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Tuesday, October 26, 2010

We Need More Trade Barriers with China

...and we need it now.

I've said it before, and I'll continue saying it.   And, I may be only econ person to do so, but damnit, the only way to fight this kind of stuff is to impose a penatly - and the best kind of penalty is a sharp tax on these kinds of goods coming from China.  Will it be perfect; will perfectly harmless goods be taxed?  No, and probably respectively.  But doing this is a sure way send a signal to China that these kinds of industry practices will not be tolerated.  We should demand this behavior stop, along with its trade currency manipulation.  Until their manipulation stops, we should continue to enforce our trade restrictions.   That's the only sure way to double exports or whatever absurd thing Obama thinks he's going to do without a real plan to do it.  At least this is a plan, and not some edict on high with no teeth.

Because the US is such a large nation in terms of the degree of importation of Chinese goods and exports on the world market, it has some power in the market.  Nevertheless, there would be some amount of dead-weight loss, which I suggest might be more than offset by the benefits mentioned in paragraph one.  In addition, by taxing these 'bad' goods, we essentially are correcting a negative externalities imposed by Chinese producers/government on American consumers.   Despite that benefit, consumers would be hurt by higher priced Chinese imports after the tariff policy is enacted.  However, the government would be taking in a presumably good chunk of change in taxes which it could then turn around and provide a progressive tax rebate annually until and unless China improves its aforementioned problems.

9 comments:

Garth said...

http://delong.typepad.com/sdj/2010/10/department-of-huh-john-cochrane-edition.html#

I agree with Delong's assessment, but not his prescription. As for Cochrane and Mankiw....well.... HUH?

Anonymous said...

snort fioricetfioricet soma
The country of concept was raised during the roll sauce.

soe said...

If those goods are bad, why people are buying them?

And what about currency manipulation done by USA?

Just asking...

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