"the common claim that the reason some foreign country, currently China, can make things cheaper than we can is that their workers will work for less. "
I think a lot of people make the mistake you're pointing out, but other people might mean that *real* wages in China are much lower than in the US. You can get an hour of Chinese labor for a lot less "stuff" than you'd have to pay for an hour of US labor. What explains that and how would your explanation comfort the people making the objection?
Real wages in China are lower than real wages in the US because average productivity of US workers is higher than average productivity of Chinese workers.
Consider this. The price of a hair cut in India is lower in India than the price of a hair cut in the US (at exchange Rs/US$ rate) even though the productivity of hairdressers in both countries are the same. The difference is that the US has a lot more of high productivity workers as compared to India, and India has a lot of low productivity workers (unskilled farm workers, for instance) and fewer high skill workers (engineers, for example). Therefore the average productivity of US labor is much higher than the average productivity of Indian labor. Therefore, hairdressers make a lot less in real wages in India than they do in the US.
Low skilled jobs pay a lot more in the US than in India. That's so because there are a lot of high skilled workers in the US who produce a lot of stuff.
Right but why do barbers in India make less than barbers in the US? Is that because in the US, the employer (i.e. the barber shop owner) has to compete with employers of high-skill people to attract barbers?
It all boils down to opportunity cost of being a barber, whether in India or the US.
If US barbers made the same wages as Indian barbers, no one in the US would want to be a barber since they have other comparatively high wage options such as housekeeping or waiting tables, flipping burgers, etc. The demand for haircuts and the supply of barbers determine the wages -- high in the US and low in India.
Given that the per capita income in the US is an order of magnitude higher than in India, it is unremarkable that haircuts in the US costs an order of magnitude more here than in India.
Government policies reduce employment in a number of ways. Many hurt workers on the low value end especially.
I suggest that payroll taxes are a tax on labor. They make labor more expensive to the employer. They reduce labor’s marginal value, particularly on the low end, where the margins are thinner.
However, I have a problem with your ending “A second reason is that the trade war model, tariffs as a weapon… It also explains the pattern of trade negotiations. It seems odd for countries to bargain over each agreeing to stop hurting itself if the other does.”
I don’t deny that politicians often do self-interested things, and even more often in this context do things that benefit their coalition and not necessarily “the country.”
However, sometimes tariffs as a weapon are used to benefit ”our country” by extracting a concession from another country that there is little to no practical way to do by other means.
E.g. getting the Chinese to stop violating IP rights. Or requiring U.S. businesses to give up intellectual property in order to do business there.
You are excellent at knocking down bad reasons (in this case for tariffs) and usually good at acknowledging places where you cannot be sure your argument is correct. But imo “tariffs as a weapon” you have in fact strawmanned rather than steelmanned.
I did not read the footnoted link today (I did read it and “like” it in the past), prior to my comment.
Using tariffs as a way to “get a better deal”, as I described above, is not “protectionism”. At least not how that word is commonly used.
Having read the link, while I agree with all its contents as far as the piece goes, it does not seem to cover my point either.
Let me be clear that I agree with the rest of your arguments, and I don’t defend “protectionism” ever, and most surely as rationale for any trade policy. I reject protectionism wholly. I’m am talking solely about the use of tariffs as a tool of political leverage with other countries.
Using “tariffs equals protectionism” in the context I comment on is little different than claiming “all gun violence is murder” even for the case where I am in my own home and shoot and kill someone coming at me with a knife (or their own gun), even after I first, cop-like, tell them to drop it and they don’t comply.
I define "protectionism" by what the government does not why it does it.
I think if you look at the arguments offered by politicians for tariffs, you will not find "This tariff hurts us but it also hurts them so can be used to get them to change policies that hurt us," which is the argument you are describing. The usual rhetoric implies that the tariff helps us but hurts them, and we will be willing to give it up in exchange for their dropping something, such as violating IP rules, that helps them but hurts us.
Can you offer any counterexamples, any cases of politicians arguing for tariffs to pressure another country while conceding that the tariff makes us worse off?
When i ask ChatGPT for examples the first one it gave is this:
“1. Donald Trump - Tariffs on Mexico (2019)
Context: In May 2019, President Trump threatened to impose a 5% tariff on all Mexican imports, increasing monthly up to 25%, unless Mexico took stronger action to curb illegal immigration into the U.S.
Acknowledgement of Downsides: Trump often acknowledged that tariffs hurt U.S. consumers and businesses but framed them as necessary leverage to achieve broader goals, like border security. He referred to tariffs as a "lose-lose" in some contexts but argued the long-term benefits would outweigh the costs.”
When asked for specifics regarding the downsides, it gave me this:
“While former President Donald Trump often promoted tariffs as beneficial tools for the U.S. economy, there were instances where he indirectly acknowledged their potential downsides, particularly their impact on American consumers. Here are some specific examples:
August 2019 – Delay of Tariffs for Holiday Season:
Context: The Trump administration announced a delay in implementing certain tariffs on Chinese goods, moving the date from September 1 to December 15, 2019.
Trump's Statement: President Trump stated, "We are doing this for the Christmas season," suggesting that the delay was to prevent potential price increases on consumer goods during the holiday shopping period.
Interpretation: This decision indicates an awareness that the tariffs could lead to higher prices for American consumers, especially during a peak retail period.
June 2019 – Consideration of Tariffs on Mexican Imports:
Context: President Trump threatened to impose tariffs on all Mexican imports to pressure Mexico into taking action on immigration issues.
Trump's Statement: He acknowledged that there could be "some pain" for consumers and businesses, stating, "I'm ready to do it."
Interpretation: This reflects an acknowledgment that tariffs might have negative repercussions for Americans but were considered necessary to achieve policy objectives.”
And the May tariff threats to Mexico CLEARLY gave Trump what he wanted re: illegal immigrant curbs:
“May 30, 2019: President Trump announced a 5% tariff on all Mexican imports, set to increase incrementally to 25%, unless Mexico took action to stem illegal immigration. The tariff threat was aimed at pressuring Mexico to intensify its efforts to control migration flows, including cooperation on the MPP.
June 7, 2019: After a week of negotiations, Mexico and the U.S. reached an agreement that led to:
Increased enforcement: Mexico deployed 6,000 National Guard troops to its southern border to curb migration.
Expansion of MPP: Mexico agreed to accept more asylum seekers under the Remain in Mexico program and increase logistical support for the policy.
