by Charles Hugh Smith
Of Two Minds
The tariff sledgehammer has a role, but it’s a limited one.
There’s an inherent tension in State-Corporate Capitalism. Proponents of the free market hold that any state Industrial Policy will fail because the State cannot pick the winners and losers as effectively as The Market. Yet Corporate Capitalism continually lobbies the State to lower interest rates and taxes, weaken the currency to make corporate products cheaper in overseas markets, erect tariff / trade barriers against mercantilist global competitors, etc.
In other words, the State should butt out of the free market except when it serves our purposes.
The other source of inherent tension is the State’s responsibility for more than boosting private-sector profits. Enterprises have the luxury of focusing on one thing: boosting profits and “shareholder value.” Governments have responsibilities far broader than boosting profits–for example, national security, which has been gutted by de-industrialization and the wholesale transfer of supply chains overseas.