On the Following Fair Taxation System(s).

Saying that the system "taxes rich and poor equitably" does not define what is fair. It begs the question. What is equitable? A Marxist would say that equitable means "from each according to his ability, to each according to his needs." Someone with libertarian leanings would say that it is inequitable to take wealth away from those who create it to subsidize people who create less. Pro characterizes my argument as "utilitarian." That is not an argument against it is being fair. I am arguing that a fair system does not waste the citizens' wealth. Note that Pro argues exactly that when he asserts with respect to the income tax that, "The main component of this taxation system would be the abolishment of the income tax. Historically, when you want less of something (pollution, imports) you tax them at a high rate. Why tax one's legal work? Do we want less people to work?" His only argument against the fairness of the present income tax system is that it is not utilitarian, and because of that it robs citizens of prosperity they could otherwise enjoy. Thus when criticizing the income tax he equates fairness with utilitarian efficiency, but when his own systems are held to exactly the same criteria, he rejects the argument as unsound. Pro offers no other measure of fairness or equity. Pro is correct that I agree System 1 or System 2 without his protective tariff would appear reasonable. So, yes, the drink without the poison might be palatable. However, he does not offer it up without the poison, so therefore it fails. a) Pro did not answer the argument that industries protected by tariffs become non-competitive. Pro claims that a protected industry would be competitive because foreign manufacturers would be allowed to produce domestically. Note that Toyota did not make Hindustani Motors competitive by setting up shop in India, nor have cars manufactured under protective tariffs in Russia or Taiwan ever become competitive. Overseas manufacturers are understandably reluctant to invest in protected economies, because they correctly understand that the whole purpose of protective tariffs is to prevent competition. Why invest in a country that demonstrates it does not tolerate competition, when the alternative is to invest in places that allow competition? Toyota only invested in US plants after they became established as a competitive player in the market. Moreover, the protected domestic producer has no incentive to reduce costs to be competitive on international markets. Thus if Japan had protected high prices for cars within Japan, Toyota would never have been able to compete overseas. That would have deprived Japan of the immense revenue from international trade. India did protect Hindustani Motors, and they never became an international competitor. b) Pro states that "It seems to me that if the North Carolinians can make X amount making textiles, and X + Y amount making pharmaceuticals, the economic choice is clear. My opponent's example is simply a case of foolish or uninformed economic practices." What Pro misses is that X includes the tariff protection money. Thus if A is the international price of textiles and B is the tariff support, X = A + B. Thus so long as X is greater than an alternative, the industry will not be abandoned. It should be abandoned when A is not competitive with respect to an alternative. For example, in the late 1980's the international price of sugar was four cents a pound. To keep the U.S. sugar industry competitive, tariffs were imposed to keep the price at 23 cents per pound. No alternative use generating less than the artificially inflated revenue could displace the labor-intensive cane sugar industry. Subsidies were phased out in the 90's. That ended the cane sugar industry in Hawaii, however beet sugar producers in Texas and elsewhere adapted to the competition. Land in Hawaii was then freed up for other uses; growing coffee being one use. Point is, if the government protects an industry with tariff subsidies, it will not be abandoned in favor of something truly competitive. c) "This is a simple way to get American companies like Proctor and Gamble to move their 31 plants in China to places like the same town where their headquarters is - Cincinnati. Import tariffs encourage US companies to pay US workers to make their products. This seems like a very good thing for US workers to me." It is very good thing for some workers. The result would be something like doubling or tripling the price of soap and household goods so that workers in Cincinnati can make non-competitive soap instead of participating in a competitive industry. However, every worker in the United States gets to pay double or triple the price for soap to support the non-competitive soap industry. That is bad for workers overall, and the alleged benefit is to keep a smaller number of workers stuck in jobs in an industry that has extremely growth potential. If you doubt that prices would double, simply compare prices in countries having protected industries, like agricultural products in Japan. Of course, P&G is an international company so only plants needed for U.S. production would be relocated. Note that in a protected industry, an alternative to paying local workers is to automate. Automation is not always an alternative. No one has yet invented a machine that will automatically stitch pantyhose together. However, it is mainly labor-intensive jobs that are exported, an many of them can be automated at the right price. China is now starting to feel competition from automation. Imagine how workers in Cincinnati paid high wages for menial work would fare. ******************* Pro asserts, "1) Exporting raw materials and importing finished goods makes no economic sense." This is false, because if it made no economic sense, it would not be common practice for profit-motivated companies. The economic sense derives from cheaper labor costs, unique technologies possessed by different countries, and the economies of scale in large operations. By Pro's argument, it should make no economic sense for Canada, a producer of aluminum, to ever import anything made of aluminum. It does make sense, because the small Canadian market cannot support the cost of design and the large scale manufacturing needed to compete economically in every market with the U.S. and Japan. The paradigm presented is also false. The notion is false that raw materials for a product all come from one place, are manufactured, and then are sold back to the place where the materials came from. For example, it is common for semiconductors produced in the US to be designed into products by companies in Japan, and manufactured in China using components from all over the world. the finished product is then distributed worldwide. I challenge Pro to cite a half-dozen products where all the raw materials come from the US, are manufactured overseas, and then shipped back to the U.S. Off hand, I cannot think of one. If Pro can think of any, the challenge is then to explain specifically why it makes no economic sense to do it the way it is done. As to Pro's model being the model for colonies, I challenge Pro to give current examples of this happening. Pro is proposing to cure a problem that does not exist. Actually, I don't think that was even the historical model. Colonies usually provided raw materials to the mother country, who then exported manufactured goods back to the colony. That was the model for the US back in colonial days. I have previously refuted Pro's assertion that Africa remains poor because they perform captive manufacturing. Pro has not responded to any of my refutations.