Try to think of a country that elected a populist president: someone who wanted to boost manufacturing jobs, insists that domestically-sold products should be made domestically, and threatens to use tariffs to shut off foreign competition. How would that work out?
I am, of course, referring to President Cristina Kirchner of Argentina, not President Donald Trump.
It’s too soon for Trump to have implemented his economic plans, but we can see how Trumponomics will work by looking southwards to Argentina. It is a portent of the doom that awaits us.
Argentina instituted a 35% tariff on imports, exactly the same amount Trump has suggested. How did this turn out?President Kirchner pushed through laws mandating that certain items sold in Argentina must be made there. Presumably, if you try to sell a foreign made product at market value then the strong arm of the Argentine state will use violent force against you, including deadly force if necessary, similar to how Eric Garner was slain by the state for selling untaxed tobacco. That is the Trumponomics promise.
For one example, the Argentine law mandated that cell phones be built domestically. Imports faced a 35% tariff, exactly the same amount Trump has suggested would work for America. How did this turn out?
As should be a surprise to no one, Apple completely pulled out of Argentina. This doesn’t mean Argentines can’t have the latest Apple gadgets since, of course, banning something never makes it go away: agorist-supplied black market iPhones now go for the bargain price of $3,500.
But some cell phone makes stayed. Remember BlackBerry? It’s the company that remained on the cutting edge of 20th-century technology, supplying the highest end 1999’s era communications gadgets while Apple was rolling out the iPhone. This eidos of mediocrity saw a Trumpian opportunity to keep their beacon of failure burning brightly.
They opened a factory on the tip of South America near Antartica where the manufacturing cost was 20 times more expensive than Mexico. The Argentine factories were so slow and inefficient that the fastest they could get models out was two years behind the Mexican-made product line, making the black market BlackBerries from Mexico leaps and bounds better than what could be purchased legally.
Naturally, keeping the superios Mexican BlackBerries from crossing the Argentine border was about as ineffectual as keeping Mexican Marijuana from crossing the US border.
It’s worth noting at this point a hidden cost to society to enforce all this economic destruction: the border and customs agents. I’m sure the Argentine taxpayers were forced to fund an army of well-paid agents doing an ineffectual job at preventing Argentines from enjoying low cost Mexican electric goods!
Was the promise for more jobs fulfilled? In a word, no.Maybe I’m being unfair. The promise of Trumponomics isn’t lower cost goods. The promise is jobs. Did it live up to its promise in Argentina?
In a word: no.
With all the black market BlackBerries crossing the border, legal sales of the BlackBerry crashed until all the factories closed up. This happened within two years of the first Argentinian BlackBerry coming to market. The end result was higher prices, worse products, a lower standard of living, and massive job losses. So much for all those jobs the government promised!
So that’s Trumponomics in a nutshell: economic recession, unemployment, cell phones north of $1,000, and still no iPhones. But at least President Kirchner didn’t bankrupt Argentina by building a giant futile wall along its border.
Republished from Libertas.Liberty.Me.