want to consider the little factoid that companies pay more for lobbyists than their tax bill

http://econintersect.com/b2evolution/blog1.php/2011/12/12/30-corporations-pay-more-for-lobbying-than-taxes

or that a number of companies pay their CEO more than what they pay in taxes....

http://www.citizenvox.org/2011/08/31/ceo-pay-exceeds-corporate-taxes-ips-financial-reform-executive-pay/

 

All Credit goes to Flakmeister for putting this back into the daylight!

Tue, 02/07/2012 - 12:53 | 2134191 alien-IQ
alien-IQ's picture

Pimps are "job creators" also. Do we really need more pimps?

Tue, 02/07/2012 - 15:21 | 2134852 rustymason
rustymason's picture

No, what we could use are higher quality whores, and that will take better management. Pimps for Better Pay, join today!

Tue, 02/07/2012 - 12:44 | 2134157 Gunther
Gunther's picture

One "created" job gets subsidized with 43.077 $ and pays 24.000$ a year??

Tue, 02/07/2012 - 12:25 | 2134058 linrom
linrom's picture

One of the better articles posted on ZH in a long time. Well presented, researched and backed up by clear reasoning.

Tue, 02/07/2012 - 12:21 | 2134032 GCT
GCT's picture

I agree incentives to big corporations on my poor ass back is getting old.  But why get all hyped over what a CEO makes, after all the board that hired the person tendered the offer and he or she accepted the offer.  I may not be the sharpest tool in the shed but I really do not care what they pay their CEO's.  I know some will come here call me all kinds of names.  How many of you would just walk away from the offer?   Nothing wrong with making money as long as you are performing what is required and exceeding expectations.

This is none of my business to be frank.  What is my business is when I see my city build a dam new building when so many are unoccupied and then give a fricking corporation 48 million in tax breaks to hire what 600 people.  Totally out of whack.  They never learn. They did it with NUCOR 10 years ago when the breaks were over they closed and moved to another dumb fuck state that did the same thing.   The plant was open for 5 years and now sits and rot.  They should have offered the new corporation that building but what do I know.  I am a tadpole swimming ina big pond. 

Tue, 02/07/2012 - 13:25 | 2134301 DevilsPrinciple
DevilsPrinciple's picture

GCT :

I am pretty much in agreement with you on both notions. However, it is also bothersome that corporations get preferential treatment as the result of their poilitical donations which are allowed through judicial fiat. This + greed are destroying this country.

I can only hope Komatsu CRUSHES Caterpiller.

 

PS Lizzy ~ great work !!!

Tue, 02/07/2012 - 11:41 | 2133893 tony bonn
tony bonn's picture

bravo lizzy.....welcome to the new world order of rape, pillage, plunder - the motto of the financial terrorists who are subjugating america to a 3d world serfdom.....and it is indeed a deliberate plan....

however much these psychopathic fiends luxuriate in their filthy lucre, their ends will be horrific and you can take the word of god as the guarantee....it prophecied the rise of mammon and the captains of commerce as the lords of this world....

i assure you that these assholes are on the wrong side of history and of god...

Tue, 02/07/2012 - 13:34 | 2134339 donsluck
donsluck's picture

Who is God, and why does she matter?

Tue, 02/07/2012 - 10:55 | 2133710 Shizzmoney
Shizzmoney's picture

By the way, the CEO could pay all 650 salaries for one year and still have almost $8 million left over.

This made me want to hang myself with a noose (which was most likely Made in China).

The greed in our society is what is killing us all.  The proverbial tug of taking away people's ability to voice their concerns, do something about it, even if militant......just for the sake of a corporate handout. 

Nothing won't change until a) corporate personhood is revoked and b) someone gets shot. 

Tue, 02/07/2012 - 12:46 | 2134165 pazmaker
pazmaker's picture

Shizzmoney.....you are correct it is greed greed greed and selfish selfish selfish.   We all understand that business are in business to make money and I doubt anybody expects differently.

but in a corporation like Caterpiller the profits come from eveyone's efforts and to ask workers to take a 50% pay cut while the greedy execs give themselves abnoxious raises and salaries is plainly unethical.   If the CEO was a true leader why didn't he lead by example and take a 50% paycut?  When is enough enough?   Pay your people a fair livable wage and still make a profit..

Tue, 02/07/2012 - 15:32 | 2134933 rayduh4life
rayduh4life's picture

Paz, been a long, long time since anyone led from the front.

Tue, 02/07/2012 - 13:34 | 2134341 donsluck
donsluck's picture

STRIKE!

