Health care reform: A simple explanation

[grbeck]

That’s the best part of the proposed plan. There are just too many people in this country that still don’t realize that there are some things that a certain portion of all societies

It would NOT hurt trade - one would to be naive to believe that. Do you actually think that all of these countries (Japan, S.Korea, Germany, China - to name a few) would actually draw back their imports into this consumer economy? Not at least now. Maybe someday when we no longer are the biggest (or, one of the biggest) consumer economy in the world - if we keep doing what we are doing. Then we won't matter. . . and it will be too late. It is pretty hard for them to cry or to call us protectionists (see above referenced countries) -- when THEY themselves are very strict protectionists.

 

Germany does not have a heavily protected economy, and there is no proof that Japan, South Korea and China have benefitted from protectionist measures that they have enacted.

 

Free trade has been a disaster. Free trade only exists in a balanced trade environment. Once there is a deficit to either side - then it no longer is Free trade - and there exists a winner and a loser. We have been a loser since the eighties.

 

There has never been any reputable proof of that, and the idea that most Americans are, as a whole, are poorer than they were in 1960 or 1980 has been debunked on this site many times. And the idea that a trade deficit by one or more countries "proves" that trade is no longer free is nonsense.

 

If I want to buy a BMW or a Lexus, or a plasma TV – I will have to pay more – so that this country doesn’t just fold up because we’re giving it all away. Guess what? If the American economy fails – there will be a domino effect on the world economy - as it too will also fail. Then where will we (even if it just our children) be?

 

Your contentions don't hold up in the real world. You claim that Americans are being "unpatriotic" when they buy "cheaper" foreign goods. Yet you use BMWs and Lexuses as an example. BMWs and Lexuses sell because they are better than Cadillacs and Lincolns, even though they are are also more expensive than the domestic competition. The idea that people buy foreign cars instead of domestics because they are cheaper, and that this represents "unfair" competition, is not what is happening in the real world. The foreign competition has succeeded by offering a better product, and people are willing to pay the extra money to buy it.

 

Second, you claim that Americans need "protection" against corporations, entirely missing that the free market enables people to protect themselves against the shoddy products of corporations. In the name of "protecting jobs," you want to close down that escape hatch.

 

What you are really upset about is that your favored corporations are getting their ox gored by people who have every right to take their money elsewhere. Informed, sophisticated customers aren't swayed by phony patriotism (Buy American!) or hysteria (What about the jobs!). The idea that because a UAW worker takes a pay cut or a reduction in health benefits somehow makes us all poorer is nonsense, and a bit of propaganda that most informed people can see right through.

 

What you want is to transfer the wealth of people who have decided to exercise their right to buy whatever product they choose to groups that you favor (which usually can't compete because of their own incompetence, not nefarious foreign competitors). Sorry, but no dice.

[RaZor]

I am afraid that your information is wrong grbeck. Germany has been crediting their auto manuf's the VAT(19% IIRC) on vehicles and parts shipped to the US, and then charging anything that is imported from here a VAT rate -- for many many years.

 

My brother's GF is from Germany and has verified numerous times that the Germans want more American products available to them but they are tariffed so heavily that they are quite expensive. She sends them "gifts" regularly (every month) for the last 4 years that she has resided here and her parents/family visit every fall (Oct). It mainly is a shopping experience as they load up with goodies to take back with them.

 

I don't know where you get your info from - but it is wrong. We do not have a Free Trade agreement with Germany -- and they in fact do charge a VAT on practically everything that we import.

 

I did some consulting work for a company several years ago and set them up to export to Germany, Belgium and several other countries. They do IN FACT charge VAT on everything that was shipped there.

 

I am not going to argue or even debate it with you though - as you have formed your opinions without having the facts/accurate information. It would be a waste of time. Talk to someone that exports to Germany - and see if they are charged a VAT. I know a couple of peeps that do - even though they import more than they export (for obvious reasons) as they do pay any tariffs (or VAT) on what they import. Nor will I attempt to explain (prove) to you how protecting one's own market and having free access to anothers is beneficial. Many have already done so - I won't waste my time.

 

You make erroneous statements/conclusions from posts and like to twist things to suit your ideology. Maybe it's your reading comprehension. I did not say "You claim that Americans are being "unpatriotic" when they buy "cheaper" foreign goods." Maybe you should read the post again - this time with comprehension.

 

". . .the idea that most Americans are, as a whole, are poorer than they were in 1960 or 1980 has been debunked on this site many times" Oh really, with what sources Heritage Foundation, WND, etc? Check an untainted source and you will find that the wealthy benefited enormously since the advent of Reagonomics: the real incomes of the top .01 percent of Americans rose sevenfold between 1980 and 2007. But the real income of the median family rose only 22 percent, less than a third its growth over the previous 27 years. Find someone that can help you with the math and check out how that 22% over 27 years translates to "better off" (or poorer). Then apply the fact that healthcare costs have gone up roughly 300% since the mid-eighties. IF you cannot see a trend there, I cannot help you.

 

The most humorous gibberish is your closing statement: "What you want is to transfer the wealth of people who have decided to exercise their right to buy whatever product they choose to groups that you favor (which usually can't compete because of their own incompetence, not nefarious foreign competitors)."

