Innovation from Necessity


I am firmly against excessive tariffs. I’ve made that crystal clear on a number of occasions.

Reasonable tariffs on imported goods are… well… perfectly reasonable. At our founding, it was the source of federal government funding. Reasonable import tariffs (imposts) and duties covered the cost of operating the small federal government budget. It paid for the labor and clerical work of the importation and inspection process. As the feds were responsible for little else constitutionally, tariffs were an adequate funding system.

But these days, tariffs could not hope to cover the cost of operating the federal leviathan. They are now more a measure of protectionism worldwide. And I agree that on the world stage, America has allowed itself to be taken advantage of. Other nations expect America to charge minimal import tariffs and duties for the goods they export to us, but few reciprocate.

Nations like China do in fact take advantage of us. They expect us to treat them fairly, but often charge exorbitant tariffs on products we ship to them. And that’s assuming they accept our exports at all. In many cases, they simply do not. They don’t wish to compete with American imports on their own soil. For a long time, it has been rather one-sided.

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And for just as long, the American government has put up with inequity, afraid to make waves. Enter President Trump.

He’s done what no one else has dared to do – slap additional tariffs on foreign imports of steel and aluminum.

Still, overall, America produces far more steel domestically than we import. Some estimates are around 74%.

If this is the case, then what is it that has so negatively affected American steel manufacturers?

It’s the same thing that hampers all U.S. manufacturers – government. The feds try to mask the real problem by creating a boogieman – someone or something tangible we can actually fight against. But the real boogiemen are the EPA, OSHA, and others. No matter what the tariff imbalance is, it will never hold a candle to America’s regulatory burden.

Few businesses worldwide must contend with such regulatory roadblocks.

To his credit, president Trump is trying to correct this regulatory injustice, but it’s going to take a long time to unravel, if ever. It’s a wonder that we can compete in any industry. But we manage, thanks to innovation.

Good ole-fashion American ingenuity. This is something that occurs naturally and cannot be halted or retarded, accept by government. However, innovation is a double-edged sword, because burdensome regulations also quicken the pace of innovation. It’s not about merely building a better mousetrap. It’s innovate or die.

Factories, mills, manufacturers and retail establishments are all automating, from autonomous robotic assembly lines, self-driving delivery vehicles, and self-service checkouts, to fully automated fast food establishments.

All this innovation is being driven by the necessity to circumvent burdensome and expensive regulations in an effort to compete.

Robots don’t get a salary. They require no incentives to work. They need no healthcare plan. They won’t go on strike. Robots don’t get a pension or retirement fund. They don’t need mandated sick days, paid holidays or vacation days. They need no safety gear, and have no workplace accidents for OSHA to penalize the company over. They won’t be caught on their smartphones instead of working. They work around the clock, so are not subject to government labor laws.

Fact is – far more jobs have and will be lost to regulation and thus innovation than ever will be through supposed trade wars. If Trump really wants to put more humans to work, cut the regulatory State to the bone. However backward this sounds, it will slow the roll of innovation born of necessity.

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