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Mexico’s Scramble Proves Free Trade Extremists Wrong

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Initially, let’s get this clear and open our eyes:  President Donald Trump just put a knife to the throat of the U.S. Chamber of Commerce, the GOP “donor class,” and open borders Republicans.  Irrationally, Trump’s critics always misunderstand every action as being a single, isolated event, rather than a long-term process.

Trump’s proposal over the last ten days to impose tariffs of up to 25% on imports from Mexico was not primarily aimed at Mexico.  Trump’s tariff threat was aimed at open border / pro illegal immigration / pro amnesty Republicans who have been sabotaging conservative efforts to defend our nation’s borders for decades.

Trump laid down the law declaring that the status quo is going to change.  The open borders / cheap labor Republicans (not to mention Democrats) have maneuvered to block change.  For decades, long before Trump, these traitors to U.S. workers have manipulated the system to keep the status quo.

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Trump just signaled that — one way or another — the open border exploitation by corrupt businessmen is going to end.  The party’s over.  You don’t have to go home, but you can’t stay here.  Trump will bring the entire charade to a screeching halt one way or another.  So get on board with the solutions and the new approach of actually treating the United States like a real country.

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Last week, Republicans and other “conservatives” got a first-hand experimental proof that all of the propaganda on free trade and tariff is wrong.  Yet will Republicans and “conservatives” learn anything from this first-hand experiment, this empirical proof as a massive experiment?  Unlikely.

On May 30, 2019, President Donald Trump announced (initially on Twitter) that he would impose tariffs on products “from Mexico” imported into the United States if Mexico did not stop facilitating floods of Central American rent-seekers traveling over a thousand miles through Mexico to crash the gates at the United States’ Southern border.

(Most of the high-value products are not truly “from Mexico” but are products of U.S. companies that moved their factories from the U.S.A. into Mexico to screw U.S. workers.  We tolerate this shell game and pretend that this is okay.)

What happened?  Mexico scrambled to avoid the tariffs.  Trump announced that a 5% tariff would begin on June 10, gradually increasing to 25% by October.  Mexico panicked.  Mexico did back flips to avoid even the 5%.

Almost instantly Mexico’s diplomats assured the world publicly that the U.S.A. and Mexico could work out an accommodation and the tariffs would never need to be implemented.  Trump responded that he welcomed the talks, but the first round of 5% tariffs on Mexico’ imports would go into effect on June 10 no matter what.  Within days, Mexico’s top diplomats were in Washington, D.C. desperately working out a deal to avoid even the first round to tariffs.

But why did Mexico care?

Free trade fanatics insist that only U.S. consumers pay the tariff.

So why did Mexico care?

We are instructed to believe that tariffs are a tax on U.S. consumers.  (A tax you don’t have to pay if you just choose to buy American.)

We are instructed to believe that Mexico as the exporter does not pay the tariff and is not affected in any way, at all.

So why did Mexico scramble to avoid the tariffs?

Answer:  Because the Cult of Free Trade is wrong.

Here is the orthodoxy, which you are ordered to believe:

U.S. consumers pay the tariff when the U.S.A. imposes tariffs on imports from foreign countries.  The foreign manufacturer or seller is unaffected.

U.S. manufacturers pay the price when foreign countries impose tariffs on U.S. exports.  Foreign consumers are unaffected.

See the irrational cognitive dissonance?  This is why I use the term “cult.”

U.S. consumers are hurt while foreign manufacturers are unscathed by U.S. tariffs.  But, irrationally, U.S. manufacturers or farmers exporting their products are hurt by foreign tariffs on U.S. exports while foreign consumers are unscathed.  How’s that, exactly?  What???

No matter which way it goes, the U.S. is hurt by tariffs but the foreign country is never affected at all.  That is not a rational discussion.

You can believe in the value and benefits of free trade without losing your mind over it.  Being for free trade and being a fanatic are not the same thing.

Let’s (always) define our terms.  In this author’s experience, about 50% of 100% of the political controversies and life issues and even interpersonal conflicts comes down to undefined key concepts.  People trip over words that have different meanings to one side than the other.

So we can support free trade.  But when it becomes fanaticism that is a fundamentally different concept.  Weighing the value of free trade on a case by case basis is correct.  Jumping off a cliff to the extreme is not correct.