Post-June 2019: The MPP was expanded significantly following the tariff negotiations. By late 2019, tens of thousands of migrants had been returned to Mexico under the program.”
If one had as a goal to reduce the flow of illegal immigrants across the southern border - and clearly Trump and his supporters most certainly did - it’s hard to deny that Trump‘s threats of tariffs on Mexico delivered exactly that.
I agree on the usual rhetoric. Usual is not always.
While I disagree strongly with the definition on “protectionism” you describe immediately above, I appreciate you giving it.
My main point remains that you have not steelmanned this specific use in all of your otherwise excellent arguments about why tariffs are bad, and even in the “less bad arguments for tariffs” you didn’t even mention it as a rationale, let alone a legitimate one.
But it is VERY clearly a part of the Trump arsenal here, especially in his first Administration.
I concede that his current rhetoric sounds worse re: tariffs this time around, but we will have to see what actually happens.
Does Chat GPT give a source for those statements? AI sometimes invents facts to fit the prompt.
I found the quote about the Christmas season. Here is the full passage:
“We are doing this for the Christmas season, just in case some of the tariffs would have an impact on U.S. consumers. So far they’ve had virtually none. The only impact has been that we’ve collected almost $60 billion from China, compliments of China. But just in case they might have an impact on people, what we’ve done is we’ve delayed it so they won’t be relevant for the Christmas shopping season,”
That doesn't concede that there is a net negative effect, only that tariffs might, but probably won't, raise prices. Most supporters of tariffs expect them to raise the price of imports, although Trump tries to claim that all of the cost is paid by China, which would be true only if US demand for goods was perfectly elastic or Chinese supply perfectly inelastic.
I tried googling for [lose-lose tariffs Trump] and found no statement from Trump.
“I tried googling for [lose-lose tariffs Trump] and found no statement from Trump.”
IMO your standard is now extremely unreasonable. Rare is the politician or negotiator, especially Trump, who makes the lose for themselves part explicit. And you found an actual case where he explicitly acknowledges a negative.
I used ChatGPT in this case for conciseness. It includes the WaPo reference for one link. But its description of the facts of May/June 2019 are indeed as I remember them.
You said re: protectionism you define it by its effects. Do you not acknowledge the 5% going to 25% threat to Mexico in May 2019 (not ever enacted in this case) resulted in a concession on a different point that Trump specifically wanted, one that while you might not personally consider a benefit for the country, Trump himself and 10s of millions of his supporters - and indeed very large majorities of all Americans, not just Republicans - surely do?
And since the tariff threatened was never enacted in this case, you cannot call it protectionism, by your own definition.
Due respect, but WTF do you mean by “the stolen property should simply be banned”?
Please explain how exactly you (as the U.S. government) are going to “ban” stolen IP in China? “Ban” copyrighted materials being copied and not paid for in China?
Are you aware the US ignored British copyrights in the 1800s, yet Charles Dickens and many others still made money from book sales and serializations? Should the UK have raised tariffs on US imports to make up the difference?
Due respect, but "due respect" is nothing of the kind.
Due respect, but you assume China does not export any products with that stolen IP. That seems highly improbable. Why would they produce one version of the product with stolen IP for domestic use and another version with home-grown IP for export?
What does the ”two wrongs don’t make a right” US ignoring British copyrights in the 1800s have to do with the price of tea in China?
Re: stolen IP, if they steal Hollywood movies or music and resell them only in the internal market, how does your ban help?
And how exactly is it sufficient to “ban” China exports based on stolen intellectual property? Do you propose to prevent them from selling worldwide? How?? Doing so would be a LOT harder and a LOT more costly to all than a tariff. Or can you explain how it in fact would not be?
And what about uses purely internal to China? You suggest that they should simply be ignored, based on your purist ideology that inherently any cure is worse than the disease?
But you are indeed correct about the use of “due respect”…
"An argument I have seen from supporters of tariffs is that the export industries employ high paid programmers, the import competing industries less highly paid factory workers, so an auto tariff benefits the latter at the cost of the former..." You said this is logically possible. What would be a counterargument to this?
I'm not sure what your question is, so my answer may not help.
Consider the output of the workers. Programmers produce bits, easily transferable. Construction workers produce roads, buildings, dams, and other fixed assets.
Or consider workers who are overvalued only because of regulations, such as shipyard workers and those subject to occupational licensing.
Autoworkers are overvalued because of unions, which are as distorting as governments. Imagine quitting a job and the government forbids your former employer from hiring a replacement. Someone at Cato or Mises had an article about the evils of Taft-Hartley allowing the President to invoke a cooling off period and forcing striking workers to go back to work. Might as well be slaves! he called it, with nary a thought to forcing employers to negotiate with workers holding their jobs hostage. Monopolies are OK for unions and governments, not so much for anybody else.
A counterargument to the argument that it's not right that less highly paid factory workers should lose their jobs to free trade than that highly paid programmers should have theirs.
Would it be ok if they lost their jobs to something domestic, such as changes in what the public wanted? If people buy fewer automobiles and more monitors to work remotely and games to play instead of commuting?
A lost job is a lost job. Why does the cause of the lost job matter?
There was a legal case a few days ago about some well-meaning do-gooders who released 19 sharks caught on a fishing line and turned the fishing line over to someone who threw it in a dumpster. Some lawyer argued this could not be theft because the thief did not profit from the theft, he could only be held liable in a civil lawsuit. If that's true, it's nonsense; theft is theft, he victim loses his property regardless of why it was stolen or what the thief did with it afterwards.
It's the same with a lost job. The cause is immaterial.
Another reason to support tariffs is specifically to punish the other country. We could have been justified in a 1,000% tariff on Nazi Germany's goods not for any kind of economic reasons, but because we didn't like them. We actually do this quite often, but more directly - we just call them sanctions and prohibit all trade (sometimes with certain people or in certain industries).
My understanding of Trump's tariffs is that only one part of the purpose is to generate costs that raises the use of US labor. The other side is to harm China, or more specifically to reduce China's ability to sell to us. These people, likely including Trump himself, do know that China is buying assets here, and see that as a problem. Notably, a problem that will not fix itself. We are very unlikely to balance the trade deficit with China as things are going now, let alone get an alternate imbalance in our favor.
