Tariffs or Taxes –

Here I sit, trying to conjure up some economic wisdom, stressing over all my deadlines coming due: alternative evaluation write-up, progress reports, this blog, an economic test, and chaperoning senior fun day while dealing with sun-seeking senioritis suffering students.  Throw a Praxis 2 test in the mix as a decision made by my wise administration now forces me to get highly qualified in another area.  Holy wow, besides my son’s 4^th birthday coming up, I wish I could wake up and the next couple weeks would be in the past. 

Times like these are when I tell myself I really love my job.  Actually, I am very grateful that I have a good job.  I personally know a number of people, as I’m sure we all do, that have been adversely affected by our recent recession.  There are many different and valid opinions about the role of government in times like these, but one thing is for sure, government’s actions affect our lives.

 I am reminded about a discussion we had earlier this semester about international trade and the effects of government imposed tariffs.  While the cause of layoffs from this most recent and persistent recession are different than layoffs due to jobs moving to other countries with competitive advantage, either case gives me pause to consider the value of retained employment. 

We discussed how government tariffs are a bad thing, by increasing the cost of products to domestic consumers and causing an inefficient use of resources; namely the human capital that continues to produce the taxed products instead of being allocated to areas that better serve the free market system.  While I completely agree with this position, I can’t help but wonder how a worker, a family, or a community go about this reallocation process while they are out of work and can’t pay their bills.  Where do they turn?  To the government; which, under the stress of an overburdened unemployment system, must in turn increase taxes on the rest of the countries citizens. 

So I can see the social argument for imposing tariffs on foreign produced goods if it means not taxing ourselves even more.  But the idea of growing our human capital which will expand our production possibility curve sounds like a better option.  I wonder though, is there a point where much of our human capital reaches the limit of their potential expansion?  Much of our culture is so infatuated with instant gratification, material fashion, and the easy life that there are precious few left with the dedication, willingness, and mental capacity to effectively reallocate to new markets.

So what is the best course of action; is there a happy medium?  I don’t know.  These are questions for those smarter than I.  In the meantime, I’ve got trees to cut and stumps to dig so I can assemble a playground for my son’s birthday surprise.  I’ll have to squeeze that into my spare time.

Doug Wall