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And when domestic production just doesn't happen, what then? Will you allow your population to languish in poverty while prices are high due to an artificial fl

by ihsw 13y ago

And when domestic production just doesn't happen, what then? Will you allow your population to languish in poverty while prices are high due to an artificial floor? PS4s are a luxury, but when we apply the same logic to necessities then that argument falls on its face fairly quickly. Tariffs are also susceptible to political wrangling, where taxes are levied selectively.

dandelany 13y ago
We have the resources and labor force for domestic production, and there is plenty of money to be made. Nature abhors a vacuum. It would happen. > PS4s are a luxury, but when we apply the same logic to necessities then that argument falls on its face fairly quickly. So let's only apply it to non-necessities. We already have higher taxes on some luxuries, what would happen if we implemented them as import tariffs rather than sales tax?
fiatmoney 13y ago
"Necessities" are irrelevant. If you are worried about, eg, the ability of the poor to afford food, and have a simultaneous goal of promoting domestic industry, the optimal policy is income subsidies + the tariff you would have imposed anyway. In fact, you can use the tariff to finance the income subsidies, and it will work at some tariff level as long as the right proportion of the market for that good is not receiving the subsidies. Further, the industry growth prompted by the tariff is likely to disproportionately help those the income subsidy would be targeting. You'll notice the market for unskilled labor in the US is not exactly thriving. The political economy argument is more compelling, but in practice "free trade" ends up being anything but. International trade agreements usually take the form of market access conditioned on the kinds of regulation friendliest to the most politically influential (~largest) actors. This is how you get, eg, "free trade" agreements that massively strengthen copyright regimes, to the benefit of "original" content producers and the detriment of content remixers and consumers.

by ihsw 13y ago

dandelany 13y ago

We have the resources and labor force for domestic production, and there is plenty of money to be made. Nature abhors a vacuum. It would happen. > PS4s are a luxury, but when we apply the same logic to necessities then that argument falls on its face fairly quickly. So let's only apply it to non-necessities. We already have higher taxes on some luxuries, what would happen if we implemented them as import tariffs rather than sales tax?

fiatmoney 13y ago

"Necessities" are irrelevant. If you are worried about, eg, the ability of the poor to afford food, and have a simultaneous goal of promoting domestic industry, the optimal policy is income subsidies + the tariff you would have imposed anyway. In fact, you can use the tariff to finance the income subsidies, and it will work at some tariff level as long as the right proportion of the market for that good is not receiving the subsidies. Further, the industry growth prompted by the tariff is likely to disproportionately help those the income subsidy would be targeting. You'll notice the market for unskilled labor in the US is not exactly thriving. The political economy argument is more compelling, but in practice "free trade" ends up being anything but. International trade agreements usually take the form of market access conditioned on the kinds of regulation friendliest to the most politically influential (~largest) actors. This is how you get, eg, "free trade" agreements that massively strengthen copyright regimes, to the benefit of "original" content producers and the detriment of content remixers and consumers.