 

I greatly benefited from the transfer of wealth that occurred in this country -- in the 1980's -- thanks to Reagan. I made numerous island hopping trips around the Bahamas every year in a ocean going 52' Viking sport fisherman (similar but older design to this one) with friends - for many years. At the time, we thought it was great and thanked him and his cohorts. But that was the beginning of the destruction of the American economy and you young people will be the one's that will suffer in future years (unless things aren't turned around). Sad part of it all is that most can't even see the light in the tunnel. You have been duly and fully indoctrinated in the ideology. All I can say is good luck. I don't need it. I am taken care of (legitimately - no underhanded BS or gouging of the public - and no pension either).

[grbeck]

I am afraid that your information is wrong grbeck. Germany has been crediting their auto manuf's the VAT(19% IIRC) on vehicles and parts shipped to the US, and then charging anything that is imported from here a VAT rate -- for many many years.

 

My brother's GF is from Germany and has verified numerous times that the Germans want more American products available to them but they are tariffed so heavily that they are quite expensive. She sends them "gifts" regularly (every month) for the last 4 years that she has resided here and her parents/family visit every fall (Oct). It mainly is a shopping experience as they load up with goodies to take back with them.

 

A value added tax (VAT) and a tariff are two different things. So is crediting home-based manufacturers with any VAT paid on exported parts, as opposed to slapping a tariff on imported goods. (And, here in America, we provide various subsidies to companies to encourage exports, so Germany isn't alone in doing this.)

 

Germany may apply the VAT to all goods imported to the country, but consumers in Germany also pay the VAT on ALL of the goods that they buy, not just the ones imported from other countries.

 

With a tariff, Germans would not pay extra on goods manufactured within their home country. That would be the point of a tariff - to encourage Germans to "Buy German." The VAT is not designed to encourage Germans to "Buy German." A VAT is designed to raise revenue for the government, and applying it imported goods only ensures that everyone who buys that particular imported good is still contributing to the central treasury. It is similar to the state sales tax here in Pennsylvania - one pays it on a new car whether it is built in Detroit or Tokyo. The Pennsylvania Department of Revenue doesn't care whether I buy a brand-new Toyota or Ford. It just wants the sales tax from the sale.

 

As an American, I received a rebate on the VAT paid on two cuckoo clocks bought in Germany (which were manufactured there). Germans would have still paid the VAT.

 

The American products sold in Germany cost a lot because of the VAT, but virtually EVERYTHING in Germany is more expensive than it is in the U.S. I know, because my mother is German, we visit there regularly, and we still have relatives there. The VAT is designed to raise revenue, not "protect" German industry.

 

I don't know where you get your info from - but it is wrong. We do not have a Free Trade agreement with Germany -- and they in fact do charge a VAT on practically everything that we import.

 

In your post, you complain that I have misquoted you. You have just done this yourself, as I never said that we had a free-trade agreement with Germany.

 

I am not going to argue or even debate it with you though - as you have formed your opinions without having the facts/accurate information. It would be a waste of time. Talk to someone that exports to Germany - and see if they are charged a VAT. I know a couple of peeps that do - even though they import more than they export (for obvious reasons) as they do pay any tariffs (or VAT) on what they import. Nor will I attempt to explain (prove) to you how protecting one's own market and having free access to anothers is beneficial. Many have already done so - I won't waste my time.

 

Please learn how the VAT operates, who actually pays it, why it does not fit with the standard definition of "protectionism," and why it is different from a tariff before you accuse someone else of not knowing what he or she is talking about.

 

You make erroneous statements/conclusions from posts and like to twist things to suit your ideology. Maybe it's your reading comprehension. I did not say "You claim that Americans are being "unpatriotic" when they buy "cheaper" foreign goods." Maybe you should read the post again - this time with comprehension.

 

As I pointed out above, you attributed something to me that I never said, so it would be in your best interests to refrain from accusing anyone else of having poor reading comprehension skills.

 

". . .the idea that most Americans are, as a whole, are poorer than they were in 1960 or 1980 has been debunked on this site many times" Oh really, with what sources Heritage Foundation, WND, etc? Check an untainted source and you will find that the wealthy benefited enormously since the advent of Reagonomics: the real incomes of the top .01 percent of Americans rose sevenfold between 1980 and 2007. But the real income of the median family rose only 22 percent, less than a third its growth over the previous 27 years. Find someone that can help you with the math and check out how that 22% over 27 years translates to "better off" (or poorer). Then apply the fact that healthcare costs have gone up roughly 300% since the mid-eighties. IF you cannot see a trend there, I cannot help you.

 

Nowhere does that prove that people are poorer today than they were in 1980, or have a lower standard of living today than they did then. The figures on wealth distribution are meaningless in regards to the actual living standards of people, and have no bearing on the standard of living of people today versus 1980. That does not come from the Heritage Foundation, that comes from a common-sense understanding of how the economy works, and a real-world knowledge from having lived in that time.

 

The most humorous gibberish is your closing statement: "What you want is to transfer the wealth of people who have decided to exercise their right to buy whatever product they choose to groups that you favor (which usually can't compete because of their own incompetence, not nefarious foreign competitors)."

 

I greatly benefited from the transfer of wealth that occurred in this country -- in the 1980's -- thanks to Reagan. I made numerous island hopping trips around the Bahamas every year in a ocean going 52' Viking sport fisherman (similar but older design to this one) with friends - for many years. At the time, we thought it was great and thanked him and his cohorts. But that was the beginning of the destruction of the American economy and you young people will be the one's that will suffer in future years (unless things aren't turned around). Sad part of it all is that most can't even see the light in the tunnel. You have been duly and fully indoctrinated in the ideology. All I can say is good luck. I don't need it. I am taken care of (legitimately - no underhanded BS or gouging of the public - and no pension either).

