Tariffs and Stuff

Donald Trump sees the world through a “zero-sum” lens:  nobody wins unless someone else loses.  Winning is the result of defeating adversaries so power is essential.  “Might makes right.” There are no win-win solutions. 

So, when he looks at the graph below that shows the United States “losing” the trade wars, he must blame someone and then defeat them.  Hence, he claims other countries are cheating and “ripping us off” and need to be punished with the power of unprecedented tariffs. 

I, on the other hand, view the data above with an historical lens and understand it differently.  More than 1800 container ships arrive at the Port of Los Angeles every year, the majority coming from China.  What’s the story behind that?  Here are some insights that help me understand what’s going on. 

We are a nation of consumers, by design.  At the end of World War II our leaders decided to repurpose our new industrial might from military hardware to consumer goods.  Retail analyst Victor Lebow articulated that decision in 1955:

“Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption.… We need things consumed, burned up, replaced, and discarded at an ever-accelerating rate.”  

We, American consumers, now account for 70% of our nation’s enterprise.  We buy stuff we don’t need with money we don’t yet have and much of it ends up in our 2.1 billion square feet of self-storage or landfills.  This is brilliantly depicted in Netflix’s short film, “Buy It Now.”

I also find it interesting that the balance of trade turned negative just as we embarked on the supply-side economics experiment which began in 1981 with Ronald Reagan and has been supported by all ensuing president but one.  The goal was to free corporations of taxes and regulations so they could focus solely on the pursuit of profits.  A key element of that experiment has been Robert Bork’s assertion that the sole purpose of anti-trust legislation is consumer protection.  (“The Antitrust Paradox,” 1978) He argued that if corporations were providing consumers with plentiful, affordable goods and services they were immune from antitrust prosecution. 

Corporations quickly moved manufacturing to countries with cheap labor and weak environmental regulations and created a tsunami of cheap clothing, food, appliances, technology, toys, and gadgets.  Antitrust enforcement decreased; corporate consolidation increased.

Our addiction to buying more and more stuff has been fed by four innovations:  the credit card, television, cell phones, and online shopping.  Credit cards allow us to have stuff today without paying for it.  Televisions distract us from realizing that they are actually billboards.  Cell phones are transmitters that instruct mass marketers how to satisfy our individual needs and aspirations.  Companies like Amazon have made our purchasing decisions dangerously easy.

America’s negative balance of trade is the result of our own reckless consumption.  We are not victims.  “Cheating” nations are not rigging world trade.  As that wily little possum, Pogo, told us, “We have met the enemy and it is us.”

Will Patten is a retired business executive and author of “Rescuing Capitalism, Vermont Shows a Way.”  He lives in Hinesburg.