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To: Slagle who wrote (67950)	8/22/2005 8:07:08 PM
From: Maurice Winn	Read Replies (2) \| Respond to of 74559

Still on world tour. Now in California and it is great. Heat, sun, sea, summer. I agree with tariffs as the means of taxation. But free trade means no quota nonsense or barriers. The USA is far from a free-trader. Though better than most. For international common property, international laws are needed. Such as pollution of air and oceans and rivers crossing borders, not to mention spectrum. It's always nice to be able to leave a grotty political system which might suit most people there, and go to one suiting the individual. New Hampshire was to be swamped by libertarians. I don't know how the process went or is going. Mqurice

To: Slagle who wrote (67950)	8/23/2005 1:44:18 AM
From: shades	Respond to of 74559

I keep asking why didn't china send ships to help her neighbors - hehe. Of course the USA has ALWAYS been the biggest advocate of "free trade" in the world. The British marginalrevolution.com U.S. fact of the day Tyler Cowen Total tsunami foreign aid from the U.S.: $908 million U.S. tariff revenue from Sri Lanka, Thailand, India, and Indonesia: $1.87 billion That is from Foreign Policy, September/October issue. August 18, 2005 at 08:24 PM in Data Source \| Permalink \| TrackBack (1) My understanding is that this tariff is really not a major negative. To be honest, the "tariff revenue" tells only half the story. The United States has a negative $15.5 billion trade balance with those same four countries - in other words, we import $15 billion worth of goods more than we export. This number is also for January through June, alone - extrapolating, one guesses approximately a combined $30 billion in negative trade balance. This is WITH tariff trade values - without those tariffs, ostensibly you're looking at an even greater difference. But here's the key - in those nations, goods are produced at such a discount relative to within the U.S. that there is still a heavy preference for them, as evidenced by the large trade deficit. A reduction in tariffs most likely would not cause a huge spike in demand for foreign-produced goods, as that demand is already very high, and U.S. demand is relatively elastic at current foreign prices. If you're paying either $10 or $12.50 for a foreign good, but the US good is $25, you'll prefer the foreign good a majority of the time anyway. Most people who would still prefer the US good place abnormally high value on domestic products, to the point where further discounts in price will still likely have little effect. Yet, with the tariffs, the U.S. extracts revenue from those who prefer to purchase foreign goods, and so remove their purchasing power from American industry. The U.S. can then subsidize those producers who are injured by the lost business and so maintain overall public welfare, while still garnering an extra revenue source. I'm sure I'm violating economics tenets left and right with this analysis, but to be honest, I think that a lot of economics models fail to some degree because they overemphasize the inelasticity of import demand. So sure, the U.S. is receiving revenue from goods imported from those four countries - but those countries are already pulling in approximately 15 times as much American money from our imports. Additionally, with tariffs as a revenue source the gov't has more money with which to send aid, by acting as a 'middleman' for U.S. imports: somebody buys an Indian product, sending their money to the Indian producer. Then, the U.S. takes a tariff on that good. A percentage of that tariff money goes BACK to India in the form of aid (it's part of overall gov't revenue, which dictates how much the U.S. feels willing to spend on aid). You know, I'm sure I'm just misinterpreting just about everything I could, here. It's about par for the course. Update - In an interesting twist of fate, the immediate next post made on MR deals with Honest Tea, tea made by an economist. In the post, located here, the economist who markets the tea rebuffs a claim that his product is not taste-maximizing: Cutting back the sugar costs you very little in flavor but still save you a whole lot of calories. In technical terms, it is a second-order loss of flavor but a first-order savings in calories. That's basically my point in terms of the U.S. tariffs on goods from export-heavy, labor-cheap countries. Increasing the tariffs costs you very little in terms of decreased U.S. imports, but garners a greater amount in revenue for the United States - to the point where one could actually make an argument for the tariffs as welfare-maximizing. 1 response(s) to Imbalanced... But which way? James Waterton [Visitor] @ itneededtobesaid.blogspot.com says: 08/20/05 @ 01:54 The trade imbalance isn't so important. The tariffs you talk about act as an indirect tax on American consumers, who are forced to spend more of their income on the more expensive American made product, or just pay extra for the imported one. That money could be saved, thus increasing America's tiny savings rate, or spent on other things, stimulating the economy. But as it goes, the government gets the money, the cost of bureaucracy is creamed off and the figure subsequently represents a deadweight loss to the American economy. Tariffs only help inefficient producers.