The most likely result of high tariffs against China is not increased US labor, but a different third party (maybe India or some other country in S or SE Asia) that we're on better terms with and are not competing against in geopolitical matters. Those in favor of these tariffs likely see cutting China out of the deal as good on its own terms, and would much rather increase trade with other partners. Those who want dramatic increases on all countries are probably trying, futilely it would seem, to increase domestic production. Not impossible, but very much worse for the US economy than the likely gains.
There may be reasons to support such losses, for what we call strategic industries. I very much want the US to be self-sufficient for things like oil/gas, steel, and advanced military technologies, even at the expense of the larger economy. Japan felt compelled to attack the US in 1941 not because it thought it could win, but because it didn't have the natural resources to sustain its own internal goals if a foreign power moved against it. It felt it had no choice, against the better advisement of its own leaders.
i) This analysis also skewers, I think, an argument I've seen for not worrying about trade deficits which says "I have a trade deficit with my local supermarket. They never buy anything from me. This is not a problem". The analogy breaks down, I think, because the supermarket and I are using the same currency - or is that all there is to it?
ii) So what about the case of countries that use the same currency? Does the concept of trade deficit make sense? If France buys more from Germany than Germany does from France, then Germany doesn't have to invest its excess euros in French bonds or businesses - it can invest them locally or anywhere else in the eurozone. And yet instinctively it still feels that if France is (hypothetically) producing a lot of overpriced crap that nobody wants to buy then this is bad for France. So trade deficit is apparently still meaningful, even though it's no longer linked to the buying and selling of currency. So what's so special about a national currency? Or equivalently, what makes trade between currency zones so fundamentally different from trade within a currency zone? In both cases it's all about producing stuff that people want to buy at a price they can afford - productivity, I suppose.
You have probably answered this many times before but, why has economics failed as a science? Even simple stuff like, as you say, getting people to understand the nature of wealth? My working hypothesis is that sociology (ie class war/Marxist analysis of society) has completed a takeover of the Humanities in general, and infected economics too. So,oat economists are now class warriors too, and in fact agree about with the finite nature of wealth theory.
"At the outset I confess a sense of embarrassment that I feel whenever I talk or write about the problems of drafting. This comes from the fact that, unlike most legal topics, discussions of legislative drafting have to be conducted on a kindergarten level. Since the art of legal drafting in general, and of legislative drafting in particular, is only crudely developed, I can only talk about the most elementary matters to a sophisticated audience that is expecting me to be profound. This leaves me feeling like a man who is trying to explain the alphabet to a group of Ph. D.'s.
One reason why it is hard to teach people how to draft is that like all writing it looks easy. There is one thing upon which almost everyone prides himself, and that is his writing. This is especially true of lawyers. Not only do they underestimate the difficulties of writing but they tend to think of themselves as individually accomplished. It is hard to sell a man a new suit when he considers himself already well accoutered.
This poses a dilemma. If I am to make this subject clear to you, I must oversimplify it to the point of confirming your natural prejudices. On the other hand, if I am to paint a true impression, I must frighten or confuse you with a bewildering mass of principles, approaches, and details. I will do my best to take a middle course.
Another trouble with teaching drafting is that the instructor can't do it just by talking about it any more than he can teach you, just by talking, how to box or play the violin. There is no substitute for doing it yourself with the right kind of guidance. But, even with this reservation, there are some useful things we can talk about."
Yes and no. Politicians could just tax everyone and give the money to the auto industry. The reason they impose a tariff instead is that they have plausible false arguments for doing so.
The motivation behind tariffs is both "they transfer from a dispersed interest group to a concentrated interest group" and "in a way that can be plausibly represented as something else." The same applies to professional licensing used to restrict entry to some activity for the benefit of those already permitted to engage in it and to lots of other things governments do.
Tarrifs are a tax and are theoretically substitutable for other taxes such as an income tax. Because tarrifs are primarily a consumption tax and not an income tax, tarrifs shift the economic costs away from labor and towards capital - capital holders aren't as affected by income taxes but are still affected by consumption taxes.
Financial assets are taxed differently than income. Capital gains tax can be half or lower, in the usa 0% on the first 90k (assumong no other income, its complicated). On top of that, you can borrow against capital tax free. On inheritance, in the usa the cost basis for financial assets is stepped up - so you can also reduce the taxes for your descendents. For economists, income is income no matter the source, but for tax officials it's not.
Whether capital gains are taxed less than other income is complicated because capital gains are not indexed for inflation. If prices go up at 10% a year and your asset does the same, your real income from the asset is zero but your capital gains, on which you are taxed, are 10% a year.
You are correct about the inheritance effect. All income is tax free for the first $X, details varying. That isn't something special about capital gains.
"Because tarrifs are primarily a consumption tax ... ."
Where did this nonsense come from, and when? Tariffs are a consumption tax coupled with a producer subsidy. Some of the tax revenue is going to the producer. There is no reason for this. Even the sophisticated arguments for protection are wrong as stated. A subsidy from the budget would be better if one could ever find an infant industry or an industry vital for defense. But politicians are most happy to keep things opaque.
I agree with you for the most part that low to moderate tariffs on end user consumption goods are primarily a consumption tax.
But tariffs on intermediate goods are decidedly not consumption taxes, and indeed are lose-lose taxes for most ordinary people as both workers and consumers, independent of whether they help to propagate a trade war. And worse for your clearly leftist viewpoint, such tariffs most benefit domestic capital special interests.
And in both cases, your framing of “labor” versus “capital” misses the important point that all “laborers” are also consumers, and as consumers they are made worse off when the cost of the goods they consume goes up.
All intermediate goods are inputs for what are ultimately consumption goods, so it's ultimately a consumption tax. Hawaii for instance has a GET that taxes intermediate goods, and that tax is passed down the supply chain to the consumer.
Taxes on intermediate goods are NOT the same as consumption taxes, and it’s blatantly false to claim that all simply get passed down to the consumer, or that they have the same impact on economic activity as consumption taxes on end users.
The effect of tariffs on intermediate goods is well understood. Put a tariff on steel, and on nothing else. Steel industry gets bigger. All other industries, including export industries, shrink. We are poorer for it.
In the real world, when steel gets a tariff, steel using industries get higher tariffs! Then, the simple analysis of tariff = consumption tax cum producer subsidy is easy to apply.
'While I obviously like the analysis of a tariff = consumption tax cum producer subsidy [due to Jagdish Bhagwati] what it still leaves out is the effect of a tariff on the distribution of income. It is certainly true that while a tariff on steel makes steel specific workers better off, it makes the rest of us worse off, and the steel workers gain less than the rest of us lose.
