Search This Blog

Sunday, September 13, 2009

UPDATE: Prof Mankiw - hypocritical?

Mankiw is ok with 'invading' the market and charging higher taxes on gasoline, but when it comes to tires that could be deadly to American consumers and when it comes to placating a 10% growth-rate country that has little to no regulation of safety in its supply chains... all of a sudden he dashes to the typical pro-market line of 'free trade'. Gas taxes sap the income of Americans and make it hard in these severe economic times given the necessity of gasoline consumption of thousands of Americans. Temporary Tarrifs sap the income of 10%-growth China and add to American coffers - until Chinese behavior changes when the tariff can be lifted. Does Mankiw not believe there is a negative externality to Chinese tires sold in the US? Perhaps the cost is negligible, but perhaps not. But perhaps the signal to China is priceless....

http://gregmankiw.blogspot.com/2009/09/victory-for-protectionists.html

14 comments:

Kostas Stamos said...

Your argument is entirely unconvincing (bordering on bad faith): why are tarrifs a better way to guarantee quality than safety standards?

If a malaysian company produces faulty tires, all malaysian companies should be punished with a new tariff?

What about the Firestone scandal? Where you then in favor of a heavy tax on all domestic tires?

Garth said...

i suppose my argument in this post is less about the merits of a tariff, which certainly is arguable, and more about the hypocrisy of supporting market intervention for one perceived social cost (pollution) while being against market intervention for another perceived social cost (lack of safety).

The difference to me between the Chinese industry and the American one is that, in America, companies like Firestone work their butt off and spend millions to fix the problem (which arguable Firestone did). Chinese companies do not and I believe that is in large part due to the culture created by the Chinese government.

Kostas Stamos said...

There is no hypocrisy since nation-wide tarrifs is a completely inefficient way to deal with the social cost of tire safety.

Some chinese tires may be unsafe, but some are safe, and there could be unsafe tires from the US (Firestone) or another country. So the proper way to deal with tire safety is to enforce safety standards regardless of tire origin.

On the other hand, taxing gasoline does internalize an external cost, since every type of gasoline consumed produces pollution (gasoline consumption also creates the externality of geopolitical instability but let's stick to the pollution factor).

Garth said...

I agree they are not 1:1 types of problems, though one could argue that every imported tire produces negative externalities (due to needs for trans-continental transportation etc).

Regardless, I still find it curious, despite your point which I agree with to a degree, that some economists (like Mankiw) seem to pick and choose their arguments based on textbook models as opposed to potential reality. I don't mind if someone is against Tariffs after thinking about it. But I find the blanket statement "Tariffs are never good" to be ridiculous - and yet that is what mainstream economics teaches.

The potential reality is that tire tariffs are "inefficient." The other potential reality is that cracking down on safety standards is unrealistic or even more "inefficient" - it's impossible for safety inspectors to 100% keep up with import surges such as this. Beyond that is, an assumption you are making about the relative efficiency of regulation vs. tariff - which is fine - I just happen to believe that a temporary tariff is a better mechanism in terms of incentives.

Some Chinese tires probably are safe - though I'd argue the evidence from the 2000s (esp. 2007) suggests that a good chunk of their tire market is not. It's not just tires - it's many of their products. At some point signals need to be sent that we will not tolerate (1) their currency manipulation that causes import surges to the US and (2) their cost-saving mechanisms at the sacrifice of public good.

Regulations send no message, provide no government revenue (actually take away from it), and provide no incentive for the Chinese government or Chinese industry to change their habits.

Nevertheless, I'll agree to disagree on these points. Please keep participating!

Kostas Stamos said...

Garth I have addressed some of your points in the comments of your previous post.

I indeed agree with the position that "Tariffs are never good", not just because this view is the mainstream economics view as you also recognize.

Tarrifs are essentially economic racism: Their proponents view "Chinese", "chinese products", "chinese tires" etc. as a uniform entity that a blanket measure (tariff) can be applied on, and "american products" as a different, again uniform, entity that no such measure should be applied. (your questions at the other comment thread follow this line of thinking)

I have read a nice argument that exposes the fallacy of this way of thinking here. It essentially says that, if you think that "tariffs are sometimes good", would you (at least in principle) also support tariffs between states? States do have different law environments after all.

Furthermore, labeling a tariff a "better mechanism" ignores most unintended consequences that may follow: for example, consider the horrible aftermath of a trade war that can always be ignited by a tariff.

Anonymous said...

Hi !.
You re, I guess , perhaps very interested to know how one can reach 2000 per day of income .
There is no initial capital needed You may commense to get income with as small sum of money as 20-100 dollars.

AimTrust is what you haven`t ever dreamt of such a chance to become rich
AimTrust represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.

It is based in Panama with structures around the world.
Do you want to become a happy investor?
That`s your choice That`s what you wish in the long run!

I`m happy and lucky, I started to get income with the help of this company,
and I invite you to do the same. If it gets down to choose a proper companion utilizes your funds in a right way - that`s AimTrust!.
I make 2G daily, and what I started with was a funny sum of 500 bucks!
It`s easy to get involved , just click this link http://sikebofof.o-f.com/igafyz.html
and go! Let`s take this option together to become rich

Anonymous said...

