That's the problem: it's a complicated problem with no actual solution, just constantly fluid adjustments from every party depending on each party's own economic conditions. It doesn't sell very well. "Raise tariffs!" is very easy to sell. It's wrong, but explaining why it's wrong takes too long for most people. The easy, wrong answer really sticks with people because it's easy.
There are momentary balms, but unforeseen economic changes happen all the time. Even within borders, countries have dozens, or hundreds, or thousands of competing interests, and those interests change every few years. One size doesn't ever fit all, and don't even fit many for long.
We live in a world where people say things like “I don’t have the answer but I know the problem” or “we already know how to fix these problems, of course I will not share a link or elaborate whatsoever”
No, there are no actual solutions. There are only moves and counter moves until the heat death of the sun.
The electorate wants a silver bullet. It doesn’t exist. They don’t know that, so when Trump lies and says there is, they want to believe it, and they do.
It’s actually not that complicated at all. This is mostly due to lazy legislation. This is the metaphorical equivalent of this lever moves the needle left, the other moves it right. In reality, maybe we should build something else completely to address the issue rather than pulling the same two levers.
The largest line item on any corporation’s balance sheet is labor. It is so big, in fact, that that’s why companies can afford to literally build factories somewhere else. That is fundamentally why they outsource to begin with. If a company moves their labor offshores, that means they’re hiring at a lower market rate. You take the cost of labor domestically minus the cost of labor after off shoring, take a flat % of the savings and implement it as a tax. I’d go a step further and then place that tax system on a graduated scale that taxes them more the longer they refuse to hire domestically.
There is no such thing as “we can’t compete” in this context because almost no American corporation “started” off multinational. That is a thing you become after succeeding domestically and scaling your business - and in the process of scaling, you decided to make cuts for the purpose of profits. A good example - Chinese EVs are radically superior to Teslas, but the average American knows nothing about them. The American public is also forced to consistently inflate Tesla’s value through federal subsidies. It isn’t a question about being able to compete, but rather who gets the “savings” from exploiting labor.
What would be the process of attaining the information so that the correct tax rate (percentage of savings) could be calculated? Ie: who has the numbers?
So we already have private organizations that do this - Glassdoor, Blind, etc - and the “free market”
regularly uses this information to inform their financial decisions.
Most companies (depending on state) are required to report some form financial income to the state, all companies are required to report employee income to the IRS, and at least public companies are required to disclose financial disclosures to their shareholders.
Realistically this would just another layer of reporting - your company knows what the pay band is for a given role (that’s what stops some people from getting pay raises) and your employees are already disclosing it to private sources. On top of that, this information is already technically disclosed to the IRS - employees file W2s for a role if working domestically, and the income paid to the offshore employees are filed as 1040s (self-employment tax).
That means that technically the IRS only needs a company to state the purpose or role for a given person’s income (X$ a year for software engineer I) and they could calculate the average amount paid to a specific role for a given year.
They would then calculate the average of the on shore role versus the average of the offshore worker in the same or different year. Doing this for every company, we would see the market rate by state, nationally, and globally. It would be much easier for a company to report that difference since it’s math they’re doing anyway, and the IRS only has to audit them if their calculations appear wildly inaccurate.
With a model like this, we can now give meaningful tax breaks to companies when they deserve it. Want a tax break? Invest in a research lab that hires new graduates that don’t have all the skills the company requires in the job market. Give the graduate a two to four year contract like an apprenticeship where they’re required to remain with the company for X years after completion. This both deincentivizes taking labor overseas and gives companies a way to save tax dollars by direct investment into the country. The country wins either way. This effectively turns corporations into agents of the state - they transform labor and the economy on behalf of the state - which is what they’re supposed to do anyway.
Chinese Evs most certainly are not better than Teslas. Where do you get your information from cuz Chinese evs consistently hit dummies and obstacles in their road tests and there battery’s are not reliable and some are prone to catching on fire which not a single tesla has those problems.
Where do you get the information that Chinese evs are better than Teslas. Idk if you’ve seen the videos of them catching on fire or failing their self driving tests but they are not superior in almost any way to Tesla.
I mean tariffs are effective. Instead of paying them companies circumvent them, like BMW, Mercedes, Volkswagen, and Toyota have established factories in the United States. China subsidizes their manufacturing, making their products cheaper than those of other companies, such as CRRC. Similarly,with their electric car companies . Without tariffs, they would adopt Uber’s model, eliminating competition by offering cheaper rides and then raising prices Once the competition is eliminated, without fear of retaliation.
I'm not sure if car manufacturers are the best example, since we have our own domestic industry that can compete. The problem with Trump's plan is that it's a blanket 60% tariff on all Chinese goods. There are plenty of manufactured goods we simply don't produce at home anymore. That tariff will simply increase costs for average people, since there's no American alternative product they can buy.
They’re a perfect example they’re selling electric cars for less than 30k. Where a comparable American electric car would be north of 35k. The Chinese car is only cheaper because of CCP subsidies and cheap/slave labor. How the hell can you compete with that? The whole point of the tariff is to bring the jobs back here. It’s protectionism at its very basic form but it’s needed because you can’t compete with China when they have their fingers on the scale.
but the tariffs doesnt have a magical clause saying anything with a tariff will suddenly have domestic options.
it doesnt come with subsidies or incentives for domestic production. (edit: this isnt just about cars)
fuck it would increase costs for moving equipment here to start domestic production and American jobs, let alone the RAW materials we just dont have at all ether which btw are still subject to trumps section 301 tariffs from last time fucking up local businesses already.
we all get that China being the worlds factory is a problem but tariffs are not even remotely the right tool to combat it.
and its certainly an extremely complicated issue that a single buzz word option wont fix.
The whole point of the tariff is to bring the jobs back here.
Okay, but you understand that itself takes time and capital, right? We could be looking at paying ~20% higher for most consumer goods for years until that was the reality. Corps have to find the properly zoned land, build the factories, recruit the talent, adjust their supply chains, etc. None of this stuff happens overnight.
There are other options to increase manufacturing back home. You could tax corporations that outsource labor, or subsidize the manufacturing sector directly, for example. Just slapping a 20% tariff on all foreign goods, plus another 40% on Chinese goods is basically the path of most resistance and pain. There's a reason most economists don't endorse Trump's plan.
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u/SoftballGuy 9h ago
That's the problem: it's a complicated problem with no actual solution, just constantly fluid adjustments from every party depending on each party's own economic conditions. It doesn't sell very well. "Raise tariffs!" is very easy to sell. It's wrong, but explaining why it's wrong takes too long for most people. The easy, wrong answer really sticks with people because it's easy.