Let's Protect Canadian Cheese !!

I've been going through some old stuff that I've saved for a few months and came across this gem of an essay that run in Industry Week a while back. 
The United States sugar industry has been protected (for various, ever-changing reasons) since the James Madison administration in 1816. 
Remember that when you get to the part about artisan Canadian cheese-makers ! 

This is good stuff.  From an economist named Brian Beaulieau. 

Canada and the European Union are on track to ratify a free-trade deal in 2015. Leaders in both countries expect the deal to be approved without a lot of resistance. The deal, called CETA, would eliminate tariffs on goods and provide for greater access of services both ways across the Atlantic. Some regulatory dismantling would also occur. Free trade with less regulation in Canada and the EU – that's great news if you are a cheerleader for the free market.

The estimate is that this deal would increase the current EU-Canada trade volume of €80 billion (aprox $109 billion) a year by 23%. Consummation of CETA would also mean that Canada is the only Group of Eight nation to have preferential access to the US and Europe, the two biggest consumer markets in theworld.

The European Commission estimates that up to a quarter of the economic benefits will come from eliminating regulatory barriers to trade. Reducing barriers sounds like a terrible idea to protectionists or to uncompetitive industries, but it fosters competition, efficiencies, and in the end, results in economic gains for consumers.

There's an old joke that I love that goes "If you don't go to other peoples' funerals, they won't go to yours." 
But seriously.....  If your citizens aren't allowed to buy other countries' goods and services, those countries aren't going to buy yours.  Protectionists just don't get it. 

There are those who would prefer that the protective barriers would continue. Canada's cheese industry is one such group. They state that Canada will lose its small, artisan local cheese makers as Europe's name-brand makers have easy access to their market. This is exactly the protectionist versus free market point. These small Canada cheese makers are not seeing the potential of access to a huge market; they fear that superior goods will take away market share.

The free market answer is to improve your quality and marketing and compete on a larger stage. If the local cheese makers truly produce an inferior product, why should they be protected from those who are better at their trade? The reality is most will probably improve their process, product and positioning, and in doing so be better entities because of this. That's the beauty of the free-market system; it pushes participants to new heights.

Go here to read about the Florida's Fanjul family and their (protected) sugar empire.  God has more competition than they do. 

Why Economic Nationalism is a philosophy of war

Here's some Ludwig Von Mises, explaining why Economic Nationalism is a philosophy of war. 

I've long believed that Economic Nationalism (quotas, tariffs, price supports), like most other forms of tribalism, was outright racist but I couldn't quite articulate it. 

You've gotta love this quote:

 Imagine a world in which the principle of private ownership of the means of production is fully realized, in which there are no institutions hindering the mobility of capital, labor, and commodities, in which the laws, the courts, and the administrative officers do not discriminate against any individual or group of individuals, whether native or alien. Imagine a state of affairs in which governments are devoted exclusively to the task of protecting the individual's life, health, and property against violent and fraudulent aggression. In such a world the frontiers are drawn on the maps, but they do not hinder anybody from the pursuit of what he thinks will make him more prosperous. No individual is interested in the expansion of the size of his nation's territory, as he cannot derive any gain from such an aggrandizement. Conquest does not pay and war becomes obsolete.

Go here to read the whole thing.  It's hard to declare war when your soldiers (and their money) and the citizens in "enemy" territory (and their money) are free to move elsewhere. 

You just THOUGHT you were having a tax holiday

About two months ago, we had a workplace visit from the good people at Homeland Security. 

In addition to keeping you safe from the people pissed off by 60 years of disastrous American foreign policy decisions, military bases, and armies of occupation, the Homeland Security folks are responsible for monitoring and regulating all the import tariffs and quotas. 

The U.S. tariff and import quotas are determined by the same mechanism as most legislation: through bribes. 

The Homeland Security munchkins (3 of them, one was actually flown in from California) were looking at our aluminum products.  If our aluminum extrusions (price tag holders) came in to the country attached to a shelf, we paid one tariff rate.  But if they were not attached to the shelf, we paid a different tariff rate. 

Yeah.  They flew someone from California to Texas to help clear up this matter of national security. 

Here's another example of the system.  Go here to see the FedEx spreadsheet for importing clocks.  Nobody remembers why clocks are imported according to certain rules.  Nobody cares.  The rules are there, and they create jobs for bureaucrats, and these bureaucrats make good donors and foot-soldiers during elections. 

