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Tariffs to offset Transport Subsidies?

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Jargon Posted: Fri, Dec 7 2012 8:25 PM

The world global economy has been based on, since the 19th century, large public works of transportation. These include the interstate highway project, the railroads, the canals, the airports, and the shipping ports. These are funded by public credit and eminent domain. This then, is an externalization of distribution costs away from the producers and onto taxpayers; an artificial subsidy to distant producers at the expense of nearer ones.

Since it wouldn't make sense to destroy the infrastructure that has already been created, nor would it be possible, would not a tariff direct production back to a more proper state of affairs, before the market was distorted in favor of large and distant producers?

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Jargon:
Since it wouldn't make sense to destroy the infrastructure that has already been created [...]
Why does it not make sense to do so?

To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process.
Rabbi Lapin: "Let's make bricks!"
Stephan Kinsella: "Say you and I both want to make a German chocolate cake."

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Jargon replied on Fri, Dec 7 2012 8:55 PM

Because destroying it won't put the money it was built with back into the pockets of the taxpayers. If we destroy it then we are "down" the cost of the infrastructure and "up" zero, whereas if we keep it we'll be "down" the cost of the infrastructure and "up" the infrastructure. Just as burning down the malinvestment-housing from the mid-2000's does not give us back the resources expended on it. Sure it might elevate housing prices, but what about the big picture? Building infrastructure and then destroying it makes as much sense as building housing and then destroying it. Yes it is a distorted, suboptimal outcome of the market, but you can still enjoy it.

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It does not have to be destroyed. It can be dismantled. The asphalt, cement, and steel could be used for other stuff, such as roads that make more sense than the current ones.

 

To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process.
Rabbi Lapin: "Let's make bricks!"
Stephan Kinsella: "Say you and I both want to make a German chocolate cake."

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Jargon replied on Fri, Dec 7 2012 9:12 PM

There are some problems with this though:

1) If the supply of roads/rails-laid is greater than the supply of road/rail-demanded, some road/rail will be discarded and sit idle.

2) It disrupts all of the trade based on already existing infrastructure.

3) One would have to create the infrastructure, if it were already torn out, with which to deliver the materials to the areas where transport is demanded

4) Once again, the taxpayers are paying for unionized labor, for rooting up the roads/rails.

 

Is this something you would support? Or are you just prodding me towards an error in my own thinking?

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Wheylous replied on Fri, Dec 7 2012 10:26 PM

Why not just end all future subsidies and not place either tariffs or destroy stuff?

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Jargon replied on Fri, Dec 7 2012 10:34 PM

Because Transportation Infrastructure is a huge, fixed installation. Simply glossing over it won't change the fact that it distorts the market towards mass and foreign producers. There are some negative effects of such an outcome: oligopsonistic labor markets, higher energy consumption via distribution, pollution associated with said energy consumption, less employment opportunities, large companies are arguably less efficient than small ones because of internal bureaucracies, sociological reasons.

Placing Tariffs probably wouldn't solve all of those problems. For instance, it probably wouldn't do much to increase the number of firms in the US since the rails/roads would still be there, but it would still help other things, like a net overexposure to foreign trade and overconsumption of energy.

Ending subsidies to energy would probably help this as well.

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Wheylous replied on Fri, Dec 7 2012 10:46 PM

And how do you know that the tariffs won't simply distort the market in another direction? Seems like more pretense of knowledge to me.

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Jargon replied on Fri, Dec 7 2012 10:55 PM

Tariffs just seem to me to be the most direct contradiction of an overexposure to foreign trade. Is it not?

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Wheylous replied on Fri, Dec 7 2012 11:00 PM

Roads deteriorate without maintenace. Plus, they sit on land which has alternative uses. I would just open it up to homesteading.

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Jargon replied on Fri, Dec 7 2012 11:12 PM

This is true. I'm curious though as to how one would homestead a road?

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Wheylous replied on Sat, Dec 8 2012 12:01 AM

Here are some ideas:

http://www.mises.org/journals/scholar/road.pdf

I don't agree with the entire analysis, but some parts are good.

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