Brazil will provide $16 billion in tax breaks and toughen trade barriers to protect manufacturers hurt by a currency rally that’s fueling a surge in imports from China.
The targeted tax breaks and incentives, which amount to 25 billion reais over two years, were announced today by President Dilma Rousseff after a report showed industrial production plunged 1.6 percent in June, the second biggest drop since 2008.
The plan, called “A Bigger Brazil,” will eliminate a 20 percent payroll tax for industries such as shoemakers and software firms hurt by the real’s 48 percent rally since the end of 2008, which has reduced the cost of imports and strengthened decades-old complaints by business about excessive costs…
A bit protectionist, to be sure, but the basic thing is to reduce the cost of creating wealth within Brazil in order to ensure that the free labor of Brazil is not undercut by the slave labor of China. This is just rational policy. Free trade is all well and good – but only between people who are mutually free. Free trade with a tyrannical nation is a contradiction…there will be trade, but it won’t be free: it will come at a high cost to the free labor of the one and even of the slave labor of the other, as their chains are more securely fastened.
I’ve been saying it for years, and it is another thing I’ll keep saying until everyone agrees with me, because I’m right: we must ditch “free trade” and turn to “freedom trade”. The American worker can and will out-compete every other workforce in the world…but he can’t compete with a government which deliberately keeps wages low, allows sub-standard products to be shipped to the United States and connives as the theft of American intellectual property. As long as China is playing with loaded economic dice, it is asinine for us to allow them to enter our market place. Let them institute free and fair multi-party elections and then we can trade with them…until that time, keep them out.
Go ahead and try and argue me out of this position, but be warned that you would ultimately be defending a position where US wealth is transferred to a China which is building up a military force for the purpose of challenging us. Good luck with that.