Good day!

For sure you didn’t here about me yet,
my parents call me James F. Collins.
Generally I’m a venturesome analyst. recently I take a great interest in online-casino and poker.
Not long time ago I started my own blog, where I describe my virtual adventures.
Probably, it will be interesting for you to find out my particular opinion on famous gambling projects.
Please visit my web page . http://allbestcasino.com I’ll be glad would you find time to leave your comments.

Anonymous said...

Buying generic Generic Viagra is by far the best way to get cheap Viagra . However keep in mind that the active ingredient must be sildenafil citrate in order to be the same thing as name brand Cialis .

123 said...

http://blogtext.org/4utiffany/
http://www.blurty.com/users/4utiffany
http://4utiffany.bravejournal.com/
http://4utiffany.blog.friendster.com/
http://iblogs.org/index.php?cmd=/public/user/blogs/name_4utiffany/
http://4utiffany.livejournal.com/
http://tiffany4u.viviti.com/
http://member-6p01347f31df99860b.vox.com/
http://4utiffany.webs.com/apps/blog/
http://4utiffany.weebly.com/new-blog.html

oakleyses said...

tiffany and co, christian louboutin shoes, polo ralph lauren outlet, coach purses, nike free, longchamp handbags, coach factory outlet, louis vuitton outlet, tiffany and co, louis vuitton, gucci outlet, kate spade handbags, louis vuitton outlet, true religion jeans, tory burch outlet, kate spade outlet, prada handbags, air max, michael kors outlet, chanel handbags, burberry outlet, ray ban sunglasses, oakley sunglasses, burberry outlet, prada outlet, nike shoes, michael kors outlet, longchamp outlet, louis vuitton handbags, ray ban sunglasses, coach outlet, jordan shoes, michael kors outlet, louboutin outlet, michael kors outlet, polo ralph lauren outlet, air max, michael kors outlet, michael kors outlet, coach outlet store online, louis vuitton outlet stores, oakley sunglasses cheap, oakley sunglasses, true religion jeans, louboutin, longchamp handbags, louboutin

oakleyses said...

hollister, louis vuitton uk, michael kors, sac burberry, true religion outlet, nike tn, vans pas cher, abercrombie and fitch, nike roshe run, nike air max, michael kors, louboutin, oakley pas cher, timberland, nike free pas cher, north face, nike trainers, polo ralph lauren, mulberry, ray ban pas cher, michael kors pas cher, new balance pas cher, ray ban sunglasses, air max, air force, barbour, sac longchamp, sac louis vuitton, vanessa bruno, lululemon, sac guess, sac louis vuitton, air jordan, sac hermes, louis vuitton, true religion outlet, nike free, air max, longchamp, hogan outlet, nike roshe, hollister, ralph lauren, north face, polo lacoste, air max pas cher, converse pas cher, nike blazer

oakleyses said...

hollister, herve leger, canada goose, insanity workout, nfl jerseys, canada goose, soccer jerseys, north face outlet, p90x, ugg, uggs outlet, canada goose, marc jacobs, new balance shoes, ugg pas cher, canada goose outlet, ferragamo shoes, canada goose uk, celine handbags, jimmy choo outlet, abercrombie and fitch, reebok outlet, mac cosmetics, longchamp, wedding dresses, ugg boots, beats by dre, mcm handbags, asics running shoes, ghd, giuseppe zanotti, babyliss pro, soccer shoes, canada goose jackets, ugg boots, ugg australia, lululemon outlet, birkin bag, mont blanc, north face jackets, nike huarache, nike roshe run, bottega veneta, chi flat iron, rolex watches, instyler, vans shoes, valentino shoes

oakleyses said...

montre homme, iphone 6 cases, thomas sabo, swarovski crystal, hollister clothing store, swarovski, lancel, rolex watches, moncler, ray ban, wedding dresses, air max, hollister, ugg, ralph lauren, coach outlet store online, pandora jewelry, converse, baseball bats, oakley, louboutin, juicy couture outlet, moncler, gucci, air max, pandora charms, hollister, moncler outlet, timberland boots, louis vuitton, toms shoes, juicy couture outlet, canada goose, vans, parajumpers, moncler, ugg, pandora charms, canada goose, moncler, moncler, links of london, converse shoes, moncler, supra shoes, karen millen

dong dong23 said...

louis vuitton outlet
gucci outlet
michael kors uk
michael kors outlet clearance
michael kors outlet
oakley outlet
beats headphones
ray ban sunglasses discount
nike sb
louis vuitton outlet stores
supra sneakers
louis vuitton outlet
oakley vault
ralph lauren outlet
coach factorty outlet
oakley sunglasses
adidas originals
michael kors outlet
kevin durant shoes 8
cheap nfl jerseys
coach outlet
nike roshe runs
cheap oakley sunglasses
cheap jordans
kate spade handbags
coach outlet
ray ban sunglasses
ray ban sunglasses
michael kors handbags
coach outlet
cheap nfl jerseys
toms shoes
caoch outlet
christian louboutin shoes
ray ban sunglasses
louis vuitton outlet
ralph lauren polo
replica watches
nike air max
louis vuitton handbags
20164.16wengdongdong