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Sunday, January 14, 2018

Paying Tribute to America

In ancient times, any country conquered by Rome had to pay tribute to Rome. These vassal states had to spend their own resources to build up stores of grain, honey, and other trade goods in order to ship them to Rome for free, or at a greatly reduced price. This was how they acknowledge Rome's hegemony over them.

Today, countries acknowledge America's hegemony by doing the same thing. Other countries build up stores of trade goods at their own expense and ship those goods to us at a greatly reduced price, a price subsidized by foreign governments, in the hopes that we will buy those goods.

From an economic perspective, Trump's "Buy American" policy runs counter to his "Make America Great Again" policy. America proves her economic greatness when vassal countries ship us cheap goods whose manufacture has been subsidized by foreign governments. Whenever the foreign government throws government money at producing a good that will be sold in the US, that government has essentially sent us a check to help us prop up our economy. Foreign-subsidized goods that enter the US are as much free money as any cashier's check, grain shipment or oil shipment we send for cheap or free to a third-world country.

Americans frequently complain about the amount of free money we send to other governments, other countries. They almost never acknowledge that foreign-subsidized goods are free money that those foreign states send to us. Every dollar a foreign government spends to produce a good is a dollar in tax that they pay to America in exchange for the privilege of being allowed to sell to Americans. Foreign subsidies of goods are nothing more than tax dollars paid by foreign citizens, collected and paid, by foreign governments, as tribute to the United States.

Thus, forcing American government projects to "buy American" is absurd. We should be buying the least expensive material from whoever produces it. If we are lucky, foreign countries will subsidize the production of the steel, oil, etc., that we use in our projects. When we build American projects on American soil, any decent economist would much prefer the material in those projects come from companies that are subsidized by foreign governments. That's free money for us.The "trade deficit" is not a bug, it's a feature. It proves that America receives more money from vassal states than she sends out.
"It is no coincidence that the smallest American merchandise trade deficit since 1982, $74 billion in 1991, occurred during the period’s only recession."

To reiterate, foreign government subsidies of any industrial good we import is nothing more or less than a foreign country paying tribute to America. Foreign subsidies acknowledge American economic superiority. THAT is what I want. Do you want to Make America Great Again? Buy foreign goods. Make sure the world keeps paying its taxes to us.

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