Here's something about the assorted import taxes on your kids' clothing and school supplies.  You could purchase the stuff for less, but you have to support unnecessary bureaucrats instead of supporting the companies, services and friends that you would otherwise choose. 

The people who enforce this have to be paid.  The companies who bring stuff into our collective cage have to pay other people to keep the bureaucrats happy.  Totally wasteful. 

Think of the economic boost of bringing in EVERYTHING at 4%.  It would be amazing. 

The Tax Implications Of The X-Men Being Human Or Not Human

The X-Men are not human.  The courts have said so. 

Why would the courts care?

To enjoy this particular situation, one must be aware of the following:

1) Politicians are elected by selling exemptions to the tax code.  Sometimes these exemptions are in the form of exceptions to tariff and quota rules.  Sometimes a rule is put in place to punish a competitor.  

2) This is why our tax code is four million words long, and growing by the day.    

3) Efficiency is good.  Inefficiency is bad.  If all merchandise came into the United States at the same tax/tariff rate, we could eliminate tens of thousands of government jobs and the godawful pensions that go with them. 

4) These wasteful "jobs" will never be eliminated.  There will always be an organized groups for exemptions in their medical device / green energy / children with cooties / American flag / Bibles For The Troops / javelin / coffin handle / Scrabble tile-manufacturing industries.  These groups are more organized than you.  They'll get their exemption, and you'll be taxed to supply enough bureaucrats, lawyers and courts to keep the rules sorted out. 

Now that my preliminary throat-clearing is out of the way, here goes:  

 Toy Biz v. United States was a 2003 decision in the United States Court of International Trade that determined that for purposes of tariffs, Toy Biz's action figures were toys, not dolls, because they represented "nonhuman creatures." This decision effectively reduced the tariff rate by a factor of two.


U.S. law distinguishes between two types of action figures for determining tariffs: dolls, which are defined to include human figures, and toys, which include "nonhuman creatures". Because duties on dolls were higher than on toys, Marvel Comics subsidiary Toy Biz argued before the U.S. Court of International Trade, that their action figures (including the X-Men and Fantastic Four) represented "nonhuman creatures" and were subject to the lower tariff rates for toys instead of the higher ones for dolls. On January 3, 2003, after examining more than 60 action figures, Judge Judith Barzilay ruled in their favor, granting Toy Biz reimbursement for import taxes on previous toys.

To summarize, the taxes on imported (human) dolls are lower than the taxes on imported (non-human) toys.  There's no reason for this distinction, and it would take a dozen Library Of Congress employees to figure out which politician put the distinction in place.  The donor he did it for is probably long-dead. 

It took almost ten years and hundreds of thousands (if not millions) of dollars in expenses to make this toy vs. doll distinction.

Here's just part of one logic behind one of the official rulings.  Go here for the whole thing.  If you can read this without praying for a nuclear strike on D.C., you're not part of the 49% who pay taxes.  

It is Customs position that the intent of the committees in reaching this conclusion is to deny the doll classification to those figures which possess non-human characteristics that are immediately apparent to the casual observer. Where the non-human feature(s) can only be discovered by close examination, the doll classification may be appropriate. The phrase "close examination" may encompass the need to look closely, the need to remove the clothes of the figure, or perhaps even the need of the observer to guess as to whether a feature that appears to be non-human is, in actuality, such a feature. Most angels and devils possess readily apparent non-human features, i.e., halos, large wings, visible horns, pointed tails, etc. -6-


However, if a figure is marketed as an angel or devil, and yet appears human to the casual observer, then, again, the doll classification may be appropriate.

In HRLs 081201 and 089895, issued October 3, 1988 and November 4, 1991, respectively, we classified certain troll figures that were described, in pertinent part, as being pot- bellied, flesh-colored, erect-standing figures, having flat heads with virtually no foreheads, pointed ears, and large, upturned snouts. We noted the guidance provided by the EN, that dolls should "represent" human beings, and cited Webster's Third New International Dictionary (1961), which defines "represent" as meaning "to portray by pictorial, plastic, or musical art: delineate, depict...to serve as the counterpart or image of: typify." In each case, we held that, while certain troll figures may have "resembled" human beings to some extent, it was immediately apparent to the casual observer that the subject figures did not "represent" humans, but rather represented widely recognized non-human creatures, i.e., trolls.

