Topic: SUPR: Why Tariffs?

Vikram Ambani

Date: 2008-01-12 16:02 EST
Why Tariffs" An examination of the effects of ad velorum taxes on imported goods Social Unity Party of Rhydin Official

There has recently been a great deal of controversy surrounding the Social Unity Party of Rhydin's intent, upon election, to levy taxes on the import of goods from other nations. People are concerned about this. Will that make goods more expensive" Will people will lose their jobs" These questions are understandable; never in the history of Rhydin has such a plan been made. This pamphlet ought to answer your concerns about what exactly we are planning to do, what we hope it will accomplish, and what the consequences would be.

Q: What is an ad velorum tariff" A: An ad velorum tariff is a tax placed on imported goods. Everyone who brings a finished good from another nation and sells it to someone here - be it a bag of flour, an iron tool, or even an industrial machine like a cotton engine - will have to pay a tax of 8 percent of the cost of the product. For example, if somebody sells you 10 pounds of apples from Thalassia and you pay 25 silver crowns, he would have to give two of those silver crowns to the government.

Q: So if he's only getting 23 silvers for 25 silvers worth of stuff, why would he ever sell here" A: Because he would raise the price to 27 silvers, so as to keep the same amount of income from the sale.

Q: But nobody would buy his apples. I mean, an apple is an apple is an apple, and if 10 pounds of them usually costs 25 silvers but this foreigner's costs 27, why would he even come to do business here" A: Because everybody else's prices will increase, too - though not quite as much. Most likely by four or five percent.

Q: Wait a minute, wait a minute. So everything gets more expensive" How could this possibly be a good idea" A: There are two reasons, the long reason and the short reason. The short reason is simple - this is a way for the government to gain revenue without imposing a complicated income tax structure. It would be easy to understand and easy to enforce, and it would give the government the money that it needs to strengthen the Watch and improve the city's public education. It would also encourage industrial self-reliance, which is useful in case of international crises - if another nation gets in trouble, it won't affect us as much.

Q: Alright, fair enough. So what?s the long reason" A: The long reason has to do with something called the velocity of money. Imagine that you have 100 spare silver crowns. You go out and buy yourself, say, some new clothes. Now you've spent 100 crowns on something you wanted, and your tailor has the 100 crowns. He saves 10 of them and spends the rest on coffee. He's now richer in terms of real things by 90 crowns, and the coffee seller is 90 crowns richer. He saves 10 percent of that, and spends the other 81 crowns. The next person spends 73, and then 66, and then 60, and then 54, and so on. By the time the last person doesn't even have a whole silver crown, there have been 45 transactions, with a total value of 992 silver crowns. Think about it! All that money has been generated by the first expenditure.

Q: Well, that's cool, but what does that have to do with tariffs" A: By raising the price of foreign goods, we increase the demand for native goods. If any of those 45 people had spent their money on a foreign good, then the profits of that sale would have vanished out of the system, and all that money would be rattling around far away from our community - and the chance that you or anybody you know would get a piece of it is slim to nil.

Q: So how specifically are you justifying putting up tariffs" A: A tax on foreign goods will lead to their prices increasing. This will increase the demand for native goods, since their prices will be lower than competing foreign goods. This will mean higher sales and thus higher profits for local producers and business owners, which means that local workers will have room to negotiate higher wages. Higher wages means more money to spend on goods - and while prices will go up, income will increase faster due to the increased capital in the system. The math checks out. This all means that the growth rate of the economy will increase. And the money which is spent on foreign goods will partially flow into the hands of the government, which can then spend it on things like salaries, facilities, and equipment for the Watch, construction of roads and bridges, and the entire apparatus of public education - which, again, is better for everyone.

Q: Who wouldn't benefit from the tariffs" A: Importers of foreign goods won't benefit, for obvious reasons. Other than that, literally everybody here would benefit due to the increased flow of capital. Not only will Rhydin be a much more attractive market for its own goods, but we will be able to do increased business as a vendor to foreign nations, this increasing our mutual wealth even more.

So now you know! Now that you see what tariffs will do for our society, it's time to make the decision - is this really something Rhydin can afford to miss out on?

Remember: Only Anastas Iskandorj and the SUPR will protect local businesses, ensure the growth of local capital, and improve public welfare!

