02 July 2019

Tariffs for a Green Economy

Can we use tariffs to build a green economy?   Imagine if the debates you hear on the news were of tariffs like these: 

  1. Tariffs on products that cannot clearly prove freedom from exploitation throughout their supply chains.  Including freedom from exploitation of people, animals, land, water and natural resources. 
  2. Tariffs on goods that cannot demonstrate that they were produced under fair working conditions. Including living wages, freedom from discrimination, the right to organize, compulsory time off, etc.
  3. Tariffs based on the environmental footprint of goods; including, carbon emissions, water use, natural resource use, and waste production.
  4. Tariffs on products that do not have a clear and sustainable end-of-life.  Meaning they must be easily compostable, readily recyclable, readily adaptable for future use, or come with a buyback program from the manufacturer. 

Shortly there would still be debate about tariffs, some of the arguments would likely be the same while others would be clearly different.  Most are aware that the general goal of tariffs, putting politics aside, is to change the behavior of those whom the tariff is being placed upon.  A sort of tax on “bad” behavior if you will. Justification for the current tariffs has included unfair trade practices and national security, among others. So, one could argue, the tariffs are a tool, used to influence those engaged in unfair, or undesirable behaviors, with a goal of changing those behaviours.  Alternatively, tariffs can be used to encourage more preferable behaviors, using more domestic supply chains for raw materials and technology, for instance. So, it seems like tariffs could be a tool in our path towards a more sustainable society.  

In practice, the cost of tariffs are not paid directly by the entity upon which they are placed, but are instead paid by those who purchase the tariffed goods.  This has been a point of contention in our current situation in the USA, where the general public perception of tariffs is that they are “bad” as they hurt consumers by increasing prices on consumer goods.  These increased prices can serve as an encouragement to purchase other, non-tariffed goods, the producers of these alternate products may look at these tariffs as “good,” as they make their products more competitively priced and, potentially, bring in new customers.  Presumably these goods are produced by entities with more favorable behaviors, fair trade practices for instance. These changing purchasing behaviors, away from the tariffed goods, are the real cost paid by those being tariffed. With the goal that they will lead to a change in the behaviors that provoked the tariffs in the first place, creating a more fair playing field. 

It is here that we see the case where tariffs can be a tool in our move to a more sustainable economy, and society.  The fact is we should be paying the true value of the products we consume, and, in all likelihood, we are not. I’m not in favor of putting undue financial burdens on people, but I’m not opposed to tariffs either, in fact I would support them for the right reasons.  It’s hard to argue against the fact that our capitalist society has thrived off of worker exploitation. There are countless stories of the use of child labor, slave labor, menial wages, and horrid working conditions in factories overseas that produce goods for the western world.  A sustainable society is built around the triple bottom line, which includes social equity. If we are to build a society that promotes social equity, that includes fair and equitable labor practices. This includes fair living wages, a safe and healthy working environment, access to healthcare and time off, freedom from discrimination, no child or forced labor, and the like.  These aren’t unreasonable requests but, some, or all, of these are lacking throughout the world.  

It’s sad to say but, while the USA has laws against child and slave labor, we still benefit greatly from unfair labor practices throughout the world, and even within our borders.  Even those of us who work to be more sustainable may support illegal labor practices, through the purchases we make, due to the lack of transparency. We are often ignorant of where our products come from, what they’re made of, and who makes them. If tariffs were placed on all goods entering the country that could not demonstrate fair labor practices we would likely be paying a more realistic price for all of the items we consume, from food, clothing, electronics, etc. It shouldn’t come as a surprise, that if we lived in a world where all workers had a living wage and the other benefits listed above, and abandoned this culture of abuse, prices would rise, likely significantly.  For this reason, this approach would likely not find immediate favor with many and can only come with a real push towards a sustainable society while working holistically.  

If we are truly looking to build a sustainable economy and sustainable society we should be paying a fair price for all we consume.  A price that reflects the true value; the true cost of raw materials extraction, farming, production, transportation, the whole life cycle.  By identifying unsustainable practices, as well as sustainable practices, tariffs can be used as a tool to help build a sustainable world.