Resorting to tariffs is a political ploy that hides the losses.
Though in the real world, only *some* steel using industries get tariffs when steel does. Many don’t. E.g. autos might indeed, but wind turbines and dishwashers and screwdrivers might not (the fact that wind turbines likely get other subsidies and mandates notwithstanding…).
Im open to changing my mind, but I have honestly no idea what you're referring to. Tarrifs are not taxes on financial products, and are generally not taxes on services. I know that David Friedman often explains how in an environment where there's zero trade deficit, trade effectively converts corn into cars for American consumers. But that's not the case, as he points out in this post: instead a lot of trade is consumer goods for financial products. Even the types of intermediate goods are typically ones destined for consumption (such as steel). Yes there is a substitution effect, and the mix of produced goods in the USA changes; but as long as those goods from abroad are brought in with tarrifs, the taxes paid are on products that end up in consumer goods and necessarily increase their cost. Because of substitution it's not the same as a consumption tax, just as the get in hawaii also creates a substitution effect where finished goods can be cheaper than intermediates - but if that's your point, we're in agreement that different taxes are different. My point is that there's a shift in who pays taxes with tariffs, because due to how long term capital gains are taxed (when set up properly near zero) versus labour (up to 40% or higher) by adding tarriffs that both capital holders and labor pay, the net tax burden shifts.
I also noticed you said my view is "leftist" and frankly I have no idea what you're talking about. My educational background in economics is certainly incomplete but my undergraduate mentor was a well regarded libertarian, and my own career is in cryptocurrency consulting which is why I'm concerned about issues about impacts on capital holders - if a policy will increase taxes on my clients and my industry, i have to see that with clear eyes so I can adapt my advice to accurately reflect the market environment.
One difference between a consumption tax and a tax on an intermediate good is that the latter creates an incentive to substitute other inputs for that intermediate good. Tax imported sugar and soft drinks use corn syrup instead.
If the objective is to tax consumption the obvious way is a sales tax.
Is your tactic for avoiding capital gains taxes to borrow against your assets for consumption and leave both assets and debts to your heirs? That seems crazy but I don't see why it wouldn't work.
Take this with a giant grain of salt as its all hearsay, and I dont give tax advice.
On reducing total tax burden, yes I've heard of people using the borrow/die strategy, but it's only needed over a certain amount of wealth because the long term capital gains tax brackets are very generous compared to income tax and go up with inflation. For 2025, married filing jointly is now 0% on first 96k, 15% up to $600k, and 20% on anything over that. If you have $5m in financial assets yielding 5%, and you sell only 2% to make sure you're ahead of inflation, your annual income is $100k. Take the standard deduction and your tax bracket is below $96k and the tax rate is zero. Now this specific situation rarely happens (and theres a lot of gotchas) but it's common for people to shift their income from labor to financial assets to reduce taxes. For instance crypto devs often hold large amounts of tokens in a project where they work for free or for minimal pay, selling/borrowing against their assets. Of course since they aren't obligated to work it requires devs who are primarily passionate about technology and would work on the tech anyway without pay.
I'm not the best source for educating you on economics.
If you *really* want to learn, the single best place IMO would be "Basic Economics" by Thomas Sowell. It is quite long, but very readable.
Much of my commentary/criticism above is that since you are on a Substack written by an economist, I assumed you were using terms that economists use, in generally the way they use them. In that sense, your claims about tariffs are mostly wrong in terms of who is harmed, who benefits and in that sense who "pays" them.
Re: the leftist reference, since you used the terms "labor" and "capital", and made a point of distinguishing between those two, again in terms of economics you are using the framework of Marx and so I naturally assumed you were a leftist or at least got your economics ideas from leftists.
I see above you are claiming that you are focused on tax impacts on the clients for whom you consult, so I won't take this much further. You are still not correct in what you are claiming above re: who pays taxes, but I concede that given your context you are somewhat *less* incorrect, especially in regards to the timing of tax flows and what accounts they come out of.
But please do understand that your original claim that started this conversation ("Because tarrifs [sic] are primarily a consumption tax and not an income tax, tarrifs [sic] shift the economic costs away from labor and towards capital - capital holders aren't as affected by income taxes but are still affected by consumption taxes.") is simply not correct.
For multiple reasons, but notably because there you explicitly said "economic costs". And "economic" costs are not at all the same idea as the pocket/account out of which taxes flow to the government.
Distinguishing between labor income and capital income isn't limited to Marxists, it goes back at least to Ricardo and is part of conventional modern economics.
Good point on language & word choice, I can be a bit sloppy because the same word means different things in different disciplines while the work I do is necessarily interdisciplinary and often involves conversations with members of the public who might lack even a high school diploma.
I would suggest be a bit more careful about categorizing people's politics based on their language. You might alienate allies. In my case although I primarily studied and agreed with libertarians in my economics education, I've also studied critical theory and Marxism albeit only a few graduate courses. I've also attended a communist party meeting. Given the hundreds of hours of conversation with all sorts of leftists, Ive naturally picked up some of the ways they use language. But just because someone studied a topic or uses the language of a leftist field, doesn't mean they are politically aligned with a leftist project. That all said, you might want to look at bit into the history of Rothbards politics- at certain points in his career, he would not have been opposed to anarcho capitalism as a type of leftism, and tried to bring together both right and left unsuccessfully - check out "Left and Right: A journal of libertarian thought." Here with DF we are in more of the utilitarian camp than Rothbard was of course. But it's important to recognize that Rothbard was influenced by conversations he had with communists and its possible to read his work as a type of post-Marxist critique.
Best explanation of tariffs and exchange rates I've ever seen.
“Economics is haunted by more fallacies than any other study known to man.”
"the common claim that the reason some foreign country, currently China, can make things cheaper than we can is that their workers will work for less. "
I think a lot of people make the mistake you're pointing out, but other people might mean that *real* wages in China are much lower than in the US. You can get an hour of Chinese labor for a lot less "stuff" than you'd have to pay for an hour of US labor. What explains that and how would your explanation comfort the people making the objection?
Great explanation of trade, btw.
Real wages in China are lower than real wages in the US because average productivity of US workers is higher than average productivity of Chinese workers.