Heavily funded by the same businesses who profit from open borders, cheap labor, and exploitation of U.S. workers and consumers, the Cult of Free Trade insists that tariffs are always bad and wrong.  The donations from businesses who exploit our citizens have been very well spent.  U.S. workers who have lost their standard of living and often their jobs will zealously defend the schemes of the crony capitalists who undermine them.

But the U.S. Constitution funded the U.S. Government almost exclusively by “excise taxes” including tariffs (duties) on imports.  That changed in 1913 when the income tax was created by the Sixteenth Amendment.   Attacking the U.S. Constitution, these “conservatives” pursue a fanatical devotion to a caricature version of free trade that was never part of the Republican agenda, never true in the real world, and in conflict with real life.  They reject the system of tariffs built in to the U.S. Constitution.

Ronald Reagan was a free-trader.  Ronald Reagan was a protectionist.  Reagan was both protectionist and a free-trader on the same day, often in the very same speech.

President Reagan imposed hundreds of purely protectionist tariffs — for no reason but protectionism (unlike China which has clearly violated specific trade rules).  Reagan gave speeches in the very same speech praising the importance of the free market but simultaneously warning that protectionism is necessary to protect U.S. manufacturers at time.

Reagan imposed protectionist tariffs on imported motorcycles to save Harley Davidson from business failure, purely to benefit an American company. “President Reagan, asserting that he was trying ”to enforce the principles of free and fair trade,” imposed a 100 percent tariff today on some Japanese-made computers, television sets and power tools.” (Gerald Boyd, New York Times, April 18, 1987, page 1.)

The Reagan “administration imposed more new restraints on trade than any administration since Hoover.”  Bill Niskanen, a member of Reagan’s Council of Economic Advisers, summarized in his definitive book: Reaganomics: An Insider’s Account of the Policies and the People (Oxford University Press, 1988)

In other words, Reagan was not the fanatic that the Cult of Free Trade wants all Republicans to be.  How could Reagan be both a free-trader and a protectionist at the same time?  Simple.

Trade policy was a tool for Reagan.  A hammer. A screw driver.  Reagan did not bow down and worship at the altar of free trade nor declare tariffs the devil.  Reagan merely rummaged through his tool box and pulled out the right tool for the situation at hand.

I wrote a quick summary for World Net Daily on Reagan’s careful balancing between the two ends of the spectrum in The conservative position: Free trade or protectionism?   But there are dozens of such reviews of Reagan’s protectionism to be found.  See, for example:  Ronald Reagan: Protectionist | Mises Institute

Free trade is a tool.  Free trade is not “the one true god” that you must bow down and worship.  It’s just a tool. You don’t worship a screwdriver.  But a screwdriver comes in handy when you need one.

Yet the fever of fanaticism against tariffs has infected most of the Republican party.  We had Republicans in Congress about to revolt against their president to block the tariffs on Mexico.  Never did Republicans threaten to rise up against President Ronald Reagan’s protectionist tariffs on Japanese exports.

Around The World

Not all Shi’a-Majority Nations are the Same

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The recent alleged arson attack on the Tomb of Esther and Mordechai, a Jewish holy site in Iran, was indicative of the ever-rising rate of anti-Semitism and broader religious intolerance in the Islamic Republic. The recently released United States Commission on International Religious Freedom (USCIRF) annual report had highlighted Iran’s anti-Semitic targeting of its small Jewish population as well as other minorities including followers of the Baha’i faith; the most persecuted faith in Iran.

The USCIRF described that it documented “a particular uptick in the persecution of Baha’is and local government officials who supported them in 2019. Iran’s government blamed Baha’is —without evidence — for widespread popular protests, accusing the community of collaboration with Israel, where the Baha’i World Centre is located. Iran’s government also continued to promote hatred against Baha’is and other religious minorities on traditional and social media channels.”

U.S. Special Envoy to Monitor and Combat Anti-Semitism Elan Carr has said that “anti-Semitism isn’t ancillary to the ideology of the Islamic Republic of Iran. It is a central foundational component of the ideology of that regime, and we have to be clear about it, and we have to confront it and call it out for what it is.” After the Tomb of Esther and Mordechai was set ablaze last weekend, Carr reiterated these statements and called Iran the “world’s chief state sponsor of anti-Semitism.”