Only they will make sure that tomorrow belongs to everybody!

The Power of Grayskull

Date: 2008-01-12 17:06 EST
Several pamphlets have been passed around, mostly in the marketplace, featuring a detailed examination of SUPR political rhetoric. A typical example is as follows:

The Social Unity Party of Rhy'Din suggests that their plan for import-tarrifs will lead to a boost in our economy. Their belief is that import-tarrifs will infuse the economy with a greater amount of coinage, and that this will, in turn, mean a greater standard of living for all.

This is, of course, quite fallacious, as we will hope to show you in the following deconstruction.

SUPR SAYS: An ad velorum tariff is a tax placed on imported goods. Everyone who brings a finished good from another nation and sells it to someone here - be it a bag of flour, an iron tool, or even an industrial machine like a cotton engine - will have to pay a tax of 8 percent of the cost of the product. For example, if somebody sells you 10 pounds of apples from Thalassia and you pay 25 silver crowns, he would have to give two of those silver crowns to the government.

Q: So if he's only getting 23 silvers for 25 silvers worth of stuff, why would he ever sell here" A: Because he would raise the price to 27 silvers, so as to keep the same amount of income from the sale.

Q: But nobody would buy his apples. I mean, an apple is an apple is an apple, and if 10 pounds of them usually costs 25 silvers but this foreigner's costs 27, why would he even come to do business here" A: Because everybody else's prices will increase, too - though not quite as much. Most likely by four or five percent.

And this increase in prices will be across the board for all Rhy'Din citizens. The tarrifs will force the prices of all products to increase, especially for imported goods. Those two extra silvers will be coming out of the pockets of the average citizen as prices are raised across the board.

How is this a good thing" What explanation does SUPR give" Why the explanation of money as being magically created through a misunderstanding of basic mathematics, as will be discussed shortly.

SUPR SAYS: Q: Wait a minute, wait a minute. So everything gets more expensive" How could this possibly be a good idea" A: There are two reasons, the long reason and the short reason. The short reason is simple - this is a way for the government to gain revenue without imposing a complicated income tax structure.

This of course suffers from a false premise to begin with. The tax structure of Rhy'Din is already in place, and the government's average budget income due to taxes is more than high enough to fund the city's various endeavors. The question is a matter of budgeting that money correctly, not forcing an increase that will fill the coffers of and already bloated system.

The solution is not to squeeze more money out of the citizens of Rhy'Din, but to better apply the money already being taxed.

Now let's talk about math. Fun, right"

SUPR SAYS: Q: Alright, fair enough. So what?s the long reason" A: The long reason has to do with something called the velocity of money. Imagine that you have 100 spare silver crowns. You go out and buy yourself, say, some new clothes. Now you've spent 100 crowns on something you wanted, and your tailor has the 100 crowns. He saves 10 of them and spends the rest on coffee. He's now richer in terms of real things by 90 crowns, and the coffee seller is 90 crowns richer. He saves 10 percent of that, and spends the other 81 crowns. The next person spends 73, and then 66, and then 60, and then 54, and so on. By the time the last person doesn't even have a whole silver crown, there have been 45 transactions, with a total value of 992 silver crowns. Think about it! All that money has been generated by the first expenditure.

Here SUPR really sinks their teeth into political doublespeak, attempting to confuse readers with numbers. According to their "calculations" a total of 992 silver crowns were spent in this scenario.

But if I have ten apples, and I give you nine, and you give a friend eight, and he gives a friend seven, and so forth and so on until each person has but one apple, how many apples were exchanged"

Ten. Not fifty-five.

The amount of money exchanging hands does not equal a spontaneous creation of more money into the economy. That 100 silver is still 100 silver, regardless of how many times it exchanges hands. Don't be fooled by tricky wordplay.

Coins, let's recall, are a symbolic representation of value. Coins allow a barter economy to evolve to the point where I can still get medicine for my daughter by selling milk from my cows, even if no one wishes to directly trade medication for milk. The coins themselves have only a little intrinsic value, and adding tarrifs actually lowers that value significantly. It's what they represent that is the value, and inflating prices artificially through tarriffs means each coin is worth that much less.