Consider this. The price of a hair cut in India is lower in India than the price of a hair cut in the US (at exchange Rs/US$ rate) even though the productivity of hairdressers in both countries are the same. The difference is that the US has a lot more of high productivity workers as compared to India, and India has a lot of low productivity workers (unskilled farm workers, for instance) and fewer high skill workers (engineers, for example). Therefore the average productivity of US labor is much higher than the average productivity of Indian labor. Therefore, hairdressers make a lot less in real wages in India than they do in the US.
Low skilled jobs pay a lot more in the US than in India. That's so because there are a lot of high skilled workers in the US who produce a lot of stuff.
Right but why do barbers in India make less than barbers in the US? Is that because in the US, the employer (i.e. the barber shop owner) has to compete with employers of high-skill people to attract barbers?
It all boils down to opportunity cost of being a barber, whether in India or the US.
If US barbers made the same wages as Indian barbers, no one in the US would want to be a barber since they have other comparatively high wage options such as housekeeping or waiting tables, flipping burgers, etc. The demand for haircuts and the supply of barbers determine the wages -- high in the US and low in India.
Given that the per capita income in the US is an order of magnitude higher than in India, it is unremarkable that haircuts in the US costs an order of magnitude more here than in India.
Great explanation. Thanks.
Government policies reduce employment in a number of ways. Many hurt workers on the low value end especially.
I suggest that payroll taxes are a tax on labor. They make labor more expensive to the employer. They reduce labor’s marginal value, particularly on the low end, where the margins are thinner.
An excellent post, as usual.
However, I have a problem with your ending “A second reason is that the trade war model, tariffs as a weapon… It also explains the pattern of trade negotiations. It seems odd for countries to bargain over each agreeing to stop hurting itself if the other does.”
I don’t deny that politicians often do self-interested things, and even more often in this context do things that benefit their coalition and not necessarily “the country.”
However, sometimes tariffs as a weapon are used to benefit ”our country” by extracting a concession from another country that there is little to no practical way to do by other means.
E.g. getting the Chinese to stop violating IP rights. Or requiring U.S. businesses to give up intellectual property in order to do business there.
You are excellent at knocking down bad reasons (in this case for tariffs) and usually good at acknowledging places where you cannot be sure your argument is correct. But imo “tariffs as a weapon” you have in fact strawmanned rather than steelmanned.
The footnote in that post links to an earlier post on less bad arguments for protectionism. I gather you didn't read it.
I did not read the footnoted link today (I did read it and “like” it in the past), prior to my comment.
Using tariffs as a way to “get a better deal”, as I described above, is not “protectionism”. At least not how that word is commonly used.
Having read the link, while I agree with all its contents as far as the piece goes, it does not seem to cover my point either.
Let me be clear that I agree with the rest of your arguments, and I don’t defend “protectionism” ever, and most surely as rationale for any trade policy. I reject protectionism wholly. I’m am talking solely about the use of tariffs as a tool of political leverage with other countries.
Using “tariffs equals protectionism” in the context I comment on is little different than claiming “all gun violence is murder” even for the case where I am in my own home and shoot and kill someone coming at me with a knife (or their own gun), even after I first, cop-like, tell them to drop it and they don’t comply.
I define "protectionism" by what the government does not why it does it.
I think if you look at the arguments offered by politicians for tariffs, you will not find "This tariff hurts us but it also hurts them so can be used to get them to change policies that hurt us," which is the argument you are describing. The usual rhetoric implies that the tariff helps us but hurts them, and we will be willing to give it up in exchange for their dropping something, such as violating IP rules, that helps them but hurts us.
Can you offer any counterexamples, any cases of politicians arguing for tariffs to pressure another country while conceding that the tariff makes us worse off?
When i ask ChatGPT for examples the first one it gave is this:
“1. Donald Trump - Tariffs on Mexico (2019)
Context: In May 2019, President Trump threatened to impose a 5% tariff on all Mexican imports, increasing monthly up to 25%, unless Mexico took stronger action to curb illegal immigration into the U.S.
Acknowledgement of Downsides: Trump often acknowledged that tariffs hurt U.S. consumers and businesses but framed them as necessary leverage to achieve broader goals, like border security. He referred to tariffs as a "lose-lose" in some contexts but argued the long-term benefits would outweigh the costs.”
When asked for specifics regarding the downsides, it gave me this:
“While former President Donald Trump often promoted tariffs as beneficial tools for the U.S. economy, there were instances where he indirectly acknowledged their potential downsides, particularly their impact on American consumers. Here are some specific examples:
August 2019 – Delay of Tariffs for Holiday Season:
Context: The Trump administration announced a delay in implementing certain tariffs on Chinese goods, moving the date from September 1 to December 15, 2019.
Trump's Statement: President Trump stated, "We are doing this for the Christmas season," suggesting that the delay was to prevent potential price increases on consumer goods during the holiday shopping period.
Interpretation: This decision indicates an awareness that the tariffs could lead to higher prices for American consumers, especially during a peak retail period.
https://www.washingtonpost.com/business/2019/08/13/trump-finally-acknowledges-his-tariffs-could-hit-consumers/?utm_source=chatgpt.com
June 2019 – Consideration of Tariffs on Mexican Imports:
Context: President Trump threatened to impose tariffs on all Mexican imports to pressure Mexico into taking action on immigration issues.
Trump's Statement: He acknowledged that there could be "some pain" for consumers and businesses, stating, "I'm ready to do it."
Interpretation: This reflects an acknowledgment that tariffs might have negative repercussions for Americans but were considered necessary to achieve policy objectives.”
And the May tariff threats to Mexico CLEARLY gave Trump what he wanted re: illegal immigrant curbs:
“May 30, 2019: President Trump announced a 5% tariff on all Mexican imports, set to increase incrementally to 25%, unless Mexico took action to stem illegal immigration. The tariff threat was aimed at pressuring Mexico to intensify its efforts to control migration flows, including cooperation on the MPP.
June 7, 2019: After a week of negotiations, Mexico and the U.S. reached an agreement that led to:
Increased enforcement: Mexico deployed 6,000 National Guard troops to its southern border to curb migration.
Expansion of MPP: Mexico agreed to accept more asylum seekers under the Remain in Mexico program and increase logistical support for the policy.
Post-June 2019: The MPP was expanded significantly following the tariff negotiations. By late 2019, tens of thousands of migrants had been returned to Mexico under the program.”
If one had as a goal to reduce the flow of illegal immigrants across the southern border - and clearly Trump and his supporters most certainly did - it’s hard to deny that Trump‘s threats of tariffs on Mexico delivered exactly that.
