Quote:
Originally Posted by DudeImBetter
So Trump's tariffs suck because increased costs on goods are shifted to American consumers. Which I get and agree with.
But why then doesn't the same logic apply to a $15 minumum wage? Why doesn't the increased payroll cost translate into higher costs of goods? Or the offshoring of labor?
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Incorrect premise.
The extra costs to American citizens are just one negative effect, and a relatively minor one since the money is ultimately captured by the American government.
Much worse are the effects of reduced foreign trade. Both in the lost value of the things that are imported into the USA (often things the US isn't good at producing), and in the reduced exports to other countries as they retaliate against the US for higher tariffs.
Look at all the stuff around you. Much of it was probably imported. One common reaction to that is "why not replace this all with stuff made in America?" But think about it more: if we left it to the US to manufacture all of this basic, low-value stuff, a lot of the stuff simply wouldn't have penciled out to manufacture/sell in the first place; in a word, you would be much poorer. Latin America's development strategy through much of the 20th century was based on the idea of replacing imports with domestic production; this in part accounts for the region's lack of development.
Another way of looking at this is that if the US economy was entirely restructured to manufacture all of the cars we consume, clothes we wear, cheap trinkets we buy, then would it have had the extra capacity to create the iPhone, computers, new drugs and treatments, etc? Probably not. If our economy had ever moved away from manufacturing and into services, some significant portion of the technologies we use and enjoy everyday simply wouldn't exist.