5 ms·

Removal of trade barriers is always good, even if it's unilateral and asymmetric. https://econrsa.org/wkshops/tradepolicy/session2day1-whatshouldtradenegotiato

• frgtpsswrdlame 8y ago
  If you've got an argument that supports: >Removal of trade barriers is always good, even if it's unilateral and asymmetric. then just make it. A strong statement and a pdf link isn't very convincing.
  • rory096 8y ago
    I'd say the Nobel Prize winning trade theorist explains it better than I can, but feel free to read the NYT editorial by the (non-prize-winning) economist if you prefer html to pdf.
    • frgtpsswrdlame 8y ago
      I ask people to make their own arguments because I think it's lazy to post things that even you don't understand. But if you want to me talk Krugman then okay: Here’s an easy one: suppose that an industry generates negative environmental externalities that are not properly priced, and that international trade leads to an expansion of that industry in your country. Then that trade may indeed reduce national welfare Okay so he admits that externalities can outweigh our more traditional views of gains from trade and then he moves on to state and refute a different argument. The case for these tariffs is best going to be made through the externality argument though and tariffs/trade restrictions are an example where we believe externalities are outweighing our benefits. Seen through this lens common economic reasoning would tell us that a large improperly priced externality requires a tax to bring the item up to the proper price. In trade this tax is called a tariff and it's common sense to use it if you believe your country is being indirectly harmed by free trade. Trump (but more probably his advisors) believe there are large external effects to having a strong technology industry at home in the 21st Century. Accordingly they are using tariffs and trade restrictions to maintain that.
      • rory096 8y ago
        >I ask people to make their own arguments because I think it's lazy to post things that even you don't understand. My degree happens to be in economics, but okay. The argument is that trade barriers, both unilateral and bilateral, cause economic losses and are therefore bad. The belief that asymmetric trade barriers result in the unrestricted country "losing" is wrong - removal of trade barriers results in a reduction of deadweight losses even without symmetry. This is well-supported economic consensus with acceptance among economists comparable to that of climate change among climatologists. >Okay so he admits that externalities can outweigh our more traditional views of gains from trade and then he moves on to state and refute a different argument. No, he really doesn't. His point is that the proper solution to externalities is to price them in domestically, and tariffs in lieu of environmental policy harmonization are "second best" with unconvincing arguments in favor. However, this discussion is about using tariffs as a tool to combat externalities unrelated to trade and is tangential at best to our discussion. >The case for these tariffs is best going to be made through the externality argument though and tariffs/trade restrictions are an example where we believe externalities are outweighing our benefits. Seen through this lens common economic reasoning would tell us that a large improperly priced externality requires a tax to bring the item up to the proper price. In trade this tax is called a tariff and it's common sense to use it if you believe your country is being indirectly harmed by free trade. This is precisely where Trump is wrong. Removal of trade barriers has positive externalities, not negative. It is a Kaldor-Hicks improvement. >Trump (but more probably his advisors) believe there are large external effects to having a strong technology industry at home in the 21st Century. Accordingly they are using tariffs and trade restrictions to maintain that. This is not in line with their stated reasoning. They believe tariffs are necessary because trade deficits are losses.
        • rayiner 8y ago
          > No, he really doesn't. His point is that the proper solution to externalities is to price them in domestically, and tariffs in lieu of environmental policy harmonization are "second best" with unconvincing arguments in favor. How does that help? Isn’t the country that has lax environmental laws and can sell cheaply going to win over the country that has tough environmental laws? (Genuinely asking, my degree is in engineering not economics.) And do these models account for changes in dynamic equillibrium? E.g. a foreign country engaging in dumping ends up killing the domestic industry? It seems odd that exercise of monopoly power can lead to deadweight losses in a closed domestic market, but a country engaging in anti-competitive measures overseas is best handled by doing nothing. Do these theories account for the interactions between economics and government. (E.g. the ability of foreign governments to exercise power over companies in their jurisdiction?) I’m not trying to argue with you by speculating, I’m trying to figure out the metes and bounds of your assertion.
• rich-w-big-ego 8y ago
  Trump believes that the USA is getting a bad deal - not that trade is bad. China may purchase US companies and Universities, but US is nowhere close to being able to do the same in China. Also, you say that Trump misunderstands trade deficits. Can you prove that at all? He's a very successful businessman. I would be more likely to think it's you with the misunderstanding.