SUPR SAYS Q: Well, that's cool, but what does that have to do with tariffs" A: By raising the price of foreign goods, we increase the demand for native goods. If any of those 45 people had spent their money on a foreign good, then the profits of that sale would have vanished out of the system, and all that money would be rattling around far away from our community - and the chance that you or anybody you know would get a piece of it is slim to nil.

There are two major problems with this premise.

The first is that there are a plethora of goods that are not produces in Rhy'Din to begin with. Exotic teas, spices, and liquors alone make up a huge percentage of import incomes. Rhy'Din is a city full of individuals from thousands of different places, each with their own unique tastes and desires. A very large amount of their purchases are from imported goods that simply cannot be produced locally.

These goods will raise in prices dramatically or cease to be sold altogether as importers realize the costs of selling their products in Rhy'Din outweigh their potential profits, and with no local goods to balance the equation, these already expensive goods will have their prices further artificially inflated.

The second problem is that the import business is a thriving one in Rhy'Din. The dockside holdings of our city's major corporations specialize in importing and exporting goods. The economy of Rhy'Din is one that depends on outside sources to help breed strong economic strength. Rhy'Din is not a factory city. It is not a country of farmland. Rhy'Din is a city whose main income comes from being a hub of trade for a thousand different countries across a thousand different realities.

Who will grow the local apples that SUPR believes will compete with imported ones" Where are the massive apple groves that will produce these goods" They don't exist in the city, that's for certain.

SUPR appears to be under the impression that Rhy'Din should be a city of manufacture and industry, not one of bountiful trade.

What else do they have to say"

SUPR SAYS: Q: So how specifically are you justifying putting up tariffs" A: A tax on foreign goods will lead to their prices increasing. This will increase the demand for native goods, since their prices will be lower than competing foreign goods.

Again, SUPR fails to ask who will be creating these native goods. What farmlands will grow these crops" What factories will manufacture these goods"

SUPR SAYS This will mean higher sales and thus higher profits for local producers and business owners, which means that local workers will have room to negotiate higher wages.

And what of our local importers" What of the dock workers whose jobs depend on a constant influx of new products" What of the warehouse managers who hold the stocks of goods" What of the shippers who bring us goods from across the seas and across the stars" All of these are members of our local economy, and all will suffer from import tarriffs.

And what good will those higher wages do you if the cost of every item is increased" If you get paid 5% more silver but every item you wish to purchase costs 10% more silver, how are you profiting off of this scheme"

All SUPR is offering you is inflation. Inflation in the amount of money you get paid, but inflation in the amount of money you are forced to spend, as well. And all of this while crippling the most important aspect of Rhy'Din's economy: its foreign trade.

SUPR SAYS: Higher wages means more money to spend on goods - and while prices will go up, income will increase faster due to the increased capital in the system.

Except, as we've said, that capital does not really exist. Smoke and mirrors, friends.

SUPR SAYS: The math checks out. This all means that the growth rate of the economy will increase. And the money which is spent on foreign goods will partially flow into the hands of the government, which can then spend it on things like salaries, facilities, and equipment for the Watch, construction of roads and bridges, and the entire apparatus of public education - which, again, is better for everyone.

All of this without addressing the much more pressing concern of where our tax money goes in the first place. What good is it to throw more money at a system that is already overflowing with it' Do we really need a zoo filled with "extinct" species that no one has ever actually seen" Do we really need the Watch to waste manpower and time spending twenty of their members out to deal with a solitary young boy with a BB-gun"

The problem is not a lack of funds. The problem is a misappropriation of those funds, and this is something SUPR has continuously ignored.

SUPR SAYS:

Q: Who wouldn't benefit from the tariffs" A: Importers of foreign goods won't benefit, for obvious reasons. Other than that, literally everybody here would benefit due to the increased flow of capital. Not only will Rhydin be a much more attractive market for its own goods, but we will be able to do increased business as a vendor to foreign nations, this increasing our mutual wealth even more.

SUPR fails to mention that Import Trades are one of the backbones of the Rhy'Din economy. They fail to mention the dockworkers, shipping crews, warehouse owners, and local general stores that sell these goods.

They fail to mention the likely response foreign governments will make to an import tarrif on our parts: their own tarrifs for trading with them. They fail to mention the loss in goodwill from around the thousands of cities and worlds that Rhy'Din trades with every day.

