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Capitalism and Competition

Imagine you are an athlete. You are claimed to be the greatest in the world, the greatest of all time, the GOAT. You’ve won more championships and set more records than everyone else, and you are still in your prime. But recently, you found out there is an extremely good challenger. You’ve watched their videos, and it looks like they copied your style and added their own flair. But they are better if they are as good as those videos indicate. You will probably lose if you compete against them right now. Instead of competing with them, you decide you need to work on yourself to improve before going toe to toe. You change your schedule such that you only compete in areas or divisions that your rival isn’t competing in while you improve. If you don’t want an L on the record books, it sounds like the only real option: to improve yourself until you are ready to step back into the ring and compete with your rival. Or is it?

China seems to be that rival to the US. Trump tweeted about China being of no help and that “Our great companies are ordered to immediately start looking for an alternative to China, including bringing your companies HOME.” What isn’t being properly addressed or explained is that it looks like we are failing to compete, or even that America is losing at least one competition, and as a result, Trump gives an order to business owners to force business to stay in America. Suffice it to say, there are a few logical reasons for more tariffs, but does competition have anything to do with it?

Why would a capitalistic country impose rules that ultimately limit competition? Does limited competition promote growth? Doesn’t that go against the whole point of competition, almost like being more focused on the winning record than the actual skills and abilities in a sport? In boxing, it’s like the champion choosing not to fight a certain fighter because of the high risk of losing; they duck the fight and make it look like it’s for other reasons.

The Greatest Competitors in Sports, the GOATs

Can you imagine Michael Jordan or Kobe Bryant ducking a chance to go head-to-head in their prime? How about Jack Nicklaus passing up a chance to go against Tiger Woods in their prime? Would Michael Phelps, Usain Bolt, or any other top world-record-breaking athlete even think for a second to not compete against someone else in their prime? Not a chance.

Without a shadow of a doubt, the greatest competitors would look at the competition as a challenge to overcome. A challenge that they have dedicated their lives to overcome. They wouldn’t ever want to find loopholes or ways to stay number one that aren’t direct head-to-head competition. They want to be the best.

Even these great competitors will tell you it’s not just about wanting to be the best. Lots of people want to be the best at something, but clearly, very few are. It’s all about what type of work ethic and dedication they put into being the best. It’s about their relentless mentality and self-confidence. These great competitors would never doubt themselves in the final seconds or in a failed moment; they would immediately get back up, look at whatever they’ve done wrong, and attack the problem 200%.

Sports Versus Life

The thing is, in sports, it’s just that: a sport. We can’t compare a country’s well-being or national strategy to competing in sports. Taking a loss as a country could be devastating. Becoming number two would mean the US dollar would take a plunge, stock markets would plunge, and the world’s biggest investors would move out.

Why do we love sports so much though? What is it about sports that makes something in us stir? It’s the emotions tied to overcoming obstacles, the inner instinct to fight and beat the odds. Adrenaline and various chemical processes in our brains push us to go further and further when we play sports.

We learn from sports that one of the best ways to improve is competition. It doesn’t necessarily mean we have to compete directly against others to be the best, but we always need a goal line to surpass. If my fastest 100-meter dash is 10.9 seconds, and I’ve never seen or ran with anyone else, I could think that’s the limit of my abilities. I could work hard to improve but not see any improvement and think, that must be it. Seeing someone else do it faster could easily prompt more innovation and ideas about what more I can do.

Something feels intrinsically wrong about crippling competition to force businesses to go away from China. Not only is it against true capitalistic mentality, which America has always pushed as the best way to grow a country, but it’s against what anyone who is simply a competitor would say is reasonable. For better or worse, tariffs aren’t always about competing with China or even crippling them.

Tariffs Are About Collecting Money

If businesses are going to China, it’s because they are winning in those areas. They are bringing in money. It’s because they are creating products for less cost, and they have more people organized to provide labor at a lower wage. There is more land available, and their economy has been growing so rapidly that many investors have seen extreme growth in their investments. Easily over *500 billion* dollars of imports come from China into the US annually (as of 2019).

Perhaps many in America and the world believe that ultimately, businesses won’t want to pay the premium for Chinese products, and as such, find a new way to get their products. Countries all over the world do this – everyone is looking at ways to keep money and business internal, such that they maximize their profitability.

Passing the Buck to Consumers

The logic appears sound, but let’s take a real-world example to expose this a little better. Let’s use a simple example of importing shirts. If the US raises tariffs on shirts from China, the prices of shirts in the US go up; why is this? A business has three main options: find a US supplier, find a supplier in another country, or pay the extra for a Chinese supplier.

The US suppliers could get a lot more business, possibly driving their costs down a bit, but the cost difference is often extreme; for example, I’ve recently been quoted around three dollars a shirt by a few Chinese suppliers versus nine dollars a shirt from the cheapest US suppliers. This is for good quality material, screen-printed, or sublimation shirt. That means a tariff of 300% would be required to make up that difference. That won’t happen, guaranteed. The worst-case scenario is likely something around 25% for shirts/clothing, not nearly enough to justify paying nine dollars a shirt versus a new $3.75 a shirt.

The second option is to find a supplier in another country, not China. The next inexpensive countries are often somewhere in the middle, $5-7 a shirt – closer to competing with China, but still not winning. There are a few suppliers in other countries that can compete (but not many). All that means is that most businesses will likely continue to do what they’ve been doing: buy from China, increase shirt costs, and accept the possible sales hit due to a 75-cent uptick in cost to the customer. It happens all the time, and customers eat costs like that daily, with very little impact on businesses. Customers pay tariffs ultimately.

Trump knows this. Policymakers know this. Businesses know this. So what’s the real story? What is going to happen to China versus America? Absolutely nothing or very little will happen to China, at least if we’re talking shirts. Maybe some other random country can squeak out more business because of it.

The US is going to collect *billions* of dollars due to the tariffs, all money that is passed on to the American people and the businesses. It’s like more taxes before taxes, covered to look like innovative, competition-based issues. It feels less and less to do with competition, capitalism, or GOATs, for better or worse. Instead, it feels more like collecting money to pay off debt or fund new initiatives and spread to the people but at the same time ‘sold’ to the people.

Right or Wrong

It’s not right or wrong as far as the decision to impose tariffs. There are valid reasons for both. What is wrong, however, is that the real reason behind the tariffs and what is happening feels obscured. We tend to use partial truths to validate or confirm our biases. We see things often in ‘right versus wrong,’ and the media and politicians know this and use it to serve their own agendas.

Technically, China could see an impact due to the tariffs. Maybe a small number of businesses will go elsewhere or come back to the US. Maybe a small number of businesses will innovate. But *all* of the story should be told to the people, not simply “bring business home to the US” or “we don’t need China.” We need tweets to also say, “we will earn billions with these new tariffs” and “you may see an increase in prices in your products” and “you the people are helping us pay these tariffs until US businesses can do better”.

I guess that’s too much for any politician to say. We, the people, are partly to blame. We get frustrated at the mention of something that is contrary to our beliefs and will quickly “boooo” them off the stage. We can’t tolerate that often, up to half of the population disagree with us on just about every subject and can’t see the partial truths or positive aspects of what they believe.

It starts with us, let’s do better as a whole and ultimately hold ourselves and everyone else accountable to a higher standard of open tolerance and understanding. Accept disagreement and contrary opinions with open arms and don’t see them as a moral ‘right or wrong’ or a threat to your person or ideology.

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