  • rory096 8y ago
    >Trump believes that the USA is getting a bad deal - not that trade is bad. China may purchase US companies and Universities, but US is nowhere close to being able to do the same in China. I'd like to believe this is so, but the evidence doesn't support it. Trump and Peter Navarro have repeatedly criticized trade itself, and particularly trade deficits, rather than asymmetric trade barriers. https://www.nationalreview.com/2018/06/trump-anti-free-trade-position-protectionism-misguided/ https://www.nationalreview.com/2018/06/trump-anti-free-trade... https://www.axios.com/peter-navarro-globalist-protectionist-china-trade-war-policy-c9822426-aa7c-4706-b1a4-3c16cab63098.html https://www.axios.com/peter-navarro-globalist-protectionist-... https://www.washingtonpost.com/business/over-four-decades-trumps-one-solid-stance-a-hard-line-on-trade/2018/03/07/4b1ed250-2172-11e8-badd-7c9f29a55815_story.html https://www.washingtonpost.com/business/over-four-decades-tr... >Also, you say that Trump misunderstands trade deficits. Can you prove that at all? He's a very successful businessman. I would be more likely to think it's you with the misunderstanding. Business and economics are very distinct fields; the idea that success in business leads to academic understanding of economics is a misconception. Trump believes, as shown in the linked tweet, that a country "loses money" when a trade deficit exists. In reality, trade deficits and capital inflows are inextricably linked, due to an accounting identity. >As economist Milton Friedman argued long ago, the real gain from international trade is not what we export but what we import.
  • sv123 8y ago
    I'm interested in seeing which business of Trump's has been successful. AFAIK anything that does not have to do with real estate has been an abject failure.
  • tptacek 8y ago
• null000 8y ago
  Removal of trade barriers is a net good, benefits are not distributed equally, and historically have accrued more strongly to those who already have the money to take advantage of the decreased trade barriers. Removing tariffs on manufactured goods between the US and China, for instance, strongly benefits people who can set up factories to take advantage of the cheaper labor and materials. It weakly benefits consumers who get slightly (if at all - corporations might just take the difference as profit depending on the level of competition) cheaper goods, and it disadvantage all of the working class that now has to compete with cheaper Chinese labor. This can be mitigated by income redistribution, funding for job skills retraining, and so on (although it kinda sucks to find yourself back at the bottom rung of a new field at 40 because you can't find job opportunities anymore) but, historically, these programs haven't received any funding, so it's pretty safe to assume they won't exist until proven otherwise.
  • speedplane 8y ago
    Economists always love the slight of hand that you pointed out. If there are a million losers, and a million plus 1 winners, economists see it as a sound policy.
    • throwaway2048 8y ago
      Its more like, if there is a million people losing $100 but one person gaining $100,000,0001 its sound policy.
  • rory096 8y ago
    Right. Trade is a Kaldor-Hicks improvement, not Pareto. Losers exist, though they could be theoretically compensated for their loss to create a Pareto-efficient outcome. The same is true of immigration and automation. https://en.wikipedia.org/wiki/Kaldor–Hicks_efficiency https://en.wikipedia.org/wiki/Kaldor–Hicks_efficiency >(if at all - corporations might just take the difference as profit depending on the level of competition) This doesn't make sense — if corporations 'absorb' that profit, consumers have no reason to purchase imports over domestic goods. Moreover goods with heavy competition from low-wage countries tend to have highly competitive markets, so the price is the marginal cost of production. >This can be mitigated by income redistribution, funding for job skills retraining, and so on (although it kinda sucks to find yourself back at the bottom rung of a new field at 40 because you can't find job opportunities anymore) but, historically, these programs haven't received any funding, so it's pretty safe to assume they won't exist until proven otherwise. Actually these programs tend to be well-funded but undersubscribed. https://www.reuters.com/article/us-trump-effect-coal-retraining-insight/awaiting-trumps-coal-comeback-miners-reject-retraining-idUSKBN1D14G0 https://www.reuters.com/article/us-trump-effect-coal-retrain... https://en.wikipedia.org/wiki/Trade_Adjustment_Assistance https://en.wikipedia.org/wiki/Trade_Adjustment_Assistance