 

What's humorous is that you have managed to not address my main point. You complain that cheap goods are undermining America, and then point to Lexus and BMW as examples of products that need to be made more expensive (through a tariff, one presumes), which completely ignores the fact that they are more expensive and have higher transaction prices than their American competition. (After you learn the difference between a tariff and a VAT, perhaps we can take you car shopping so that you will at least know how much various models from different manufacturers cost).

 

You also want to "protect" us from corporations, when all that your preferred policies would do in the long run is give corporations MORE power over consumers by preventing us from buying alternatives, all in the name of "protecting American industry and workers." In reality, it's more about saving certain companies that you believe need to be saved, when it is painfully obvious that they no longer meet the needs of consumers - which is the sole reason for a company's existence. Ironically, you claim that you want to tame corporations, but your policies would basically force people to buy from select, favored corporations based on certain criteria favored by the government or whatever group has power (for example, today it might be where they manufacture their goods, tomorrow it might be whether they are "green" enough) as opposed to the one question that consumers care about (are the goods that they produce any good?). The free market lets people ESCAPE the clutches of companies that make crappy products.

 

If you want to do that - fine, but please spare me the nonsense that we are all poorer because people are buying Toyotas and Hondas instead of Chevrolets, or that the collapse of GM and Chrysler means the end of America, or that we are all headed to the poorhouse. In the case of the auto industry, what you really want is for new-vehicle buyers to subsidize three groups - management of GM and Chrysler, the dealers and the UAW - to spare them the consequences of their own ineptitude.

Edited August 25, 2009 by grbeck

[RaZor]

A value added tax (VAT) and a tariff are two different things. So is crediting home-based manufacturers with any VAT paid on exported parts, as opposed to slapping a tariff on imported goods. Germany may apply the VAT to all goods imported to the country, but consumers in Germany also pay the VAT on ALL of the goods that they buy, not just the ones imported from other countries.

 

With a tariff, Germans would not pay extra on goods manufactured within their home country. That would be the point of a tariff - to encourage Germans to "Buy German." The VAT is not designed to encourage Germans to "Buy German." A VAT is designed to raise revenue for the government, and applying it imported goods only ensures that everyone who buys that particular imported good is still contributing to the central treasury. It is similar to the state sales tax here in Pennsylvania - one pays it on a new car whether it is built in Detroit or Tokyo. The Pennsylvania Department of Revenue doesn't care whether I buy a brand-new Toyota or Ford. It just wants the sales tax from the sale.

 

As an American, I received a rebate on the VAT paid on two cuckoo clocks bought in Germany (which were manufactured there). Germans would have still paid the VAT.

 

The American products sold in Germany cost a lot because of the VAT, but virtually EVERYTHING in Germany is more expensive than it is in the U.S. I know, because my mother is German, we visit there regularly, and we still have relatives there. The VAT is designed to raise revenue, not "protect" the German auto industry.

 

My original post regarding these issues was essentially a proposal of one method to help pay for our own programs (HC reform)

 

There, of course, is a way that we can help pay for any costs of revamping our HC debacle - without costing the American taxpayer additional taxes (or at least minimize them).

 

Pointing out that other countries use the VAT to raise revenue to help pay for their programs

 

Every nation in the world has a value-added tax at its border – except for the United States. They use the revenue from this tax to pay for domestic programs, social welfare, national health care, and other things. An American “value-added tax” – would raise revenue from foreign producers, rather than shouldering the American people with extra tax burdens. Let's call it a "border tax", or we can just call it a VAT -- it really doesn't matter.

<snip>

. . . all US businesses must pay a VAT when they send goods abroad. American exporters are asked to foot the bill for France’s education system, for Germany’s mass-transit, and for health care in the United Kingdom. Even Canada charges VAT on goods that are shipped across the border. If we simply returned the favor, it would not only be able to make ourselves more competitive, but it would guarantee financing for many, if not all government projects.

 

Please note that I suggested a border tax or a “value add tax” that would raise revenue in addition to Americans shouldering the burden of taxes. I even added the sentence “Let's call it a "border tax", or we can just call it a VAT -- it really doesn't matter” - in an attempt to communicate that I don’t care what it’s called – I am more interested in the results. But I will add that if the VAT nomenclature is used then that might be a good idea in that so many countries have used the fact that we do not have a VAT to gain market advantages here. The whole idea is to get foreign manufacturers to contribute (with their imports) to our revenue (just as our imports into their country helps their revenues). Is that really that hard to comprehend?

 

Please learn how the VAT operates, who actually pays it, why it does not fit with the standard definition of "protectionism," and why it is different from a tariff before you accuse someone else of not knowing what he or she is talking about.

 

The World Trade Organization (WTO) (and GATT before WOT) has a proclaimed goal of reducing global trade barriers. However, its bureaucrats have for some time attempted to force U.S. adoption of a VAT. They do this by ruling that the Europeans may "border adjust" (read -- give rebates) their VATs but deny the U.S. the same right to "border adjust" its corporate income tax. (Note: The U.S. relies more on the corporate income tax than Europeans do, because the U.S. does not have a VAT.)

 

This ruling unfairly discriminates against U.S. exporters because they get a higher tax burden than their European competitors. As I also pointed out, U.S. corporations, for the first time, are now paying more foreign income taxes than they are US corporate income taxes – and when you add foreign VATs on top (for products exported), our corporations are paying a good deal more taxes - than do foreign corporations (producers).