In HRL 085855, issued August 9, 1990, this office affirmed the doll classification of a "Beetlejuice" figure, which represented the ghost character from a popular movie and television show. The doll featured characteristics claimed to be non-human, but which could only be discovered by close examination. We stated that "[i]n order not to be classified as dolls, figures representing...other creatures, must possess appendages and features which immediately, at first glance, identify them as non-human."

Looking to the figures that have been classified as dolls in this case, we note that in most instances, the patent distortions essentially consist of such features as odd skin color, intricate headgear, capes which bear resemblance to wings, weaponry that is uniquely attached to, but is not an integral part of, the body, etc. As noted above, when a figure's non-human features can only be discovered by close examination, the doll classification may be appropriate.

Come quickly, Lord Jesus.  Come quickly. 

This brings us to the related case of Kamar Int’l v. United States, 10 C.I.T. 658 (Ct. Int’l Trade 1986).

That case dealt with whether E.T. the Extraterrestrial dolls represented an “animate” object, which would result in a lower tax rate than for toys in general (the customs classifications have changed a lot over the years, apparently). The Court of International Trade agreed with the plaintiff, despite the United States’ arguments that E.T. was a fictional alien and thus not an animate object. The Court cited as precedent the classification of Star Wars toys as toy figures of animate objects because “as depicted in the movie Star Wars they are living beings endowed with animal life.” Kamar, 10 C.I.T. at 661.

I don't believe that the E.T. case should have been argued as Dolls vs. Toys. 
Dolls vs. some other type of toy woulda been the appropriate discussion. 

A ruling on the tariffs of Canadian sundials and birdbaths

I hope we can agree on the following statements.

1) The most fair trade of all is free trade.  All fair trade is free, and vice-versa.  If a certain industry or product line gets an exemption, the trade is no longer "fair".
2) Protecting industries from foreign competition merely rewards industry owners.  The net harm to purchasers is greater than the net gain by fat cats and their employees.
3) Congress gets itself elected by selling exemptions to the tax code.  Some of these are to reward contributors, while others are put in place to punish competitors.  Many of these exemptions can still be found, long after the original bribes contributions were paid, lingering around in the U.S. Harmonized Tariff Schedule.  Nobody remembers why hamster wheels have a different import tariff rate than coffin handles.  You could turn a team of librarians loose in the Congressional Record for years, and they would fail to discover why javelins and jump ropes enter the country at different tax rates.

Go here and behold some of the tiny subdivisions that these Civil Service Lifers have invented to keep themselves busy and their contributors happy.  Can you imagine any rational excuse for Canadian sundials and Canadian birdbaths to be taxed at a different rate?

This is just one of the hundreds of thousands of queries and rulings that government trolls, hobbits, pygmies and elves churn out every day.  Enjoy.  And then lobby for a flat tariff.  1.5% should work nicely.  Think of the labor savings.  First person to lobby for an exemption gets crucified on the 50 yard line during the next Super Bowl halftime.

******

December 3, 1993

CLA-2-83:S:N:N3:113 892510

CATEGORY: CLASSIFICATION

TARIFF NO.: 8306.29.0000; 9403.20.0010

Ms. Patricia A. Bielaski
Tower Group International, Inc.
128 Dearborn Street
Buffalo, NY 14207-3198

RE: The tariff classification of sundials, plant stands and birdbaths from Canada

Dear Ms. Bielaski:

In your letter dated November 16, 1993, on behalf of Metalcraft Spinning and Stamping, Ltd., you requested a tariff classification ruling.

The merchandise consists of painted aluminum articles on pedestal bases that will be displayed primarily on lawns and in gardens. Three samples were submitted with your request. One is a green sundial measuring approximately 21 inches high with an 11-inch diameter top and a 9-inch diameter base. The sundial is clearly ornamental in nature. The other two samples are plant stands which can be used inside or outside the home. They are designed to rest upon a floor or lawn, and meet the definition of furniture for classification purposes. One stand is green and the other is white. Both measure approximately 27 inches high with a 15 1/2-inch diameter top and a 12-inch diameter base. The plant stand can also function outdoors as a birdbath.

The applicable subheading for the sundial will be 8306.29.0000, Harmonized Tariff Schedule of the United States (HTS), which provides for statuettes and other ornaments, of base metal. The rate of duty will be 5 percent ad valorem.

