Donald Trump’s border wall with Mexico will not be paid for by American consumers, nor by Mexico itself. It isn’t so simple as to say that it will be paid for by group A or group B, but if you had to put down one group as paying for it, it would be international corporations. Though, ultimately, the border wall’s budget comes from the U.S. Treasury’s general fund, the Trump administration has proposed to pay for it through a 20 percent tariff on Mexican imports, according to CNN. That is a specific offset to fund a specific project.
While several writers have tried to frame this as Americans paying the wall, such as Scott Horsley of NPR and Eric Sherman of Forbes, that view shows a complete lack of knowledge of economics — a purposeful distortion of facts by neoliberals who favor free trade because it favors international capitalism over workers. Americans, while they may possibly pay more for products, end up with more jobs and job security in the end.
To understand how tariffs affect the welfare of your average American, it is important to understand how corporations work, in particular international corporations. Corporations are amoral constructs which are driven to do one thing: make as much money as possible. While several businesses incorporate to protect their personal assets from being seized in lawsuits and such, when I describe corporations here it doesn’t really describe truly incorporated small businesses like the family-owned print shop or the self-employed lawn maintenance guy, which may be driven by morals, but rather the large entities which are the reason for incorporation in the first place; entities that exist solely to make money for their investors.
Corporations will make money however they can, and a huge part of that is shipping jobs overseas where labor standards and environmental standards are lower, allowing for the workers to be more exploited there than here in the United States, where a strong labor movement had once won many protections for workers and where the citizenry, working or not, won protections for the environment because they didn’t want to die early of breathing in soot 24 hours a day or have radioactive lakes and rivers. It has been far from ideal here, but things have been done.
Paying workers is an expense, as is resolving environmental concerns by filtering out pollutants, properly packing and disposing of waste, or dumping in regulated areas to minimize impact on the populace. Even though these practices are better for society as a whole, if a corporation can make the income private and the expenses communal, by forcing the populace to pay to fix problems, often at a much higher cost, that maximizes their profit. So, if the cost of production is cheap enough compared to here, after adding on the costs of shipping the product back to the United States, it makes sense for an amoral corporation to shut down factories here and start them up overseas. As technology advanced, that also included some service sector jobs which can be done remotely, which is why so many call centers seem to provide you with a representative from India.
Another positive for corporations is that it then weakens the labor movement here as Americans try to be “competitive” with the rest of the world by relaxing environmental protections and workers being willing to work for less pay and less rights, even as their productivity soars. In effect, working people lose out in the trade as they become a lot less economically secure, and receive less and less of a percentage of their pay.
In essence, tariffs can serve as a wall that protects labor from their corporate masters. By raising the price of the goods by 20 percent, which fund the United States Treasury as well, the cost of these cheaply made products rises which makes their demand by distributors, who are the ones buying them, falls. Here, in the United States, the goods can be sold for a higher price, which keeps the profit per piece in check, or it can result in these products being sold for cheaper to the distributors to keep volume up, but which cuts into that profit. Either way, it is less profitable to ship these jobs overseas, and perhaps keep them overseas, resulting in fewer factories closing in the United States, perhaps jobs moving back to the United States, and of course a more empowered labor force which can demand a fairer price for their labor than before.
So, when President Clinton negotiated NAFTA in the 1990s, that is why unions were up in arms; the free trade agreement was an attack on the American worker. The liberal-leaning Economic Policy Institute outlined exactly how NAFTA assaulted the American worker in these ways. Neoliberals serve, not labor, but the interests of these corporations, which is why Bill Clinton and his New Democrats pushed through NAFTA and why President Obama, a Democrat, tried to push through the even more pro-corporate TPP which would have given corporations the ability to successfully sue governments for profits lost by strengthening labor and environmental laws. Of course, the pro-corporate Republicans weren’t much different, using it to turn non-unionized workers against unions, and turning the working class in on itself.
Who is Paying for the Wall?
While Americans who have sought to weather the assault on their incomes by buying cheaper, foreign made goods in what you could call Walmart economics, many have to start paying a higher amount for some products (especially since the tariff only targets Mexico and not all sources of cheap labor), and they will ultimately gain by the fight of United States labor to increase their income across the board, now having some increased leverage from the tariff. They are not paying for the wall.
Mexico will lose jobs and income, so they are harmed some in America’s gain, but in losing these jobs, they also lose the pressure on them from the international corporations and may, possibly, be able to improve their overall tax base and strengthen labor and environmental law they were being pressured into weakening. They aren’t exactly paying for the wall.
International corporations, being the ones who were benefiting from the widening of the labor market and the possible places to build factories with weaker environmental laws, ultimately are the ones paying for the wall. It is their profits which are taking a hit in paying that tariff, they are the ones who will start paying to relocate production back in the United States, and they are the ones who will be paying labor more as they lose leverage over them. International Corporations are paying for the wall.
When you hear someone claiming that your average American is paying for the wall, remember that the rhetoric is just coming from international corporations that, regardless of the wall itself, do not want any barriers to underselling American labor.
But Why have a Wall?
While I firmly approve of the means of paying for the wall, the wall itself is a travesty.
First, it is rather ineffective overall. The majority of illegal immigration does not come from immigrants illegally entering the United States; it comes from them legally entering the United States and then just not leaving. A wall isn’t going to keep out people who have entered the United States legally. Furthermore, people die trying to cross the border, so this is meant to stop people who are determined and desperate. It is commonly said that you get over a 20-foot wall by bringing a 21-foot ladder, but there could also be a 10 foot tunnel, especially as this is not a manned wall. Besides, in April last year, the BBC reported on the thirteenth sophisticated tunnel dug to traffick drugs from Mexico into the United States that made it all the way to San Francisco. If people are willing to do such things for profit, people who are desperate to make it to the United States can do similar.
Second, it is being built on the true premise of racism, not national security. The September 11 hijackers did not come into the U.S. across the Mexican border, they came here on visas: student, travel, and business. People want the wall on Mexico’s borders because they are racist against Latinos (or Hispanics if you prefer that term).
Trump’s border wall is absolutely no good for America despite its superior funding.
Also, let us keep in mind how undocumented immigrants affect the labor market; it is not the fact that they exist but rather that they cannot legally work. Employers take advantage of this, and moreso in the small businesses that are incorporated here, realizing that they can get more from these workers because they are desperate for any means of making a living. The most effective means of preventing them from dragging on the United States job market is to simply give them the legal right to work; if you give them the legal right to immigrate, amnesty is the best protection.
Let’s Expand on this Tariff
However, let’s not keep ourselves bound to the idea that this Mexican tariff is enough. We should take this as a serious program that we should be using extensively with every nation across the globe. There should be an administration which sets these tariffs automatically by calculating the savings employers would receive by the lower standards for labor and environmental protection in different countries and negating those savings. Of course, they shouldn’t be taking into account natural advantages different areas have in producing different products, such as that bananas grow much better in Ecuador than in Ohio, but the unnatural advantages that come from exploiting labor and the populace’s health should morally and ethically be negated. I would even like to see a subsidy given to imports from nations that hold higher standards than us; though I don’t see that coming in the forseeable future.
How about we build a wall that makes the Mexican border wall seem petty and small; even the Wall from Game of Thrones will seem small in comparison. How about we build “Donald Trump’s Tariff Wall to Make the American Labor Movement Great Again — A Golden Standard”?
I know that has to sound intriguing to the president.
[Featured Image by Justin Sullivan/Getty Images]