 

So what we have here is our companies are ending up helping to pay for foreign programs - and foreign companies are not helping to pay for ours. Maybe you like to be on the downside of the tilted (trade) table - I don't. I don't like being on the short end of the stick (being taken advantage of).

 

So what can one conclude from a EU country rebating (in short giving up its tax revenue = subsidy) to their manufacturer that exports to the US, but won’t give up that revenue if the export is made to another country (like another EU country), or if sold to their own countrymen? Sounds like (to me) that foreign countries are manipulating the table, or the ‘field’, or whatever you want to call it. SO what they have essentially been saying is, "We can rebate our VATs – but you can’t rebate your (chosen) form of taxes."

 

Maybe you like foreign countries dictating our choices (how we should run our country and provide revenue) - I don't.

 

As I pointed out above, you attributed something to me that I never said, so it would be in your best interests to refrain from accusing anyone else of having poor reading comprehension skills.

One of the several things that I was referring to – is shown by the next two direct quotes

 

Any VAT taxes will be passed on to the consumer. The consumer will end up paying them, although indirectly. The idea that the corporation eats the tax is a nice fantasy, but one that does not comport with reality. That is why many goods are much more expensive in Europe than they are here.

 

Instituting a VAT would make foreign goods more expensive but it would give a big boost to domestic industries (which just might begin to manufacturer goods here again ----> jobs!) which have been decimated by subsidized foreign competition. Using the VAT revenue to support domestic manufacturers, the same way other countries support their industries, would help them compete internationally.

 

Please note that my post precedes yours (by almost a day and your post is in response to mine) – and I made the statement that I realize that foreign goods will cost more. I guess Nap missed that point to – as he immediately claimed the same thing as you – even though I pointed it out in the original post on the subject. Hence the reading comprehension barb (which may be uncalled-for -- but true). Your injection that ". . . the corporation eats the tax is a nice fantasy . . ." is pure projection of your thoughts - not mine.

 

continued (do to limitations of forum software) . . .

[RaZor]

Germany does not have a heavily protected economy, and there is no proof that Japan, South Korea and China have benefitted from protectionist measures that they have enacted.

 

Your contentions don't hold up in the real world. You claim that Americans are being "unpatriotic" when they buy "cheaper" foreign goods. Yet you use BMWs and Lexuses as an example. BMWs and Lexuses sell because they are better than Cadillacs and Lincolns, even though they are are also more expensive than the domestic competition. The idea that people buy foreign cars instead of domestics because they are cheaper, and that this represents "unfair" competition, is not what is happening in the real world. The foreign competition has succeeded by offering a better product, and people are willing to pay the extra money to buy it.

Where did I state that Germany had a “heavily protected economy”? And there is no proof that the Asian countries have not benefited from protecting their markets and exploiting ours? You've got to be kidding. I won't go into that here in depth, but you might want to read up LINK and LINK and you might want to read LINK and note the date of the article

 

What's humorous is that you have managed to not address my main point. You complain that cheap goods are undermining America, and then point to Lexus and BMW as examples of products that need to be made more expensive (through a tariff, one presumes), which completely ignores the fact that they are more expensive and have higher transaction prices than their American competition. (After you learn the difference between a tariff and a VAT, perhaps we can take you car shopping so that you will at least know how much various models from different manufacturers cost).

That is not really an accurate reading of my post, is it? You might want to re-read at least the first sentences again:

I find it interesting that America is losing a major economics war by relinquishing management and control of the economy through effects of our balance of trade deficit, out-sourcing, subsidized in-sourcing and foreign tax benefits -- and that doesn't bother some. Funny how people that claim to be patriots are the same ones that place access to cheap foreign goods – even though it undermines our own country - ahead of defending ourselves in the economic war (that we are loosing). The same applies to illegal immigrants. . . hate them, get rid of them, thrown them out . . . but I like the “cheap tomatoes & fruits, meat (packing plants) and cheaper homes (construction workers)”. Nothing but doublespeak.

 

Personally, I think all undocumented people need to leave (before they can even apply for re-entry/citizenship) – but I also realize that tomatoes are going to cost me more – to achieve that. If I want to buy a BMW or a Lexus, or a plasma TV – I will have to pay more – so that this country doesn’t just fold up because we’re giving it all away. Guess what? If the American economy fails – there will be a domino effect on the world economy - as it too will also fail. Then where will we (even if it just our children) be?

My point was first, that I find it interesting that people that claim to be patriots place access to cheap prices on imported goods as seemingly more important than the economic security of our country. Is there anyone out there that does not realize that there has been a global economic war going on for some time?

 

Please also note my wording: “If I want to buy a BMW, or a Lexus, or a plasma TV – I will have to pay more”. Of course, they are expensive items and one would assume that only those that can afford luxury items will be purchasing them. I did not use them “as examples of products that need to be made more expensive” – I used them as examples of products (luxury) that if I can afford to purchase them, I also would be prepared to pay for them and not complain about it with the full knowledge that the increased revenue to my country (to help offset some of the costs of making the USofA a better place for my offspring and future generations to live). Sorry if I did not make that clear enough.