Tue, 02/07/2012 - 10:40 | 2133667 scragbaker a ca...
scragbaker a cape cod clamdigger's picture

IT IS A 'RACE TO THE BOTTOM'

Tue, 02/07/2012 - 10:36 | 2133653 DOT
DOT's picture

" A better future......."       http://www.youtube.com/watch?v=wJws9S5FJZU   

 

 

Tue, 02/07/2012 - 10:32 | 2133642 ebworthen
ebworthen's picture

U.S.A. 2012

Crony Capitalism reigns supreme.

The Demicans are bought and paid for, despite their hollow talk of social justice.

The Republicrats are on the same dole, espousing rule of law and responsibility while passing bailouts and taking away individual rights with their hands blessing the parasitism of corporations.

Subjugation is the theme;oppression of spirit, bleeding of individual assets and rights, obescience to the government/corporate hegemony - the Kleptoligarchy - that demands tribute in body, mind, and wallet.

Tue, 02/07/2012 - 13:29 | 2134322 PulpCutter
PulpCutter's picture

The dems are corrupt, but nowhere near the level of the Republicans.

In our two-party system, it's a lost hope to expect one side to be lily-white.  E.g., was EITHER party fair on treatment of native Americans, or sufferage?  (Yes, I know the two parties were Whig/Democrat for part of the time, but the point doesn't change.)  More recently - either party correct on the Iraq invasion?  Of course not.   So, forget about the 'neither is pure as the driven snow, so I'm not participating' theory - it doesn't work in the real world.

The way it works is that you pick the party that is more towards your position.  Politicians are nothing if not good at detecting a new scent on the wind.  If the politicians sense the voters are starting to actually care about crony capitalism, and starting to vote based on it, they will change their behavior.  Until that time, one has to be honest - if the voters don't care, then doing things for the corporations currently pays HUGE dividends in terms of campaign contributions.  The flip side is true: the bulk of the elected officials who've been in it for the average American are no longer in office (e.g., Alan Grayson, Jim Bunning).

Tue, 02/07/2012 - 10:30 | 2133633 Seasmoke
Seasmoke's picture

i always get confused, 650 underpaid workers and 1 overpaid CEO and yet they never seem to get physically overthrown anywhere.......who said there is strength in numbers ????

Tue, 02/07/2012 - 10:30 | 2133605 Mercury
Mercury's picture

Nice effort lizzy

The Doctor is  IN

At some point perhaps CAT's workers should have seen the writing on the wall and pushed to have their interests better alligned with management - ie taking some pay out in stock.

Few big American company stocks have performed better than CAT since Obama was sworn in.  Is taking some of your pay in stock a risky proposition for a ~$68k worker to take?  Sure but so is holding out for a higher wage and then loosing your job.

Tue, 02/07/2012 - 15:35 | 2134953 rayduh4life
rayduh4life's picture

Would you perhaps be interested in a little enron stock?

Tue, 02/07/2012 - 14:40 | 2134627 RKDS
RKDS's picture

Ask a former Bethlehem Steel employee how that stock deal worked out in the long run.

Tue, 02/07/2012 - 21:22 | 2136418 DevilsPrinciple
DevilsPrinciple's picture

Bahahahahahahahahahahahahahahahahahahaaaaaaa...I've got a Martin tower to sell you...such a deal ! I should be so lucky.

Tue, 02/07/2012 - 11:20 | 2133787 DarthVaderMentor
DarthVaderMentor's picture

Sure, we'll give it out in stock. Of course, you'll need to pay a fee to open your employee stock account, a fee to convert your virtual stock award to actual shares, a service fee to maintain your stock award account, a fee to sell your stock, an estimated tax at sale.....and the list goes on.....sounds like your IRA?

The masters of this scam were IBM. They handed out options and restricted stock grants with time limits like water in the 90's and ealr 2000's. The stock was at its height. When it crashed and employees needed to sometimes put 50% cash to just get their stock grants into shares they could hold them , they abandoned them and lost them when they expeired. Then a few years later the stock rose again for the executives to sell their shares. 

Tue, 02/07/2012 - 11:04 | 2133738 Shizzmoney
Shizzmoney's picture

Doesn't help it is a buyer's market for employers....and has been for 6 years.   

Unless you are OUT of debt.....this system really has you by the balls. 

Notice I say *buyer's market*.  That implies serfdom, which as we know, is the road to slavery.  The only difference is our masters rape our wallets instead of our assholes.

Tue, 02/07/2012 - 14:01 | 2134456 Colonial Intent
Colonial Intent's picture

"Unless you are OUT of debt.....this system really has you by the balls"

100 Up points IMHO.

 

Tue, 02/07/2012 - 10:31 | 2133639 lizzy36
lizzy36's picture

Caterpillar wouldn't even come to the table with the Canandian workers.