I agree on the usual rhetoric. Usual is not always.
While I disagree strongly with the definition on “protectionism” you describe immediately above, I appreciate you giving it.
My main point remains that you have not steelmanned this specific use in all of your otherwise excellent arguments about why tariffs are bad, and even in the “less bad arguments for tariffs” you didn’t even mention it as a rationale, let alone a legitimate one.
But it is VERY clearly a part of the Trump arsenal here, especially in his first Administration.
I concede that his current rhetoric sounds worse re: tariffs this time around, but we will have to see what actually happens.
Does Chat GPT give a source for those statements? AI sometimes invents facts to fit the prompt.
I found the quote about the Christmas season. Here is the full passage:
“We are doing this for the Christmas season, just in case some of the tariffs would have an impact on U.S. consumers. So far they’ve had virtually none. The only impact has been that we’ve collected almost $60 billion from China, compliments of China. But just in case they might have an impact on people, what we’ve done is we’ve delayed it so they won’t be relevant for the Christmas shopping season,”
That doesn't concede that there is a net negative effect, only that tariffs might, but probably won't, raise prices. Most supporters of tariffs expect them to raise the price of imports, although Trump tries to claim that all of the cost is paid by China, which would be true only if US demand for goods was perfectly elastic or Chinese supply perfectly inelastic.
I tried googling for [lose-lose tariffs Trump] and found no statement from Trump.
“I tried googling for [lose-lose tariffs Trump] and found no statement from Trump.”
IMO your standard is now extremely unreasonable. Rare is the politician or negotiator, especially Trump, who makes the lose for themselves part explicit. And you found an actual case where he explicitly acknowledges a negative.
I used ChatGPT in this case for conciseness. It includes the WaPo reference for one link. But its description of the facts of May/June 2019 are indeed as I remember them.
You said re: protectionism you define it by its effects. Do you not acknowledge the 5% going to 25% threat to Mexico in May 2019 (not ever enacted in this case) resulted in a concession on a different point that Trump specifically wanted, one that while you might not personally consider a benefit for the country, Trump himself and 10s of millions of his supporters - and indeed very large majorities of all Americans, not just Republicans - surely do?
And since the tariff threatened was never enacted in this case, you cannot call it protectionism, by your own definition.
Perhaps, instead of taxing imports which are unrelated to the so-called theft, the so-called stolen property should simply be banned.
Implementing tariffs to counter tariffs is as sensible as beating your wife to counter your neighbor beating his wife.
Implementing tariffs to convince a country to step stealing is as sensible as beating your wife to convince your neighbor to return your lawnmower.
Due respect, but WTF do you mean by “the stolen property should simply be banned”?
Please explain how exactly you (as the U.S. government) are going to “ban” stolen IP in China? “Ban” copyrighted materials being copied and not paid for in China?
Are you aware the US ignored British copyrights in the 1800s, yet Charles Dickens and many others still made money from book sales and serializations? Should the UK have raised tariffs on US imports to make up the difference?
Due respect, but "due respect" is nothing of the kind.
Due respect, but you assume China does not export any products with that stolen IP. That seems highly improbable. Why would they produce one version of the product with stolen IP for domestic use and another version with home-grown IP for export?
What does the ”two wrongs don’t make a right” US ignoring British copyrights in the 1800s have to do with the price of tea in China?
Re: stolen IP, if they steal Hollywood movies or music and resell them only in the internal market, how does your ban help?
And how exactly is it sufficient to “ban” China exports based on stolen intellectual property? Do you propose to prevent them from selling worldwide? How?? Doing so would be a LOT harder and a LOT more costly to all than a tariff. Or can you explain how it in fact would not be?
And what about uses purely internal to China? You suggest that they should simply be ignored, based on your purist ideology that inherently any cure is worse than the disease?
But you are indeed correct about the use of “due respect”…
Well, well, go ahead and beat your wife to reform the world. I'm sure it will be successful.
"An argument I have seen from supporters of tariffs is that the export industries employ high paid programmers, the import competing industries less highly paid factory workers, so an auto tariff benefits the latter at the cost of the former..." You said this is logically possible. What would be a counterargument to this?
I'm not sure what your question is, so my answer may not help.
Consider the output of the workers. Programmers produce bits, easily transferable. Construction workers produce roads, buildings, dams, and other fixed assets.
Or consider workers who are overvalued only because of regulations, such as shipyard workers and those subject to occupational licensing.
Autoworkers are overvalued because of unions, which are as distorting as governments. Imagine quitting a job and the government forbids your former employer from hiring a replacement. Someone at Cato or Mises had an article about the evils of Taft-Hartley allowing the President to invoke a cooling off period and forcing striking workers to go back to work. Might as well be slaves! he called it, with nary a thought to forcing employers to negotiate with workers holding their jobs hostage. Monopolies are OK for unions and governments, not so much for anybody else.
A counterargument to the argument that it's not right that less highly paid factory workers should lose their jobs to free trade than that highly paid programmers should have theirs.
Would it be ok if they lost their jobs to something domestic, such as changes in what the public wanted? If people buy fewer automobiles and more monitors to work remotely and games to play instead of commuting?
A lost job is a lost job. Why does the cause of the lost job matter?
There was a legal case a few days ago about some well-meaning do-gooders who released 19 sharks caught on a fishing line and turned the fishing line over to someone who threw it in a dumpster. Some lawyer argued this could not be theft because the thief did not profit from the theft, he could only be held liable in a civil lawsuit. If that's true, it's nonsense; theft is theft, he victim loses his property regardless of why it was stolen or what the thief did with it afterwards.
It's the same with a lost job. The cause is immaterial.
Great answer! Thank you!
Another reason to support tariffs is specifically to punish the other country. We could have been justified in a 1,000% tariff on Nazi Germany's goods not for any kind of economic reasons, but because we didn't like them. We actually do this quite often, but more directly - we just call them sanctions and prohibit all trade (sometimes with certain people or in certain industries).
My understanding of Trump's tariffs is that only one part of the purpose is to generate costs that raises the use of US labor. The other side is to harm China, or more specifically to reduce China's ability to sell to us. These people, likely including Trump himself, do know that China is buying assets here, and see that as a problem. Notably, a problem that will not fix itself. We are very unlikely to balance the trade deficit with China as things are going now, let alone get an alternate imbalance in our favor.