 

I chose those two auto manuf’s as they are just about the only foreign manuf’s that I might ever consider purchasing a vehicle from – I’ve owned Porsches, VW’s, never cared for MB’s, almost bought a 3-Series (but passed) once – but will only buy one in the future if Germany stops playing tricks with the VAT. <and I have one line of my ancestors that is German too>

 

They also represent two companies that make their products in their home country (with the exception that BMW assembles Z4’s in SC from parts shipped from Germany). Lexus is a good automobile but as long as they continue to keep most of their markets closed to US products, I will not buy from them – except when there is no other choice (such as is the case w/ many electronics ~ TVs)

 

We are on the slippery slope of economic downswing. A trillion dollar trade deficit is just as dangerous as $14 trillion Federal deficit. All of a sudden conservatives are concerned about the Federal deficit – and didn’t have much concern as long as they had the WH – even though the last guy started with a budget surplus and then more than doubled the Federal deficit. Yah see, I don’t like the idea of deficits – and I think that we can be a whole lot smarter than we have been in the past. It’s called being good business people, good capitalists, good citizens.

 

With an import “fee”, VAT, charge, tax, whatever you want to call it . . . domestic companies also will be enticed to bring back production to the US. Foreign companies like BMW will be enticed to build factories here, get their parts here. I believe all Lexus’ are made in Japan. I have no problem with them finishing the Tupelo plant and building Lexus’ there. The more parts that they in-source – the better (and that would make them not subject to the “fee” to bring them over) but in either case it’s watching out for the good ole USofA.

 

All those things put Americans back to work. We will not fully recover until we get jobs back. The more jobs, the more Americans that can work, the better our economy, the less welfare, less people not being able to pay for their own health care (tax burden). It’s a good circle – not a vicious one like the one that we are currently in. Correct me if I am wrong but most that are against Universal Health Care – have at least part of their argument (fear) that there will be many that will not pay for it themselves, right? I say, make it so there are enough jobs so everyone that wants to work can get a job and make a descent living – and pay for it themselves. That will take bringing back industry. Once we achieve that, then we can work on those people who seemingly do not want to contribute (work for a living). But first, let's get as many jobs back as we can.

 

You also want to "protect" us from corporations, when all that your preferred policies would do in the long run is give corporations MORE power over consumers by preventing us from buying alternatives, all in the name of "protecting American industry and workers." In reality, it's more about saving certain companies that you believe need to be saved, when it is painfully obvious that they no longer meet the needs of consumers - which is the sole reason for a company's existence.

 

If you want to do that - fine, but please spare me the nonsense that we are all poorer because people are buying Toyotas and Hondas instead of Chevrolets, or that the collapse of GM and Chrysler means the end of America, or that we are all headed to the poorhouse. In the case of the auto industry, what you really want is new-vehicle buyers to subsidize three groups - management of GM and Chrysler, the dealers and the UAW, to spare them the consequences of their own ineptitude.

Yeah see, there you go projecting again. Where did I say any of those things? I suppose that you believe that those foreign companies are just angels. . . the epitome of corporate responsibility (most of us are aware that many of our corps forgot the old idea that the corporation is a trust, not only for shareholders but for the benefit of the country, the employees and the people who use the product). Once upon a time, that attitude was the attitude could be found in many U.S. corporations – and that's the way some of them thought--good for the country, good for the people, good for the shareholders.

 

I won’t go into Toyota’s and/or Honda’s “trust”. Companies that actively hide their engineering/manufacturing flaws (Tacomas frame failing for what a dozen years of production, engine sludge for more than a half dozen years, air bags that produce shrapnel going back 7/8 years for Honda) and both of them had to loose class-action lawsuits before they would even admit anything was wrong with their products – oh yeah, they’re above reproach. LINK LINK LINK LINK

 

Oh and by the way, attempting to use

That sounds like a tariff. Google "Hawley Smoot" and see how well it "protected" U.S. industries in the 1930s. Reputable economists believe that, if anything, it helped make what should have been a short and sharp recession into the Great Depression. Unless you believe that retaliatory actions by other countries are nothing to worry about, and it's worth it to throw people out of work making GE locomotives exported to other countries so that we can punish people with the gall to buy a Honda not made in the U.S.

would only work as an argument on someone that is unaware of the circumstances surrounding the “Smoot-Hawley Tariff Act of 1930”, and really is an example comparing apples to oranges (didn’t you use that somewhere?). If you double check your history, you will find that (1) we had in a huge trade surplus (just the opposite as today) with just about ever trading country at the time when that Act was issued . . . and it would pretty understandable why other countries (that all had a big deficit with us at the time) . . . would pretty upset when we announced additional tariffs . . . and would want to retaliate against us and (2) actually retaliation against trade practices actually began before the Act was even passed. It was more of a reaction to the trade imbalances of the time (in which we held the big surplus).

 

There is a big difference . . . Do you see the difference?

 

Since WWII, the global trading system generally attempted to reduce, or eliminate trade distortions and trade barriers. Export subsidies were banned in 1955 on industrial goods and more recently agricultural goods have been added (some haven’t gone into effect yet).

 

And yet, the total cost on imports in many countries, esp EU, today are higher, or as high, than they were back when GATT started the movement to eliminate trade subsidies. Our Congress has on 3 occasions (’74, ’88, & ’02) instructed U.S. negotiators to address the distortions through changes in the WOT (formerly GATT) rules. Even Pres Johnson attempted to gain agreement with our trading partners to eliminate the discrimination against the U.S. – unsuccessfully. . . which left the distortions adverse to American manufacturing & agriculture intact. Yet the EU trading partners attacked certain aspects of the U.S. tax system designed to reduce those distortions on the export side of the equation.