The interests of management were a 50% pay-cut and basically NO benefits. There was no give off this position. It is almost like Caterpillar knew they would get state and federal subsidies in the US, for "re-shoring" these jobs.

Management generally gets bonused on increasing profitablilty. Cutting salaries and getting states to subsidize re-shoring, then getting taxpayers to subsidize compensation packages for the "newly employeed", seems like one to achieve this goal.

I think it is a great idea to give all employees a way to benefit if the Corporation becomes more profitable. It seems that in practice this rarely happens. 

Tue, 02/07/2012 - 12:13 | 2134013 Whats that smell
Whats that smell's picture

Good article. I wonder if Indiana's new "right to work" (for less) law applies to the sports players' unions and professional unions like the AMA. I wager the rich guys got an exemption clause.

Tue, 02/07/2012 - 11:10 | 2133715 Mercury
Mercury's picture

Well, the good news is there probably aren't too many places left where American manufacturing companies have labor costs higher than what they would be in the US.

The most transparent way to "socialize" the rewards of a stock focused company is to expand stock ownership. However this also socializes the risks and generally American labor unions and leadership haven't been very keen on that.

Also, it's certainly possible for an American  manufacturing company to spread the wealth too much among it's workers and leave taxpayers holding the bag when larger issues are ignored for too long (GM etc).

But even without widespread employee stock ownership you'd think it would have been worth the good will generated for CAT to have thrown a bone to it's workers in the form of a special dividend or something after a fat year.

Tue, 02/07/2012 - 11:50 | 2133935 GMadScientist
GMadScientist's picture

"spread the wealth too much among it's workers"

Hahahaha...good one.

http://www.reuters.com/article/2008/04/25/us-gm-ceo-idUSN2534738420080425

Moron.

Tue, 02/07/2012 - 12:30 | 2134042 Mercury
Mercury's picture

You think that happened without the UAW noticing - or do you they think they horse traded that for what they thought was more valuable to them at the time?

You can pretend that GM didn't go tits up in large part because of it's high labor (and management - to be fair) costs vs. other manufacturers but that dosen't make it true.

Tue, 02/07/2012 - 14:25 | 2134549 blunderdog
blunderdog's picture

I thought it was because GM turned itself into a holding company for a bank.

Tue, 02/07/2012 - 13:40 | 2134370 donsluck
donsluck's picture

Calling you a moron is mean and pointless. Still, the Management runs the company (sometimes into the ground), the Union runs the workers (sometimes into the ground). The COMPANY went belly up due to mis-MANAGEMENT. It is not the Union's job to run the company.

Tue, 02/07/2012 - 14:02 | 2134463 Mercury
Mercury's picture

I'll get over it, thanks...and if it were better substantiated I might have givin it more consideration.

Some of that mismanagement included trading too much of their hiring/firing/salary power in union contract negotiations. By the end they were rather stuck with that trade and the massive labor costs vs. competitors.

On the other hand most of that overhead labor cost is health care costs which aren't really a concern for competitors in countries with some flavor of socialized medicine. So I'm aware that the problem isn't  starkly black and white or an apples to apples comparison with foreign auto makers.

When the SFTF similarly with public sector workers and their benefits we'll have no management to blame but ourselves.

Tue, 02/07/2012 - 10:52 | 2133696 ebworthen
ebworthen's picture

 

 

China needs those big earth movers to evict families from farms and homesteads and build a happy-meal toy factory.

CAT Executives and Chinese Communist Party leaders will no doubt have a fine meal together and chortle while asking "What do the little people do with their time?".

Brazilian rain forests and tribes need bulldozing too.

Chortle, snort, oink.

http://www.youtube.com/watch?v=sXdKlpBOvs0

Tue, 02/07/2012 - 09:42 | 2133513 Ranger4564
Ranger4564's picture

Thank you Lizzy, great article.

Tue, 02/07/2012 - 09:39 | 2133501 Stuck on Zero
Stuck on Zero's picture

Look.  Japan Inc. has been screwing US workers.  China Inc. has been screwing US workers.  Same for Korea, Europe, Brazil, Taiwan, etc.  Why can't our government screw US workers?

Tue, 02/07/2012 - 09:32 | 2133488 AnAnonymous
AnAnonymous's picture

Made me laugh.

There is nothing like reverse socialism.

Socialism was brought by US citizens in a manner of reaction to an action.

Claiming reverse socialism is denying the existence of the action. Admittedly, the denial makes sense for US citizens since they are bullies and bullies consider retaliation (a reaction) as an agression (the action, generally done by the bully who denies it) bullies are always aggressed in their bully world.

Been stating that for a while, Smithian economics leads to pay to work.

Yes, you will have to buy a charge to be able to work.