They fail to mention the lack of an industrial epicenter in our city, and the inability of Rhy'Din to produce thousands of the goods it imports from other cities every day.

Where is Rhy'Din's steel mill" Oh, it doesn't exist' Well then where are Rhy'Din's cornfields" Oh, those don't exist either" What of Rhy'Din's silks or spice production' Extremely limited, you say?

Rhy'Din is a beautiful city, one of thriving trade and commerce. We are the hub of the multiverse, a port of call for millions of traders across a thousand cosmoses. Crippling our ability to engage in foreign trade hurts everyone.

The blacksmith who forges his arms and armor needs his steel and iron imported from mines hundreds of miles away. The store owner selling groceries purchases his apples from foreign orchards. The spinstress creating dazzling clothing does so with silks imported from beyond the stars. Even the simple bartender makes his money by selling exotic drinks, liquors, and teas from a hundred different locales.

Do not be swayed by simplistic ideas hidden inside numbers and wordplay meant to confuse. SUPR's plan is one of smoke and mirrors, one that's meant to lull our trusting citizenry into believing they will be living better lives, when in fact all it will do is create the illusion of wealth - just long enough for them to hungry.

This election day, tell SUPR that you're not so easily swayed. Vote for a candidate who understands how our economy works, and one who will solve the city's problems with action, not doublespeak.

——-

This pamphlet was paid for by the Power of Grayskull committee to elect Wolvinator for Governor, in association with the Rhy'Din Citizens for Truth.

Wolvinator 2008: Unbreakable.

Vikram Ambani

Date: 2008-01-12 18:08 EST
The following reply is given in the form of a speech, handed out to multiple party apparats and read out-loud in convenient places. At least, this is part of the speech . . .

" . . . The example given is one of apples, which is the same one that the author of our original literature used. If A gives B 10 apples, and B gives C 9 of them, and C gives D 8 of them, and so on, well, it always does equal 10 apples.

But that's not a correct understanding of what?s going on here, because you're not doing anything with the apples. If some friends and I were simply handing money back and forth without getting anything in exchange, then that would be true.

But we're not just handing them back and forth - we're exchanging them for goods and services. If I spent 100 crowns on something from you, and you spend that same 100 crowns on something from the person next to you, then it is a fact that 200 crowns worth of goods and services have been exchanged. Velocity of money is not political doubletalk - it's economic reality, something that Mr. Wolvinator and his party have proven that they do not understand. Who are your advisors, Mr. Wolvinator" Who told you that capital does not exist' It's not something that you can hold in your hand, but to claim that it's all 'smoke and mirrors' proves that you have no business making economic policy.

Their characterization of our city as relying on 'import business' is also a false one. What the city actually does is it serves as an entrepot, as a warehouse point for international shipping lanes - rather than us buying services from foreigners (as we certainly don't purchase those goods that we move), the foreigners are buying the service of our port, bulk-breaking, and loading and unloading facilities. There is no contradiction here. The foreign conglomerates whose ships are in our port are not selling their goods to us - they are selling those goods to each other. This is not an initiative we plan to tax.

In short, it is not imports that pay, except for a very select few. Imports are what we pay for - they are how money is spent rather than how it is made.

. . . At the present, local industry and agriculture are severely underdeveloped. However, this does not mean that they must always be so - it is certainly within our power as a nation to develop these capacities. The economy of the entrepot is one that is entirely dependant on foreign powers to survive - we deserve a better and more secure fate than that. The soil around the city is fertile, the climate good, and fresh water plentiful - why shouldn't we develop agriculture" And all we need to develop industry are willing employees and capital - why shouldn't we raise factories, foundries, and mills" In short, what possible reason can be given not to diversify our city's economic portfolio"

. . . Wolvinator and his followers would have you believe that once elected, things will magically get better, without any costs or difficulties - he will go behind the scenes and fix everything. But when have you ever gotten something for nothing" For good or for ill, the SUPR has explicitly laid out what it plans to do upon election, even going so far as to print exact numbers. What have the others given you? Vague promises. Assurances that you deserve the best. Re-assurances that they will 'work with the people.' Ephermal pledges to give a 'good hard look' at the budget. It's not enough for me - is it really enough for you?"