 

So basically, we have been trying for forty years to get the critical imbalance corrected. It is time to end the discrimination that has been allowed against American goods producers – for the last fifty some years. Many believe (and I am one) that we should set a specific date for this agreement to be made - to end this imbalance and discrimination - or enact legislation through such a charge (as I suggested in the original post) on imports equal to the amount of the rebate (which is an illegal subsidy) – equal to the amount of the value added tax that they impose on our imports.

 

We just plain have too many big deficits to mamby-pamby around anymore allowing all of these countries to stack the deck. I personally am not ready to give up my "wealth" anymore than my country's wealth (including the living standard & health standards of my offspring and future generations) -- without a fight.

 

So now are you going to school me on VATs and the prices of cars? Really? Have at it. . . but I probably will not respond as far too much time has been spent trying to clear the air from you attacking a couple suggestions (posts) that I made. Instead of trying to poke holes in others posts -- you might want to try and contribute your ideas how we (as Americans) can deal with the almost overwhelming problems that we currently face.

[grbeck]

My original post regarding these issues was essentially a proposal of one method to help pay for our own programs (HC reform)

 

Pointing out that other countries use the VAT to raise revenue to help pay for their programs

 

 

 

Please note that I suggested a border tax or a “value add tax” that would raise revenue in addition to Americans shouldering the burden of taxes. I even added the sentence “Let's call it a "border tax", or we can just call it a VAT -- it really doesn't matter” - in an attempt to communicate that I don’t care what it’s called – I am more interested in the results. But I will add that if the VAT nomenclature is used then that might be a good idea in that so many countries have used the fact that we do not have a VAT to gain market advantages here. The whole idea is to get foreign manufacturers to contribute (with their imports) to our revenue (just as our imports into their country helps their revenues). Is that really that hard to comprehend?

 

 

 

The World Trade Organization (WTO) (and GATT before WOT) has a proclaimed goal of reducing global trade barriers. However, its bureaucrats have for some time attempted to force U.S. adoption of a VAT. They do this by ruling that the Europeans may "border adjust" (read -- give rebates) their VATs but deny the U.S. the same right to "border adjust" its corporate income tax. (Note: The U.S. relies more on the corporate income tax than Europeans do, because the U.S. does not have a VAT.)

 

This ruling unfairly discriminates against U.S. exporters because they get a higher tax burden than their European competitors. As I also pointed out, U.S. corporations, for the first time, are now paying more foreign income taxes than they are US corporate income taxes – and when you add foreign VATs on top (for products exported), our corporations are paying a good deal more taxes - than do foreign corporations (producers).

 

So what we have here is our companies are ending up helping to pay for foreign programs - and foreign companies are not helping to pay for ours. Maybe you like to be on the downside of the tilted (trade) table - I don't. I don't like being on the short end of the stick (being taken advantage of).

 

So what can one conclude from a EU country rebating (in short giving up its tax revenue = subsidy) to their manufacturer that exports to the US, but won’t give up that revenue if the export is made to another country (like another EU country), or if sold to their own countrymen? Sounds like (to me) that foreign countries are manipulating the table, or the ‘field’, or whatever you want to call it. SO what they have essentially been saying is, "We can rebate our VATs – but you can’t rebate your (chosen) form of taxes."

 

Maybe you like foreign countries dictating our choices (how we should run our country and provide revenue) - I don't.

 

RaZor, the main problem here is that you can't keep straight what these taxes are supposed to do...on the one hand, you advocate that the U.S. "protect" its economy (most people versed in economics would understand this to require some sort of "tariff'), but then you switch to advocating a VAT to fund this country's social programs.

 

A VAT will operate like a sales tax - it doesn't care where the good is from, it is collected at some point in the design/production/sales process. As I said, the Pennsylvania sales tax applies equally to a Toyota made in Japan, just as it does to a Ford made in Detroit. A VAT isn't going to protect American industry; it will operate much like the Pennsylvania sales tax. Maybe it will help U.S. exports - debatable, but we can consider the possibility - but that isn't necessarily going to lower the prices that I pay for goods here.

 

Your fixation on the corporate sales tax and VAT rebates reminds me of the obsession with alleged Japanese currency manipulation among domestic car partisans. It looks like a plausible explanation on the surface, but one delves deeper into the subject, one discovers that it really isn't that important, and Japanese car sales have risen in the U.S. regardless of the value of the dollar versus the yen. The U.S. has other ways of subdizing exports if it so chooses.

 

Go to Germany - there are plenty of imports available, and Asian cars are starting to make inroads. The reason imports don't sell more is snobbery on the part of Germans, and the fact that German goods tend to have great external quality (although they are also high priced, and not necessarily reliable).

 

The VAT isn't stopping that - and please note that Germany's use of VAT hasn't stopped BMW and Mercedes from moving a portion of their production to the U.S., and VW is poised to do the same. So how is Germany's use of the VAT protecting THOSE jobs that would otherwise be done by Germans?

 

". . . the corporation eats the tax is a nice fantasy . . ." [/i] is pure projection of your thoughts - not mine.

 

Once again, I'm going to show you why you need to drop the barbs about the reading comprehension skills of other posters.

 

Here is your original post: Instituting a VAT would make foreign goods more expensive but it would give a big boost to domestic industries (which just might begin to manufacturer goods here again ----> jobs!) which have been decimated by subsidized foreign competition. Using the VAT revenue to support domestic manufacturers, the same way other countries support their industries, would help them compete internationally.

 

Now, here is my response: Any VAT taxes will be passed on to the consumer. The consumer will end up paying them, although indirectly. The idea that the corporation eats the tax is a nice fantasy, but one that does not comport with reality. That is why many goods are much more expensive in Europe than they are here.

