James Rickards Talks About "The American System"

Published in the on-line "Daily Reckoning" on Nov. 11, James Rickards, a well-known authority on money matters, speculates on the financial implications of the US election results for investors. He talks about Trump's fixation with tariffs as an example of the "American System" but doesn't mention that this system was the product of the Whig party led by Henry Clay until it was converted to the Republican Party of Abraham Lincoln that has maintained Whig theories of economics and government until this day. 

The Whigs were a different and more complex group of gangsters than those leading other governments, who simply confiscate the wealth of the citizenry. Having no income tax available the Whigs used tariffs and land sales to finance their infrastructure projects. Of course the reality is that tariffs are a tax on the general population, not those supplying the imports. The infrastructure projects, canals, roads, railroads, battleships, ICBMs, etc., were built by cronies of the Whigs. It wasn't a free market and it isn't today. 

One would think that the goal of a free market democracy would be to lower the cost of everything, from peanuts to legal billings, from housing to medical care. Isn't that what "efficiency" is all about? When someone needs the shingles on his roof replaced he probably doesn't pick the most expensive bidder to do the job. 

Getting back to Trump's theories of trade and their effect on the economy, it should be understood that the policies he favors can work both ways. While the US is now described more as a "service provider" than a manufacturer, the services that the Yankees might seek to export are also vulnerable to trade restrictions. It would be easy for some small, developing country to kick McKinzie or some other consultant out the door.

One might wonder why the Philippines, a country with a long but tortured relationship with the US and a well-educated population, much of which is fluent in English, doesn't have a more prominent place in the US economic scheme compared to Taiwan, Japan or even Viet Nam. It's because the Philippine constitution requires majority domestic ownership of business and property. Imports are heavily regulated. This fact may have worked in their favor or not.