Quite easy to understand the necessity of, once you accept that work is consumption of resources and Smithian economics achieve in the long term, that is concentration of wealth and resources.

Tue, 02/07/2012 - 09:04 | 2133436 dcb
dcb's picture

accurate, but should include impact of fed reserve monetary policy and tax treatment of debt as further reasons workers fall behind.

Tue, 02/07/2012 - 08:39 | 2133407 madcuban
madcuban's picture

This is a horrible article. While I agree states should not be doling out "incentive" to corporations, the author completely misses the point. If any of these 24,000 dollar workers have the knowledge or experience to be able to run an international company, then I will assume that worker will move up the ladder with unbelievable speed. Otherwise you seem to miss the point. Do we need more 24,000 dollar workers? Absolutely. How else are we supposed to compete as a REAL economy with other countries unless we can return to being a nation that ACTUALLY PRODUCES GOODS NOT SERVICES. If you want to be more competitive and actually some day be able to raise salaries, try getting rid of all tariffs. That will work. And that's only the tip of the iceberg. I can't believe this article made it on the ZH site.

Tue, 02/07/2012 - 14:38 | 2134620 outlander
outlander's picture

I'm afraid you totally missed the point cuban and you've been drinking the CNBC Kool-Aid. It's about out-of-touch-with-reality subsidies and the shell-game going on which masquerades as an effort to re-shore which actually will never sustainably result in "...a nation that ACTUALLY PRODUCES GOODS NOT SERVICES".

Tue, 02/07/2012 - 11:53 | 2133949 GMadScientist
GMadScientist's picture

" then I will assume"

And you would be completely out of touch with reality in doing so. Your argument would hold water if they were struggling to turn a profit; as it stands, a sieve.

Tue, 02/07/2012 - 10:22 | 2133607 Chump
Chump's picture

This point:

If you want to be more competitive and actually some day be able to raise salaries, try getting rid of all tariffs. That will work.

makes absolutely no sense and you provide no support for it whatsoever.  Tariffs are the sole method we have for counter-balancing Chinese slave labor, so how would removing them result in anything but US job losses, with the remaining jobs being forced to offer even lower wages, you know, to compete with that "free market labor" at Foxconn?

Even if you removed the onerous labor regulations that are distorting America's market, you would still have to recognize that you can't freely compete with a nation that enslaves its citizens and handles toxic waste by routing it to the nearest river.  Again, tariffs are the one and only outlet we have in this regard.

Tue, 02/07/2012 - 16:13 | 2135124 andyupnorth
andyupnorth's picture

Here is the piece on the "Negative Railroad" (from Wikipedia):

A famous section of Economic Sophisms concerns the way that tariffs are inherently counterproductive. Bastiat posits a theoretical railway between Spain and France that is built in order to reduce the costs of trade between the two countries. This is achieved, of course, by making goods move to and from the two nations faster and more easily. Bastiat demonstrates that this situation benefits both countries' consumers because it reduces the cost of shipping goods, and therefore reduces the price at market for those goods.

However, each country's producers begin to criticize their governments because the other country's producers can now provide certain goods to the domestic market at reduced price. Domestic producers of these goods are afraid of being out-competed by the newly viable industry from the other country. So, these domestic producers demand that tariffs be enacted to artificially raise the cost of the foreign goods back to their pre-railroad levels, so that they can continue to compete.

Bastiat raises two significant points here:

  1. Even if the producers in a society are benefited by these tariffs (which, Bastiat claims, they are not), the consumers in that society are clearly hurt by the tariffs, as they are now unable to secure the goods they want at the low price at which they should be able to secure them.
  2. The tariffs completely negate any gains made by the railroad and therefore make it essentially pointless.

To further demonstrate his points, Bastiat suggests that, rather than enacting tariffs, the government should simply destroy the railroad anywhere that foreign goods can outcompete local goods. Since this would be just about everywhere, he goes on to suggest that that government should simply build a broken or "negative" railroad right from the start, and not waste time with tariffs and rail building.

Tue, 02/07/2012 - 16:37 | 2135209 Chump
Chump's picture

I will read it when I get a chance.  I'm currently working through Rothbard's The Ethics of Liberty and after that comes Liberalism by von Mises, so it may be a while.  Just a preliminary thought, however, is that the railroad example is not a good analogy.  It assumes a certain equal standing between the consumers and producers of both countries, and my point about tariffs is that such an equal standing does not exist between China and America.  There is no such thing as free trade with a country that utilizes slave labor and does absolutely nothing in regards to pollution when the counter-party has complex regulations regarding both.

Overall, and in the context of free market operations, I agree that tariffs are counter-productive.

Do NOT follow this link or you will be banned from the site!