Goods classifiable under subheading 8306.29.0000, which have originated in the territory of Canada, will be entitled to a 2.5 rate of duty under the United States-Canada Free Trade Agreement (FTA) upon compliance with all applicable regulations.

The applicable subheading for the plant stand and birdbath will be 9403.20.0010, Harmonized Tariff Schedule of the United States (HTS), which provides for other metal furniture, household. The rate of duty will be 4 percent ad valorem. Goods classifiable under subheading 9403.20.0010, HTS, which have originated in the territory of Canada, will be entitled to a free rate of duty under the United States-Canada Free Trade Agreement (FTA) upon compliance with all applicable regulations.

This ruling is being issued under the provisions of Section 177 of the Customs Regulations (19 C.F.R. 177).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is imported. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

Jean F. Maguire
Area Director

*******

We are paying people to interpret this shit.
Have a good weekend!!

Robert Reich is a racist

Robert Reich was Secretary of Labor in the Clinton administration. 

As best I can tell from his Wikipedia entry, he's never done anything but teach school, practice law, or help screw up the country as a government employee.  I don't think he's ever manufactured anything but regulatory burdens. 

Reich recently came up with a list of things that The Teleprompter Jesus could do to create jobs.  Half of the suggestions were the standard "give employers a tax credit for doing things that their Lords And Masters like".  The other half were the standard "take money from one group that I don't necessarily like (rich people, unborn fetuses, banks, etc.) and give it to another group". 

But the tenth proposal perfectly reflects the lunacy to which we've all descended, and that's the one that got my blood boiling.  Here goes:

10. Impose a "severance fee" on any large business that lays off an American worker and outsources the job abroad.

Before I unload on this Statist sonofabitch, let me get in some full disclosure.  I'm proud to work for an American manufacturer.  We make things in the United States, which, considering the regulatory environment, is just about impossible.  We also outsource some work to China.  We're warehousing some stuff in Canada.  We're about to get something big going with a manufacturer in Brazil. 

But in addition to bringing things in from other places, I routinely ship our American-made (and outsourced) products to stores all over the world.  Before my vacation this past week, we loaded out 5 full-sized shipping containers of freakin' fruitstands to Chile.  Yeah.  Fruitstands.  You can make fruitstands anywhere, but people in Chile like ours.  So do our customers in Mexico, Canada and Colombia.  "Trade" works both ways. 

Before we started bringing some of the simpler products in from China, our company had 300 employees in the United States.  And less than a decade after "outsourcing these jobs", in Reich's phrase, to China, we had....

600 employees. 

Yep.  We started making some things in China and this allowed us to double our U.S. workforce.  (We've cut back to around 500 since our peak a couple of years ago, but then, there's a madman in the White House.) 

To what degree should we be punished?  And who will decide how much we should have to pay for sending work to Chinese People and then hiring more American People in the United States as a result of our increased efficiency? 

Let's get to the next bit o' goofiness in Reich's proposal...   I once spent a phenomenally dull Spring welding these weld nuts into 7 3/4 lengths of steel tube. 

Before long, we had doubled the size of our metal shop, and instead of 4 employees, we had 8.  Somebody else welded those things into the steel tubes.  Then 3 people welded them.   

Next thing you know, we've got 3 shifts and 90 people working in our metal shop.  We don't have room to breathe. 

But at the same time, customers decided that they didn't want any more weld nuts tacked into 7 3/4 lengths of steel tube.  Instead of 3 people welding the things, we cut back to just one person doing the job.  Then, for a brief period of time, we occasionally set up a robotic welder to do it. 

Now we order a couple of thousand of the things from China a couple of times a year. 

How is the law firm of Reich, Rodham, and Reid going to determine what "severance fee" we should pay?  And to whom?  Especially since the metal shop has grown to 150 employees since we sent the simpler stuff to China and since no one purchases enough of them to keep an American busy full-time? 

I bet Uncle Sam would have to hire 5 Regulatory Gremlins to monitor our company alone, which is probably the goal of Reich's proposal.  Who knows.  Moving on....

Let's assume that we're succesful in our attempt at manufacturing fruitstands in Brazil.  Let's also assume that Robert Reich persuades The Teleprompter Jesus to slap a "severance fee" on any company that manufactures anything overseas. 

Do you really think that our customers in China, Colombia, Chile, Canada and Mexico will be able to continue ordering things from me at the same price?  Or will their governments turn around and slap a "severance fee" of some sort on manufacturers who purchase my component parts and complete products?

