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that's also where i've landed on the tariffs issue. theoretically a bad idea, but has practical uses beyond purely economic considerations. good tariff policy
by clairity 7y ago
that's also where i've landed on the tariffs issue. theoretically a bad idea, but has practical uses beyond purely economic considerations.
good tariff policy is hard to achieve in divisive political environments however. for instance, in many cases, you'd want them to go away dynamically as conditions improve, but lawmakers hate giving away their levers of power.
- Retric 7y agoI am convinced a low tariff of ~3% on all goods and services to every country is a good idea. But that’s never what happens, you get a huge mix of zero to insanity based on which industries have political power. As such a blanket ban on tariffs became a rallying cry. Food is often used as the counter example, but IMO domestic production is less valuable than a multi year stockpile.
- clairity 7y agowhy 3%? to overcome inflation? and why on everything instead of grossly disadvantaged industries? i haven't spent much time thinking about such details, so curious about the rationale.
- whatshisface 7y agogrossly disadvantaged industries = industries labeled as grossly disadvantaged = industries that managed to talk politicians in to giving them a huge advantage
- breischl 7y agoNot the person you're asking, but I could see doing it to "internalize" the risk of rare events like what we're seeing right now. Basically it applies an incentive towards regionalization over globalization, that can make the system more resilient to distant events.
- Retric 7y agoIt’s extremely expensive to grow bananas’s in Canada, so the correct response is to import them not add a huge subsidy. The point is to encourage domestic production, but not to the point of stupidity. Further, unlike a direct subsidy it’s adding tax revenue.
- sigstoat 7y ago> domestic production is less valuable than a multi year stockpile nobody is going to stockpile food or consumer goods when you're demonized for charging more for them when the demand goes up. there's no way to do anything but lose money on it.
- Retric 7y agoGovernments used to maintain grain stockpiles in case of famine. A modern equivalent could be run for vastly less than current farm subsidies. Especially if stocks where rotated and mostly refilled in years of massive surplus. PS: At the extreme end Honey can be stored for thousands of years at room temperature.
- celticninja 7y agothat's why stockpiles should be kept by government. they don't need to make money on it. should be easy enough, have 6 months worth in a warehouse, ship the oldest out the front of the warehouse to the supply chain while topping up with new product at the back. rotating it like this acts like a buffer,rather than something that is only accessed in dire emergencies and would be out of date or less effective due to age. the relatively small costs of a warehouse would be negligible
- dv_dt 7y agoSuch a tariff could be made more economically neutral if the tariff proceeds were distributed to citizens as a dividend too.
- eru 7y agoYou'd still get deadweight losses. Easier to image with a 1,000,000% tariff: nobody would actually pay the tariff, so there's no dividend to distribute. Yet, you get an economic impact.