By Sam Foster
If a “Tea Party” candidate has the same economic prescription the radical, far-left economist Paul Krugman, can the candidate really part of the Tea Party?
Shockingly, former Republican turned Democrat turned into something else has officially succeeded in getting listed in NY-26’s special election on a ballot line called the Tea Party. While the ballot line reads Tea Party, I’m a little fuzzy on how one transforms from Republican to Democrat to Tea Party while maintaining the Tea Party, small government moniker. Such a Herculean feat would be so amazing, I just had to research it and look into it.
This will be the first of what is likely to be many posts about supposed Tea Party candidate Jack Davis and his supposed Tea Party beliefs.
Jack Davis has run as a Democrat in NY-26 for three elections: 2004, 2006 and 2008. His signature issue, his raison d’etre has to do with our nation’s trade imbalance. According to Davis’ 2006 campaign site and the current one, he wants to cancel all free trade agreements in favor of something he calls “balanced trade.”
According to Jack Davis, balance trade is going to kick American Manufacturing into high gear, put people back to work, thus raising government coffers. But, what is this “balanced trade” idea?
Jack Davis once created a site called saveamericanjobs.us that provided some of the details. The site has been cached, so I grabbed the details through The Wayback Machine. The Democratic Underground posted a direct quote of the site detailing Jack Davis’ plan and let’s just say the lefties were thrilled about this Tea Party candidate’s “small government plan :”
America needs Balanced Trade. Balanced trade described in simple terms is, if a country desires to sell products to the United States, they are required to buy an equal dollar amount of products or services from the United States.
The United States cannot force another country to do something they don't want to do (example: Iraq).
Historically, the proven method of controlling imports is with tariffs.
To obtain this balance, the United States will charge a balancing tariff (tax) on imported products. The tariff percentage amounts are variable and will be increased in five-percent increments until the trade balance is obtained.
If the United States exports more dollars in trade than it imports from a specific country, the tariff will be reduced until the trade balance is obtained or the tariff is zero.
The ideal Balanced Trade is equal trade with zero tariffs.
Since Red China has the greatest imbalance of trade, 124 billion dollars in 2003, we should apply a ten-percent balancing tariff on their total value of exports. In 2003 this was 152.4 billion dollars.
If ten percent were not sufficient, it would be increased to 15 percent then 20 percent and increased until the balance of trade is obtained. A tariff of 20 percent would provide the U.S. government with 30.5 billion dollars in 2003.
America imported products and services valued at 1.259 trillion dollars in 2003. This produced a trade deficit of 535 billion dollars. A ten-percent tariff on this would have provided the government with 126 billion dollars.
Select your favorite government program; Drugs for the Needy, Education, Social Security, Medicare, National Defense, Reducing the National Debt or Reducing Income Taxes, etc. Here are the funds.
Just placing the duty on Red Chinese products will send a strong message to all the other nations: You will be next. America is serious about balanced trade. Start buying American products.
So the solution to America’s economic troubles is unfree-market tariffs? Somehow, I missed this wonderful tariff idea in Milton Freedman’s writings. Would Rothbard please, explain the libertarian principles of “tariff for your favorite government program?”
Good news is, I don’t have to go far to find an economist to champion this idea. Just last month Paul Krugman was arguing for the exact same thing:
When the self-proclaimed "conscience of liberal America" and a one-time free trader to boot starts arguing for protectionism, you know that things have come to a pretty pass. But that's what's happened over the past week.
Paul Krugman, a Nobel Prize-winning economist, has taken to advocating a 25 per cent "surcharge" – he refuses to use the more descriptive term of "import tariff" – on goods from China as a way of bringing the Chinese leadership to heel over currency reform. So potentially dangerous and out of character is this idea that when I first read it, I assumed he was being ironic. But sometimes the cleverest of people can also be the most stupid, and he's now said it so often that you have to believe he's serious.
To be fair, there are differences between Paul Krugman and Jack Davis. Paul Krugman wants a 25% tariff and Jack Davis wants a 20% tariff. William Anderson, an Austrian economist and writer at Mises.org said the following about Krugman’s idea:
Keynesianism is based upon a belief that the laws of economics hold only in special conditions, and when those conditions are not met, then governments need to act as though the Law of Scarcity does not exist. To Austrians like me, the laws of economics are like the Law of Gravity: they are immutable and always apply.
As I see it, Krugman's latest missives contain about as much sound thinking as would be a directive from the MIT graduate that in special conditions, the Law of Gravity does not hold. However, I somehow doubt we would see Krugman then getting ready to take a leap off the Empire State Building, but economically speaking, that is exactly what he is demanding we should do.
Jack Davis’ plan is actually worse than Paul Krugman’s, because Krugman was only gunning for China, Davis wants to impose tariff restrictions on all importing nations. It is akin to new import/export regulation. Could you imagine what the Obama administration would do with such power? Jack Davis would be a party to creating the Trade Czar.
I believe that businesses should be free to trade and make economic decisions without government intervention. If Jack Davis’ idea of tariffs is the economic boom, Smoot-Hawley would have ended the Depression instead of kick it into high gear.
I wish that I could say that supposed Tea Party candidate Jack Davis was only channeling Paul Krugman in his beliefs, but the sad tale doesn’t end there. On his saveamericanjobs.us he devoted a page to political figures that Jack Davis believes agrees with his ideas. Proudly, he lists the following quote he attributes to Bernie Sanders:
"The time for playing nice with corporate outsourcers and their enablers in government is over. George Bush's suggestion that the nation's record trade deficit can be resolved by people buying more U.S. products shows how out of touch he is with the economic reality most Americans face. While the stark reality of America's industrial might moving abroad may have escaped the president and his economic advisers, a growing number of members of Congress see with their own eyes the devastating effect that the president's trade policy is having on manufacturing jobs in their own districts. Congress must repeal Permanent Normal Trade Relations with China and develop trade policies that protect and create good-paying jobs in America."
As we all know, Paul Krugman and Bernie Sanders are epitome of Tea Party economic beliefs.
More of Jack Davis’ supposed Tea Party ideals to come.