In 2016 I wrote, “According to Articles 12 and 13 of the Iranian Constitution, all branches of Islam and Christianity have the right to worship, as do Jews and Zoroastrians, within the limits of the law there. However, converting away from Islam to any other religion is considered haram, or forbidden, and in many cases, could result in execution.”

Anti-Semitism is a historical reality in Iran’s strict brand of Shi’a Islam, which emphasizes the separation between believers and non-believers, expressed in terms of purity versus impurity. The Jewish People Policy Planning Institute explains that in Iran, “under the influence of Zoroastrian traditions, the Jews were considered physically impure and untouchable (najasa). Jews were also prohibited from inheriting from Shiites, whereas the opposite was allowed. A Jew who converted to Islam was entitled to the entire inheritance. Shiites were not allowed to marry Jewish women, except for in temporary marriage (mut’a), which is an inferior and exploitative type of concubinage.”

It is also a little-known fact that the country name of Iran is derived from the ancient Persian word Arya, a linguistic predecessor of the modern European term Aryan. Further, Armenian Nazi collaborator Garegin Nzhdeh (1886-1955) is the founder of the racist Tseghakronism movement, whose ideology is reminiscent of the Aryan supremacy espoused by Nzhdeh’s Nazi comrades. Today, Nzhdeh’s brand of Aryan and anti-Semitic ideology is palpable in both Armenia and Iran, neighboring countries where the Anti-Defamation League has documented that more than half of the populations hold a series of anti-Semitic views — at even higher rate in Armenia (58 percent) than in Iran (56 percent).

At the same time, it is important to note that the majority of Iranians are secular and the regime does not necessarily represent them, or their values. In fact, the Iranian government persecutes its Azerbaijani, Arab, and other citizens from minority populations.

Yet a stark contrast with Iran is found in its Shi’a-majority neighbor, Azerbaijan, which has strong relations with Israel and protects its Jewish citizens as well as other religious and ethnic minorities.

Southern California-based evangelical pastor Johnnie Moore has elaborated on the telling differences in the realm of religious tolerance between Azerbaijan and Iran, noting that Azerbaijan is “a country where Sunni and Shi’a clerics pray together, where Evangelical and Russian Orthodox Christians serve together, and where thriving Jewish communities enjoy freedom and total security in their almost entirely Islamic country.” He has also called Azerbaijan “a model for peaceful coexistence between religions.”

During my own visit to Azerbaijan, I observed and documented this first-hand. I believe that Azerbaijan is a nation that bears the torch, and burden, of bringing religious freedom to its less tolerant neighbors in the region, like Iran.

Perhaps the most dramatic indicator of Azerbaijani tolerance is the post-Soviet state’s special relationship with its Jewish community and with Israel. Last November, Azerbaijan unveiled a statue in honor of the nation’s Jewish war hero Albert Agarunov (1969-1992). Although Agarunov was killed in battle, his legacy remains a powerful symbol of Jewish integration and pride for his Muslim-majority country.

Israel and Azerbaijan have closely cooperated for more than a decade in the realms of security, energy, and tourism. Most recently, Azerbaijan sent its Finance Minister Samir Sharifov to this year’s American Israel Public Affairs Committee (AIPAC) policy conference, where Sharifov said that the country’s “cooperation with Israel is not limited to oil supply; we are interested in widening cooperation in defense and the transfer of technology.”

Sharifov also read remarks from a letter to AIPAC by Mehriban Aliyeva, the first vice president of Azerbaijan, who wrote, “It is gratifying that our former compatriots of Jewish origin, living nowadays in the United States and Israel, have maintained close ties with Azerbaijan and contribute to the strengthening of our relations with these countries. We are grateful to them.”

How can Azerbaijan govern and act so differently from its Shi’a neighbor? Iran is a theocracy that mixes religion and state more thoroughly than any other country in the world. In contrast, Azerbaijan’s constitution affirms the country as a secular state and ensures religious freedom for its citizens. Azerbaijan is also facing its own human rights issues and working on progressing as a nation. However, the fact of the matter remains, though Iran and Azerbaijan share a border, the similarities between their governments largely end there. Not all Shi’a-majority nations are the same.

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