Free? or Free and Fair

03-11-2018Fr. John LettersFr. John Bonavitacola

Dear Friends,

Trade, tariffs and tirades. International trade is definitely not my forte, nor do I pay much attention to it. But my curiosity peaked when, after the President declared he would impose tariffs on imports of steel and aluminum, heads started popping off, editorial writers with hair on fire declared the apocalypse. The reaction was sure and swift. According to some, there is no greater sin that a president can commit than imposing tariffs. But why?

Here's my take on it, though I am sure it is overly simplistic. There are those who support free trade and among them are most Corporations, Wall Street Investors and almost all elected Republicans. Then there are those who support free and fair trade and among them are obviously the President and the Steel and Aluminum Industry, Labor Unions and many elected Democrats. Now the Free Trade group is pretty vehement that trade cannot be fair. Therefore, when a country imposes tariffs on US goods any retaliation in kind is unacceptable. However, they never explain why we should accept being treated unfairly.  The point they make again and again is that by reacting in kind, as the President has done, the cost of US goods will rise and the economy will be irreparably harmed. So, the soda and beer can will cost more, cars, houses as will anything even tangentially related to steel or aluminum. In other words, the US consumer will pay more. Something apparently, that Americans detest more than an internet outage.

Those on the Free and Fair Trade side argue, that, well, fair is fair. If a country imposes tariffs on the importation of US good or subsidizes various industries they are engaged in unfair trade practices. They also claim that tariffs will help US industries and workers by creating a more even playing field. So, what if we pay more for goods? The Free and Fair Trade side points out that the importation of low cost steel and aluminum decimated the US Steel Mills. The Free Trade side points out that this is just economic Darwinism. Besides, they say, that purchasing low cost goods from another country still helps the economy in that country (trickle down economics).

Now here is the crux of the matter, which has moral implications. Our economy is consumer based. Therefore, its flourishing depends on the increased allocation of goods. The more we buy the better things are economically. And the ability to buy more goods greatly depends on low cost goods. And low-cost goods depend on low cost labor. This is why when you look at where a low cost product comes from it tends to be countries that pay their workers very low wages.

Yet, here in the US we rail against the idea of low wages. Consider the push to raise the minimum wage to $15/hour. We even passed a Voter Proposition in Arizona last year which incrementally raises the minimum wage. The higher the wage and benefits the higher will be the cost of the goods or services we purchase. Here is the moral consideration: why are we okay with purchasing low cost foreign imported goods knowing that the workers who made them are being paid a wage they can barely subsist on? Yet at the same time, we would not be okay with US workers being paid the same. It sounds like economic hypocrisy.

The fact of low cost goods and low-cost labor is really the ugly underside of a consumer economy. This is an issue that Pope Francis rails against frequently. While he is not proposing replacing capitalism with socialism, he is asking us to consider the effects of our economic behavior on laborers in much less economically developed countries.

The imposition of tariffs is clearly a hot button issue and my Economics 101 understanding hardly does it justice. But we can all take time during Lent to consider what economic choices we make and what moral implications they have both here and abroad. Being a good steward of your treasure means a lot more than knowing when to swipe and not swipe!


Fr. John B.