Remember, Robert Reich was educated/indoctrinated at Oxford and Yale.  He's one of the brightest and best.  God help us all. 

Next, put yourself in a company owner's position.  If there was even a remote chance that a new product could be made in China, would you ever consider making it in the U.S. if doing so meant you might one day be required to pay a "severance fee"? 

Hell no, you wouldn't. 

You would keep your U.S. workforce on your old product line.  The new product would be made exclusively in China from Day One so no one at Reich, Rodham, and Reid could ever accuse you of laying off someone and sending that job to China.  

Finally, let's get to the racial issue.  We recently put up a new Martin Luther King Memorial on the National Mall in D.C.  Here's a quote from the base of the statue:

"our loyalties must transcend our race, our tribe, our class, and our nation; and this means we must develop a world perspective."

Yeah.  What King said. 

I don't give a rip about the lines of latitude and longitude where something is manufactured.  Robert Reich wants to take that into account when HE decides what HE will allow in and out of what HE thinks of as our little cage.

I don't care about the nationality of the people my employer sells to, or the arbitrary borders on a map that show where they were born.  The ones I've met have been good folks, almost without exception.  I can say the same thing about the people oversease who we purchase from.  Robert Reich thinks that nationality matters more than "the content of their character".   

I don't give a rip about the skin color of the people making my fruitstands.  Robert Reich appears to be obsessed with it.  I wonder if Reich is disturbed that the MLK statue was outsourced to a Chinese dude....

I see no other explanation than to say that I believe Robert Reich is a racist of the worst possible sort.  (And an economic idiot.)  

Hell, let's put tariffs in place between Fort Worth and Dallas

Don Boudreaux, economics professor at George Mason University, reminds me of an abusive husband.
Every morning of his life, he gets out of bed, takes a shower, eats some breakfast, brushes his teeth, and then kicks the living snot out of New York Times economics columnist Paul Krugman.

In his New Year’s Day column, Paul Krugman argues that protectionism can create jobs in times of unemployment. (Lots of other problems plague this column, by the way.)

If Krugman is correct, why stop at national borders? Just think how many jobs Congress could create by encouraging states to erect their own tariff walls? High-taxing and heavily regulating states would then be able to protect their workers from states with lower taxes and less-burdensome regulations. California wineries would never again lose market share to rivals in Oregon and Washington state. Michigan autoworkers would never again be displaced from their jobs by workers in Tennessee and South Carolina.

Here comes Boudreaux's Karate Kid Crane Kick:

Given Krugman’s assumption that restricting consumers’ freedom to make cross-border purchases increases the total number of jobs in economies suffering unemployment, why let all those borders between Maine and California go to waste? Turn those borders, too, into barriers to trade and watch American employment skyrocket!

Go here for another excellent post called "Nation's Don't Trade With Each Other: Individuals Do".

If that's not enough, go here, and read Fabulous Freddy Bastiat's idea for an un-railroad. (First published in 1845, BTW.) This is a railroad that would allow cheap and easy transportation between countries, so they could enjoy the benefits of each other's strengths. But the railroad would be closed in all places where it would hurt local inefficient producers. (This would create and save jobs ! ! ! !) In other words, the railroad would be closed in all the places where it was most needed.

Tariffs serve no purpose but to negate the gains provided to society by technology, labor, ingenuity, determination and progress.

You read something like this, and wonder how Paul Krugman ever won a Nobel Prize.
Oh.... Never mind.

The Fedex imported clock worksheet

From The Coyote Blog:

This is the information that Fedex is required to collect before bringing certain types of clocks into the U.S.
The Feds NEED this info.
You know why?

Here's Mr. Coyote, explaining why Fedex had to track him down and cross-examine him before releasing the shipment:

This would be one of the dumbest things I have seen from the government had it not been for the egg licenses I have to hold. This data was probably critical for some program pushed through by a Senator to protect some business in his district that does not even exist any more. I wonder if anyone in the government even remembers why this data is so vital (seriously, per question 11, how many wind-up clocks are coming through customs nowadays). Probably part of a program to protect America’s essential capacity to manufacture clock movements over 12mm in thickness.

If you think this is a waste of time, dive into the lunacy known as the garment industry. There are tens of thousands of quotas, guidelines, and point of origin notifications. Many of these are based on the designs and styles, each with a different tariff.
The point of all this is to keep you from getting what you want at the best price possible.
It really is that simple.