In this article, Robert Murphy says that "Most economists favor free trade because (at least under classical assumptions) when the government imposes a tariff, the monetary gains to the winners are outweighed by the monetary losses to the losers." Again: "And as we've seen, the general rule is that a tariff hurts consumers more than it helps producers."
What is the reasoning behind this?
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Danja:I don't think it really matters. This is an economics discussion.
Isn't taxation/properity rights a part of economics?
Danja:Exactly. That's the nature of the private return being too low.
OK, whats the problem with that action not being undertaken? Hasen't the original actor benefited by doing another action instead of benefiting another with his action that created a positive externality.
Danja: 1. I'm not a scientist and neither are you, so it's not my place nor yours to prove or disprove global warming. From an economics perspective the relevant question is, if global warming is real what needs to be done about it? 2. How can one person stop global warming?
1. I'm not a scientist and neither are you, so it's not my place nor yours to prove or disprove global warming. From an economics perspective the relevant question is, if global warming is real what needs to be done about it?
2. How can one person stop global warming?
1. Good point.
2. Assuming global warming is real, will only one person want to stop it from affecting their property?
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Thanks for the hijack Danja. Great jorb on that one.
Getting back to the original topic, is the reason tariffs hurt consumers more than producers that companies will only outsource if the wage of the second best domestic job is higher than the foreign wage?
From here, p. 90:
"Let:• W = aveage original wage of workers laid off• w = average wage of laid off workers in 2nd best job• N = number of outsourced workers• f = average foreign wageThus:• Total cost to US labor:(w - W)N• Total gain to shareholders:(W - f)N• What does the US gain overall? Capitalists only outsource if:(W - f)N > (W - w)NW - f > W - w-f > -wf < w• This must be true, because if the 2nd best wage wasn't better thanthe foreign wage, companies would just offer to reduce theiremployees salaries."
Admittedly, this doesn't really have anything to do with consumers, so I wonder if it is the right answer...
It only sounds like I'm trolling because I'm using your language. I certainly don't consider taxation to be theft.
Now consider yourself to be banned. Good riddance.
Freedom of markets is positively correlated with the degree of evolution in any society...
That's not true if there are market distortions. Again, if there are learning externalities that aren't taken into the account of profit-loss calculations, that's inefficiency.
There is no such thing as a "learning externality". Toss the book of fairy tales you consider to be an economics textbook in the fireplace.
Danja: liberty student:And how have you measured the costs of protection? How many people paid too much for motorcycles, foreign and domestic? How many fewer motorcycles were sold under the tariffs? By comparing the loss in import sales with the stock market value of the firm around the time the protection was lifted. Harley Davidson is a clear cut case for tariff protection.
liberty student:And how have you measured the costs of protection? How many people paid too much for motorcycles, foreign and domestic? How many fewer motorcycles were sold under the tariffs?
By comparing the loss in import sales with the stock market value of the firm around the time the protection was lifted. Harley Davidson is a clear cut case for tariff protection.
Not to mention that around that time Harley Davidson made lousy, crappy motorcycles around that time and their Japanese competitors made better motorcycles. They were lucky that they managed to turn their business around.
You also just contradicts practically the entire economic profession. To date, I never ever heard of an economist, neoclassical and Austrians argued for traiffs. Rather, there is a consensus that free trade is a clear and unambigious benefit to the economy. You got a high wall to climb there.
Free trade is benefical by deduction from logic using the principle of comparative advantages. Let see if you can refute this.
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I'm sure there are economists who get all wet over economic protectionism. That doesn't mean they're correct, of course, or not attacking windmills of their imagination's own artifice. Isn't Sanford Ikeda in favour of them, for instance? Incidentally, this is one area where Krugman is good.
Ok, I've realized that my question is this: why is protectionism a negative-sum game rather than merely a zero-sum game?
Prima facie it would seem that tariffs are a zero-sum game, because producers gain to the extent that consumers lose.
However, once you factor in the cost of tariff bureaucracy and the weakened division of labor, then tariffs are a negative-sum game; everyone is worse off.
Are there any other reasons?
What about the loss to foreign producers?
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