 

Nowhere do I see where I am incorrect. I said, VAT taxes will be passed on to the consumer. Your contention that "foreign goods" - and, by implication, ONLY foreign goods - will cost more in this country if a VAT is enacted is incorrect. ALL goods will cost more.

 

Unless the VAT will only apply to imports, in which case, it is not really a VAT, it is a tariff.

 

American-based companies aren't going to eat the VAT - that point still stands, and nothing you have said contradicts it.

Edited August 26, 2009 by grbeck

[grbeck]

Where did I state that Germany had a “heavily protected economy”? And there is no proof that the Asian countries have not benefited from protecting their markets and exploiting ours? You've got to be kidding. I won't go into that here in depth, but you might want to read up LINK and LINK and you might want to read LINK and note the date of the article

 

On August 24, 2009, at 7:18 p.m, you posted this: It would NOT hurt trade - one would to be naive to believe that. Do you actually think that all of these countries (Japan, S.Korea, Germany, China - to name a few) would actually draw back their imports into this consumer economy? Not at least now. Maybe someday when we no longer are the biggest (or, one of the biggest) consumer economy in the world - if we keep doing what we are doing. Then we won't matter. . . and it will be too late. It is pretty hard for them to cry or to call us protectionists (see above referenced countries) -- when THEY themselves are very strict protectionists. (emphasis added)

 

The logical reading of your final sentence in that excerpt - "when THEY themselves are very strict protectionists' - coupled with the reference to Germany in the second sentence, would lead one to believe that you are calling Germany a protectionist country. THAT is where you stated it.

 

As for the sources that supposedly "prove" how successful Asian economies are - the Time article is from 1981, which is almost 30 years ago. You may want to update your sources to include new reading material that lays out what has happened to Japan since about 1990 or so. Hint - its economy has not outperformed that of the U.S. by most measurements.

 

The other two articles are essentially opinion pieces that mix cherry-picked stats with alarmist hysteria (One article cites the awful fact that THE JAPANESE OWN A LOT HAWAIIAN REAL ESTATE!- big deal, this means that those Japanese owners have probably have lost their shirts, too. I'm glad that others find the U.S. a good place to invest and build.)

 

Iacocca? He has been wailing about unfair trade ever since the 1980s, when he was busy putting another coat of lipstick on the K-Car pig, instead of investing money in new platforms to beat Honda and Toyota. He has very little credibility on this subject. The domestics have suffered because they built too much garbage from the late 1970s through the early 2000s; they have frittered away the identities of their brands; and they focused on high-profit trucks and SUVs instead of passenger cars.

 

Trade policy had nothing to do with that, but Iacocca prefers that we focus on that and forget his mistakes that drove Chrysler into the ditch by the early 1990s.

 

That is not really an accurate reading of my post, is it? You might want to re-read at least the first sentences again:

 

My point was first, that I find it interesting that people that claim to be patriots place access to cheap prices on imported goods as seemingly more important than the economic security of our country. Is there anyone out there that does not realize that there has been a global economic war going on for some time?

 

Please also note my wording: “If I want to buy a BMW, or a Lexus, or a plasma TV – I will have to pay more”. Of course, they are expensive items and one would assume that only those that can afford luxury items will be purchasing them. I did not use them “as examples of products that need to be made more expensive” – I used them as examples of products (luxury) that if I can afford to purchase them, I also would be prepared to pay for them and not complain about it with the full knowledge that the increased revenue to my country (to help offset some of the costs of making the USofA a better place for my offspring and future generations to live). Sorry if I did not make that clear enough.

 

Here is what I posted: You complain that cheap goods are undermining America, and then point to Lexus and BMW as examples of products that need to be made more expensive (through a tariff, one presumes), which completely ignores the fact that they are more expensive and have higher transaction prices than their American competition.

 

Again, nothing I have posted is incorrect. You admit that your measure will raise the price of BMWs and Lexuses - “If I want to buy a BMW, or a Lexus, or a plasma TV – I will have to pay more”. Whether they are luxury goods is irrelevant. You advocate making them more expensive through the application of some sort of tax. This is what I wrote, and it is correct.

 

And you didn't limit your proposal to luxury goods in your original post. I seriously doubt that only Lexuses and BMWs will be affected. I'll bet that Hyundais, and imported Toyotas and Hondas, will be affected, too. Do you believe that those products are luxury goods as well?

 

And it also doesn't change the fact that both Lexuses and BMWs are already more expensive than their domestic competition, so low price isn't the reason for their success in the U.S. Buyers aren't lured into showrooms by a "cheap price" on those vehicles.

 

With an import “fee”, VAT, charge, tax, whatever you want to call it . . . domestic companies also will be enticed to bring back production to the US. Foreign companies like BMW will be enticed to build factories here, get their parts here. I believe all Lexus’ are made in Japan. I have no problem with them finishing the Tupelo plant and building Lexus’ there. The more parts that they in-source – the better (and that would make them not subject to the “fee” to bring them over) but in either case it’s watching out for the good ole USofA.

 

All those things put Americans back to work. We will not fully recover until we get jobs back. The more jobs, the more Americans that can work, the better our economy, the less welfare, less people not being able to pay for their own health care (tax burden). It’s a good circle – not a vicious one like the one that we are currently in. Correct me if I am wrong but most that are against Universal Health Care – have at least part of their argument (fear) that there will be many that will not pay for it themselves, right? I say, make it so there are enough jobs so everyone that wants to work can get a job and make a descent living – and pay for it themselves. That will take bringing back industry. Once we achieve that, then we can work on those people who seemingly do not want to contribute (work for a living). But first, let's get as many jobs back as we can.

