From: orville%weyrich@uunet.uu.net (Orville R. Weyrich)
Subject: Re: Cash Prizes for Ideas on Saving U.S. Jobs
Reply-To: orville@weyrich.UUCP (Orville R. Weyrich)
Organization: Weyrich Computer Consulting
Date: Fri, 2 Oct 92 16:12:40 GMT

In article <1afjm1INNkmd@overload.lbl.gov> prem@prem.lbl.gov (Shirdi R. Prem) writes:
>In article <1992Sep30.151501.9522@informix.com> cshaver@informix.com (Craig Shaver) writes:
>>
>>I agree, if we can get the rest of the world to go along with our standards
>                    ########################################################
>>then we will be able to 'afford' some of the social programs the fluff 
>>heads want to force on business.
>>Craig Shaver  (cshaver@informix.com for now) (415)390-0654 (415)926-6407
>
>	__WHY__ should the rest of the world be made to go along with
>	U.S. standards ?? Does the U.S. always comply with the standards
>	in other nations ?? Or doesn't it have to, because it has bigger
>	guns ??

It is not likely that the world will ever all subscribe to the same value
system. Therefore our international economic policy must be designed to
work IN SPITE of trans-border divverences  in value  systems.

It is totally stupid to go to Japan and tell the Japanese that  they  need
to modify their trade practices so that we  can balance our trade deficit.

If the  Japanses [and others] don't have the same vision of what "fair trade
practices" are [they don't], we will just get our *ss kicked if we continue
to pursue "free trade".

On the  other hand, protectionist  reactions protect  inefficient local
industries, leading  to a lower standard of  living.

The best approach is one that the U.S. can  and should take unilatterally,
and  which gives the  best of both  free trade  and protectionism, with
little if  any  of the  faults of  each.

The  over-riding factor must  be that the U.S. must eliminate trade-deficits.
Whether they  are cause by unfair trade practices by other countries against
the U.S.  or by shoddy workmanship by overpaid  union  workers in the U.S.,
or whatever is irrelevant to the "PRIME DIRECTIVE", which is  to eliminate
trade deficits.

If  the goal is to eliminate trade deficits, then  a sliding-scale import
tax  is the best  tool, since it can be implemented unilatterally  and doesn't
depend on  our converting the Japanese [and other] value systems to  be the
same as our own.

The way it would  work is that it would start out as  a  1% tax on all  imports
[from anywhere]. Every 6 months that the trade deficit persists, increase the
tax by 1%. When the  deficit disappears, then every 6 months lower the import
tax by 1%. Put  all proceeds from the  tax into domestic programs designed to
make the U.S. labor force more competitive internationally.

The above could be refined -- the 1% tax delta and the 6 month feedback period
might  need  tweeking, and perhaps  a simple economic model could be  
developed that  would give smoother  control. The  model would not have to be
perfect -- anything  that shifts the tax  in generally  the right direction
would be an improvement.

One of the  important points is that the plan  would give a  much more stable
business  environment  and  eliminate a  lot  of the fear, uncertainty,
and doubt in this country. Although the exact tax  would not be predictable,
the  result [trade deficit will become vanishingly small and will be
consistently  stable] would be predictable. Also, if  the slew rate is
appropriately limited, the  economy would not suffer the shocks of
bang-bang congressional reversals on major  policies [[like the treatment
of capital gains].

The tax would not be "retallitory" to other countries "unfair trade practices"
but would  instead be  simply a  "we  WILL live within our means" and  not
spend more than we make policy.

The tax policy  would not preclude other diplomatic discussions with major
trading partners  like Japan. If such diplomatic discussions do turn out to
be successful,  the tax will vanish automatically. If  the discussions are
not successful, then the tax is an automatic fail-safe standby.


orville

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Orville R. Weyrich, Jr.                        Weyrich Computer Consulting
Certified Data Processor                     POB 5782, Scottsdale, AZ 85261
Certified Systems Professional                   Voice: (602) 391-0821
Certified Computer Programmer            Internet: orville%weyrich@uunet.uu.net
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Newsgroups: misc.jobs.misc