The most likely result of high tariffs against China is not increased US labor, but a different third party (maybe India or some other country in S or SE Asia) that we're on better terms with and are not competing against in geopolitical matters. Those in favor of these tariffs likely see cutting China out of the deal as good on its own terms, and would much rather increase trade with other partners. Those who want dramatic increases on all countries are probably trying, futilely it would seem, to increase domestic production. Not impossible, but very much worse for the US economy than the likely gains.
There may be reasons to support such losses, for what we call strategic industries. I very much want the US to be self-sufficient for things like oil/gas, steel, and advanced military technologies, even at the expense of the larger economy. Japan felt compelled to attack the US in 1941 not because it thought it could win, but because it didn't have the natural resources to sustain its own internal goals if a foreign power moved against it. It felt it had no choice, against the better advisement of its own leaders.
Some more thoughts/questions.
i) This analysis also skewers, I think, an argument I've seen for not worrying about trade deficits which says "I have a trade deficit with my local supermarket. They never buy anything from me. This is not a problem". The analogy breaks down, I think, because the supermarket and I are using the same currency - or is that all there is to it?
ii) So what about the case of countries that use the same currency? Does the concept of trade deficit make sense? If France buys more from Germany than Germany does from France, then Germany doesn't have to invest its excess euros in French bonds or businesses - it can invest them locally or anywhere else in the eurozone. And yet instinctively it still feels that if France is (hypothetically) producing a lot of overpriced crap that nobody wants to buy then this is bad for France. So trade deficit is apparently still meaningful, even though it's no longer linked to the buying and selling of currency. So what's so special about a national currency? Or equivalently, what makes trade between currency zones so fundamentally different from trade within a currency zone? In both cases it's all about producing stuff that people want to buy at a price they can afford - productivity, I suppose.
You have probably answered this many times before but, why has economics failed as a science? Even simple stuff like, as you say, getting people to understand the nature of wealth? My working hypothesis is that sociology (ie class war/Marxist analysis of society) has completed a takeover of the Humanities in general, and infected economics too. So,oat economists are now class warriors too, and in fact agree about with the finite nature of wealth theory.
I wrote about how this plays out in gov/law (https://www.maximumnewyork.com/p/a-challenge-of-teaching-government). The "Dean of Legislative Drafting" Reed Dickerson had this to say in a 1955 speech called "How to Write a Law":
"At the outset I confess a sense of embarrassment that I feel whenever I talk or write about the problems of drafting. This comes from the fact that, unlike most legal topics, discussions of legislative drafting have to be conducted on a kindergarten level. Since the art of legal drafting in general, and of legislative drafting in particular, is only crudely developed, I can only talk about the most elementary matters to a sophisticated audience that is expecting me to be profound. This leaves me feeling like a man who is trying to explain the alphabet to a group of Ph. D.'s.
One reason why it is hard to teach people how to draft is that like all writing it looks easy. There is one thing upon which almost everyone prides himself, and that is his writing. This is especially true of lawyers. Not only do they underestimate the difficulties of writing but they tend to think of themselves as individually accomplished. It is hard to sell a man a new suit when he considers himself already well accoutered.
This poses a dilemma. If I am to make this subject clear to you, I must oversimplify it to the point of confirming your natural prejudices. On the other hand, if I am to paint a true impression, I must frighten or confuse you with a bewildering mass of principles, approaches, and details. I will do my best to take a middle course.
Another trouble with teaching drafting is that the instructor can't do it just by talking about it any more than he can teach you, just by talking, how to box or play the violin. There is no substitute for doing it yourself with the right kind of guidance. But, even with this reservation, there are some useful things we can talk about."
Many or most of the elements in your very last paragraph were ringing in my ears the whole read through, and then there it was.
9/10ths of the motivation behind tariffs, I'd guess.
Yes and no. Politicians could just tax everyone and give the money to the auto industry. The reason they impose a tariff instead is that they have plausible false arguments for doing so.
The motivation behind tariffs is both "they transfer from a dispersed interest group to a concentrated interest group" and "in a way that can be plausibly represented as something else." The same applies to professional licensing used to restrict entry to some activity for the benefit of those already permitted to engage in it and to lots of other things governments do.
Tarrifs are a tax and are theoretically substitutable for other taxes such as an income tax. Because tarrifs are primarily a consumption tax and not an income tax, tarrifs shift the economic costs away from labor and towards capital - capital holders aren't as affected by income taxes but are still affected by consumption taxes.
"capital holders aren't as affected by income taxes but are still affected by consumption taxes."
I don't follow that. You hold capital to get income from it, and that income is taxable.
Financial assets are taxed differently than income. Capital gains tax can be half or lower, in the usa 0% on the first 90k (assumong no other income, its complicated). On top of that, you can borrow against capital tax free. On inheritance, in the usa the cost basis for financial assets is stepped up - so you can also reduce the taxes for your descendents. For economists, income is income no matter the source, but for tax officials it's not.
Whether capital gains are taxed less than other income is complicated because capital gains are not indexed for inflation. If prices go up at 10% a year and your asset does the same, your real income from the asset is zero but your capital gains, on which you are taxed, are 10% a year.
You are correct about the inheritance effect. All income is tax free for the first $X, details varying. That isn't something special about capital gains.
"Because tarrifs are primarily a consumption tax ... ."
Where did this nonsense come from, and when? Tariffs are a consumption tax coupled with a producer subsidy. Some of the tax revenue is going to the producer. There is no reason for this. Even the sophisticated arguments for protection are wrong as stated. A subsidy from the budget would be better if one could ever find an infant industry or an industry vital for defense. But politicians are most happy to keep things opaque.
I agree with you for the most part that low to moderate tariffs on end user consumption goods are primarily a consumption tax.
But tariffs on intermediate goods are decidedly not consumption taxes, and indeed are lose-lose taxes for most ordinary people as both workers and consumers, independent of whether they help to propagate a trade war. And worse for your clearly leftist viewpoint, such tariffs most benefit domestic capital special interests.
And in both cases, your framing of “labor” versus “capital” misses the important point that all “laborers” are also consumers, and as consumers they are made worse off when the cost of the goods they consume goes up.
All intermediate goods are inputs for what are ultimately consumption goods, so it's ultimately a consumption tax. Hawaii for instance has a GET that taxes intermediate goods, and that tax is passed down the supply chain to the consumer.
Yeah you should read more DF and other economics.