 

You are confusing the VAT with a tariff again. Please note that these are two entirely different types of taxes, with different goals and different modes of operation.

 

Honda, Toyota, Nissan, Hyundai, BMW and Mercedes have all built manufacturing facilities in the U.S., and VW is about to build one. They didn't need a VAT to encourage them to do it. And the use of a VAT isn't keeping the Europeans at home.

 

Yeah see, there you go projecting again. Where did I say any of those things? I suppose that you believe that those foreign companies are just angels. . . the epitome of corporate responsibility (most of us are aware that many of our corps forgot the old idea that the corporation is a trust, not only for shareholders but for the benefit of the country, the employees and the people who use the product). Once upon a time, that attitude was the attitude could be found in many U.S. corporations – and that's the way some of them thought--good for the country, good for the people, good for the shareholders.

 

I won’t go into Toyota’s and/or Honda’s “trust”. Companies that actively hide their engineering/manufacturing flaws (Tacomas frame failing for what a dozen years of production, engine sludge for more than a half dozen years, air bags that produce shrapnel going back 7/8 years for Honda) and both of them had to loose class-action lawsuits before they would even admit anything was wrong with their products – oh yeah, they’re above reproach. LINK LINK LINK LINK

 

I never said that foreign corporations are angels, so I would appreciate it if you would not put words in my mouth. I said that they make superior products, and this is borne out in road tests by publications as disparate as Car and Driver and Consumer Reports.

 

If you want more comfirmation of this fact, then talk to independent mechanics. I have - and they uniformly reply that Honda and Toyota build the best vehicles, and that they are, with few exceptions, superior to their domestic counterparts in the reliability and build quality departments. Linking to a few sensational stories does not dispute their real-world, daily experiences in repairing and maintaining thousands of vehicles.

 

The defects that you have listed were limited to a few products; and, anyway, two can play at that game. Do I have to list Ford's problems with launching spark plugs, fire-starter ignitions, faulty transmissions in many front-wheel-drive vehicles, and crappy head gaskets on the 3.8 V-6? Or GM's problems with the faulty intake manifold gaskets on many of its V-6s, clunking intermediate steering shafts on many models, as well as the numerous woes associated with the Northstar V-8?

 

Oh and by the way, attempting to use

 

would only work as an argument on someone that is unaware of the circumstances surrounding the “Smoot-Hawley Tariff Act of 1930”, and really is an example comparing apples to oranges (didn’t you use that somewhere?). If you double check your history, you will find that (1) we had in a huge trade surplus (just the opposite as today) with just about ever trading country at the time when that Act was issued . . . and it would pretty understandable why other countries (that all had a big deficit with us at the time) . . . would pretty upset when we announced additional tariffs . . . and would want to retaliate against us and (2) actually retaliation against trade practices actually began before the Act was even passed. It was more of a reaction to the trade imbalances of the time (in which we held the big surplus).

 

There is a big difference . . . Do you see the difference?

 

All of which are irrelevant to my main point - that the Hawley Smoot Tariff sparked retaliatory measures that helped turn what should have been a short and sharp recession into the Great Depression. The other countries weren't erecting barriers because of a trade imbalance; they erected them in response to the enactment of Hawley Smoot. This has been proven beyond a doubt, and, even if they did enact the trade barriers in response to allegedly unfair trade practices, the result was still the same - they hurt their own economies in the process, and ensured that the Great Depression spread from the U.S.

 

Either way, instead of protecting their economies, they cut off their nose to spite their face. Hardly an example of how to run a successful economic strategy, unless one subscribes to the masochistic school of economic thought.

 

Incidentally, when we run a big trade surplus, then taking any action that will encourage retaliatory measures is even riskier...Hawley Smoot choked off a potential source of revenues for companies reeling from the collapse of the domestic market. Hardly a good economic strategy.

 

Hawley Smoot was a disaster; that is why neither party embraces protectionism, and why historians from both sides of the ideological spectrum condemn it.

Edited August 26, 2009 by grbeck

[fmccap]

Constitutional Contempt

At Speaker Nancy Pelosi's Oct. 29th press conference, a CNS News reporter asked, "Madam Speaker, where specifically does the Constitution grant Congress the authority to enact an individual health insurance mandate?" Speaker Pelosi responded, "Are you serious? Are you serious?" The reporter said, "Yes, yes, I am." Not responding further, Pelosi shook her head and took a question from another reporter. Later on, Pelosi's press spokesman Nadeam Elshami told CNSNews.com about its question regarding constitutional authority mandating that individual Americans buy health insurance. "You can put this on the record. That is not a serious question. That is not a serious question."

 

Where in the U.S. Constitution does it authorize Congress to force Americans to buy health insurance? If Congress gets away with forcing us to buy health insurance, down the line, what else will they force us to buy; or do you naively think they will stop with health insurance? We shouldn't think that the cure to Congress' unconstitutional heavy-handedness will end if we only elect Republicans. Republicans have demonstrated nearly as much constitutional contempt as have Democrats. The major difference is the significant escalation of that contempt under today's Democratically controlled Congress and White House with the massive increase in spending, their proposed legislation and the appointment of tyrannical czars to control our lives. It's a safe bet that if and when Republicans take over the Congress and White House, they will not give up the massive increase in control over our lives won by the Democrats.