Tariffs and the Big Cheese

You may not have heard, but there was a debate between two political candidates last week and it could have a negative effect on public health. We have already felt part of the negative effects of inflation but at least one of the ideas could make it worse, tariffs. 

Let’s think about what a tariff really is. It’s like saying, if you want to sell a bike to a kid, first they have to give your parents money just because.

The countries faced with tariffs can do one of several things. First, they can say, “no thanks” and not sell us their goods. Remember, the only reason they could sell us their goods in the first place is because they were selling them cheaper (or it’s a better product) than our own manufacturers could sell it to us. So, we lose the cheaper or better goods and are stuck with our higher priced ones.

Second, they could say, “OK, we’ll pay your tariffs on chocolates, but you have to pay our tariffs on Chevy’s.” Everybody loses with higher prices because of money going to the respective governments who, of course, turn around and spend it on stuff the government likes and that drives up inflation. That scenario is likely for most countries because the leaders like to get the money.

Or they could suck it up, sell it to us, and pay the tariff because they are desperate—in effect saying “thank you sir, may I have another?” Again, it’s inflationary unless the government spends it to pay down the debt which is as unlikely as fresh city air.

So, tariffs are an inflation tax. If your wages don’t go up at the same time, you now are poorer. One of the effects of being poorer is that you must cut back on expenditures including those that affect health and safety.

For example, if people cut back on medications, they die. An NBER article said that if drug prices were to increase by $10, there would be a “sharp 33% increase in deaths from patients cutting back on costly medications for heart disease, hypertension, asthma, and diabetes.” But you say, there’s an easy fix for that, i.e., “Don’t let them charge that much.” Then we don’t get as many new medicines that would save more lives. There’s no free lunch there.

But people may also not go to doctors for regular check-ups, may buy less nutritious foods, may not be able to heat and cool their homes (which can cause health issues), and inflation in general can cause chronic stress resulting in mental health issues. 

One health issue may be having to drop a gym membership which particularly affects older people who are more likely to suffer from chronic diseases. Being sedentary “rachets up” cell damage resulting from inflammation and oxidative stress causing metabolism changes, fat gain, and loss of muscle which “makes you more vulnerable to disease.” 

In fact, exercise, “has the potential to prevent more premature deaths than any other single treatment, with none of the side effects of actual medication.”

The people who will most suffer from tariff taxes are people on fixed incomes—which includes a lot of older people and people in the bottom income levels. It won’t help any more than trying to buy their votes now knowing that they’ll pay much more later.

Right now, we’re (meaning the U.S.) are at the top of the food chain, the 500-pound gorilla, “the boss, the head man, the top dog, the big cheese, the head honcho…” (Richard stop with the Airplane quotes,). Oh, sorry. What that means is that we think we can just charge people to sell to us because we are such a rich country. As our debt rises, and countries don’t want to take a chance on helping us pay the vig (oh, you’re a mobster now), that may not last.

Back in 2001, Venezuela was the richest country on the South American continent. Then they had unrestrained public spending, and the state was siphoning money from private industry (also the way tariffs work). Consequence, inflation went up 800 percent. Today, people are fleeing the country or staying there rummaging through garbage left outside of shops. Deaths are increasing.

If there are countries and products that are actually dumping cheap goods on us, target them for tariffs. As to the debt, there is an old-fashioned way to solve it, stop spending so much.