Some Trade Links

by Don Boudreaux on March 7, 2018

in Balance of Payments, Crony Capitalism, Myths and Fallacies, Trade

My intrepid Mercatus Center colleague Veronique de Rugy debunks four bad arguments for Trump’s new tariffs.  A slice:

Precisely because cronyism truly is unhealthy and unfair, the appropriate response to cronyism abroad is not more cronyism at home.

When a country, any country, subsidizes its domestic industries, it actually hurts consumers in their own consumers as well as the non-subsidized companies. In short, there’s no such thing as a free subsidy.

Lauren Landsburg argues persuasively that Trump’s tariffs take us Americans to the cleaners.

Jim Tankersley, in the New York Times, explains that Trump’s ‘understanding’ of so-called ‘trade deficit’ is, in fact, deep misunderstanding.

Richard Ebeling is correct that we Americans will be lucky if the only consequence of Trump’s tariffs is that they make us a bit poorer than we’d be otherwise.

In this op-ed, John Cochrane explains well what ought not need to be explained at all but which, in fact, requires constant repetition – namely, nearly all international trade is good regardless of the policies of foreign governments.  A slice:

Tariffs, like all protection from competition, are great for the protected business and its workers, at least for a while. If you’re a practical businessperson you think the way to get the economy going is to just to replicate for the economy what is good for your business, and hand out protection to everyone. But protection only helps one business at the expense of all the others, and at the expense of consumers, and the damage is worse than the gain. What is good for an individual business is not good, scaled up, for the economy as a whole. Business people and bankers turned policy makers miss that.

Tariffs, like other protections, also help visible, large, and politically powerful constituencies. The larger pain is spread throughout the economy, in ways most of us may not even notice in day-to-day living. But it adds up.

Also from John Cochrane is this reminder to remember the 1930 letter that 1,028 economists sent to Herbert Hoover in opposition to the Smoot-Hawley tariff.

Mark Perry shares 22 reasons why Trump’s tariffs – that is, his punitive taxes on Americans who buy imports that he and his cronies disapprove of – should be opposed.

“‘Reciprocal’ Trade Demands Defy Basic Economics and Common Sense” – so argues Scott Lincicome.  Here’s Scott’s conclusion:

There is no doubt that some (but not all) nations impose higher barriers to imports of U.S. goods and services than the United States does in return. This is not, however, a weakness in the current system but rather a testament to sound American economic policy, which has generated undeniable benefits for the vast majority of Americans. In short, the United States should not start impoverishing its citizens because other nations lack the economic insight or political strength to stop impoverishing theirs. To do so would not only ignore common sense and basic economics, but also lead to higher trade barriers, fewer reforms and therefore a lower standard of living for us all.


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