His central argument is that, in the end, it is U.S. consumers who will pay the cost of imposing higher tariffs on automobiles or any other product made in Mexico.
These measures, which tend to reduce competition in the domestic auto market in the United States, will result in an increase in the average price of all cars, regardless of where they are manufactured, and a decline in overall quality. Furthermore, few jobs will be recovered by such measures in the U.S. auto industry.
If these measures are applied to other products, the welfare of millions of families in the United States will be seriously affected for the same reasons, with a domino effect across the economy.
These and other evils are triggered by protectionism, which on many other occasions has demonstrated its ability to destroy family living standards.
Who Is Going to Pay for the Wall?
U.S. economist John Kenneth Galbraith, who was influential in his day, said that when most people look at the rich, they imagine that they must be very intelligent. Galbraith added that many rich people come to believe the same thing, namely, that they are very intelligent precisely for being rich. Because of this self-deception, it is often difficult for someone who is rich to acknowledge that they are wrong on an issue.
It appears that Mr. Trump is one of those who believe they are very intelligent, when, in fact, his intelligence is, at best, mediocre.
For example, Mr. Trump promises that Mexicans will pay for the border wall that will separate the United States from Mexico, construction of which will begin as soon as he assumes office on January 20.
This is undeniably a hard and undeserved blow to Mexico. But this anti-economic measure will represent a much greater blow to the United States, and the culprit will be an American president who thinks he is very intelligent because he is rich.
Mr. Trump wants a protectionist tariff to be slapped on cars manufactured in Mexico that are sold in the United States. The tariff will have to be paid by the importers in the United States, and the cost of the tariff will be added to the price of the imported cars sold to the American public. As a result, Americans will be paying for the wall on a daily basis and as long as the protectionist measure remains in place, they will be paying for it in the form of higher prices on imported cars.
However, the damage does not stop there. Since the imported Mexican cars are going to cost more, the entire U.S. auto industry will be able to raise prices, since the competition from Mexico will have been canceled out with the import tariffs. This is wonderful news for American car manufacturers in the United States! But it’s terrible news for the American consumer, who will have to pay more when purchasing a car!
Walls between nations are a sign of weakness. The Soviet Union built a tremendous wall between the parts of Europe that it dominated after World War II and the rest of free Europe.
The purpose was not to prevent Europeans from entering, but to prevent the residents of the countries occupied by the Soviet Union from fleeing to a free Europe, to escape a USSR that suffocated the productive aspirations of its inhabitants.
Let’s look at the lesson of the USSR: if it becomes easier, simpler, and safer to establish a business in Mexico; if we eliminate bureaucracies and curb corruption with the total legalization of all types of drugs ̶ such as Portugal has done ̶ ; if we consistently and gradually reduce the taxes that we are charged to sustain a parasitic class of politicians; if we do all this, ̶ and why shouldn’t we do it ̶ we will see that it will be the gringos who will want to jump over the wall to come to Mexico to organize their lives.
If Mr. Trump erects the wall, and we do not react positively to make our country more attractive for investments from our own citizens and foreigners alike, this will inevitably result in greater impoverishment for Mexico. Millions of Mexico’s poorest will present Mr. Trump with a wave of refugees who will reach the United States, even if that means swimming to get there.
Who will pay for the wall? The Americans themselves are going to pay for the wall, many times more than the cost of actually building it.
This xenophobic measure of Mr. Trump will hopefully awaken us from the shameful intellectual lethargy that we are afflicted with, the focus on leaving everything to the government, formally fulfilling work-related tasks without caring about quality or excellence, and the wasteful allocation of public resources that our politicians practice.
The author is honorary chairman of Grupo Elektra.