Taxes on intermediate goods are NOT the same as consumption taxes, and it’s blatantly false to claim that all simply get passed down to the consumer, or that they have the same impact on economic activity as consumption taxes on end users.
Repeating your claims does not make them true.
The effect of tariffs on intermediate goods is well understood. Put a tariff on steel, and on nothing else. Steel industry gets bigger. All other industries, including export industries, shrink. We are poorer for it.
In the real world, when steel gets a tariff, steel using industries get higher tariffs! Then, the simple analysis of tariff = consumption tax cum producer subsidy is easy to apply.
'While I obviously like the analysis of a tariff = consumption tax cum producer subsidy [due to Jagdish Bhagwati] what it still leaves out is the effect of a tariff on the distribution of income. It is certainly true that while a tariff on steel makes steel specific workers better off, it makes the rest of us worse off, and the steel workers gain less than the rest of us lose.
Resorting to tariffs is a political ploy that hides the losses.
I agree with most of this.
Though in the real world, only *some* steel using industries get tariffs when steel does. Many don’t. E.g. autos might indeed, but wind turbines and dishwashers and screwdrivers might not (the fact that wind turbines likely get other subsidies and mandates notwithstanding…).
Im open to changing my mind, but I have honestly no idea what you're referring to. Tarrifs are not taxes on financial products, and are generally not taxes on services. I know that David Friedman often explains how in an environment where there's zero trade deficit, trade effectively converts corn into cars for American consumers. But that's not the case, as he points out in this post: instead a lot of trade is consumer goods for financial products. Even the types of intermediate goods are typically ones destined for consumption (such as steel). Yes there is a substitution effect, and the mix of produced goods in the USA changes; but as long as those goods from abroad are brought in with tarrifs, the taxes paid are on products that end up in consumer goods and necessarily increase their cost. Because of substitution it's not the same as a consumption tax, just as the get in hawaii also creates a substitution effect where finished goods can be cheaper than intermediates - but if that's your point, we're in agreement that different taxes are different. My point is that there's a shift in who pays taxes with tariffs, because due to how long term capital gains are taxed (when set up properly near zero) versus labour (up to 40% or higher) by adding tarriffs that both capital holders and labor pay, the net tax burden shifts.
I also noticed you said my view is "leftist" and frankly I have no idea what you're talking about. My educational background in economics is certainly incomplete but my undergraduate mentor was a well regarded libertarian, and my own career is in cryptocurrency consulting which is why I'm concerned about issues about impacts on capital holders - if a policy will increase taxes on my clients and my industry, i have to see that with clear eyes so I can adapt my advice to accurately reflect the market environment.
One difference between a consumption tax and a tax on an intermediate good is that the latter creates an incentive to substitute other inputs for that intermediate good. Tax imported sugar and soft drinks use corn syrup instead.
If the objective is to tax consumption the obvious way is a sales tax.
Is your tactic for avoiding capital gains taxes to borrow against your assets for consumption and leave both assets and debts to your heirs? That seems crazy but I don't see why it wouldn't work.
Take this with a giant grain of salt as its all hearsay, and I dont give tax advice.
On reducing total tax burden, yes I've heard of people using the borrow/die strategy, but it's only needed over a certain amount of wealth because the long term capital gains tax brackets are very generous compared to income tax and go up with inflation. For 2025, married filing jointly is now 0% on first 96k, 15% up to $600k, and 20% on anything over that. If you have $5m in financial assets yielding 5%, and you sell only 2% to make sure you're ahead of inflation, your annual income is $100k. Take the standard deduction and your tax bracket is below $96k and the tax rate is zero. Now this specific situation rarely happens (and theres a lot of gotchas) but it's common for people to shift their income from labor to financial assets to reduce taxes. For instance crypto devs often hold large amounts of tokens in a project where they work for free or for minimal pay, selling/borrowing against their assets. Of course since they aren't obligated to work it requires devs who are primarily passionate about technology and would work on the tech anyway without pay.
I'm not the best source for educating you on economics.
If you *really* want to learn, the single best place IMO would be "Basic Economics" by Thomas Sowell. It is quite long, but very readable.
Much of my commentary/criticism above is that since you are on a Substack written by an economist, I assumed you were using terms that economists use, in generally the way they use them. In that sense, your claims about tariffs are mostly wrong in terms of who is harmed, who benefits and in that sense who "pays" them.
Re: the leftist reference, since you used the terms "labor" and "capital", and made a point of distinguishing between those two, again in terms of economics you are using the framework of Marx and so I naturally assumed you were a leftist or at least got your economics ideas from leftists.
I see above you are claiming that you are focused on tax impacts on the clients for whom you consult, so I won't take this much further. You are still not correct in what you are claiming above re: who pays taxes, but I concede that given your context you are somewhat *less* incorrect, especially in regards to the timing of tax flows and what accounts they come out of.
But please do understand that your original claim that started this conversation ("Because tarrifs [sic] are primarily a consumption tax and not an income tax, tarrifs [sic] shift the economic costs away from labor and towards capital - capital holders aren't as affected by income taxes but are still affected by consumption taxes.") is simply not correct.
For multiple reasons, but notably because there you explicitly said "economic costs". And "economic" costs are not at all the same idea as the pocket/account out of which taxes flow to the government.
Distinguishing between labor income and capital income isn't limited to Marxists, it goes back at least to Ricardo and is part of conventional modern economics.
Good point on language & word choice, I can be a bit sloppy because the same word means different things in different disciplines while the work I do is necessarily interdisciplinary and often involves conversations with members of the public who might lack even a high school diploma.
I would suggest be a bit more careful about categorizing people's politics based on their language. You might alienate allies. In my case although I primarily studied and agreed with libertarians in my economics education, I've also studied critical theory and Marxism albeit only a few graduate courses. I've also attended a communist party meeting. Given the hundreds of hours of conversation with all sorts of leftists, Ive naturally picked up some of the ways they use language. But just because someone studied a topic or uses the language of a leftist field, doesn't mean they are politically aligned with a leftist project. That all said, you might want to look at bit into the history of Rothbards politics- at certain points in his career, he would not have been opposed to anarcho capitalism as a type of leftism, and tried to bring together both right and left unsuccessfully - check out "Left and Right: A journal of libertarian thought." Here with DF we are in more of the utilitarian camp than Rothbard was of course. But it's important to recognize that Rothbard was influenced by conversations he had with communists and its possible to read his work as a type of post-Marxist critique.