[[{“value”:”That is the topic of my latest Bloomberg column, here is one excerpt: It is true that 19th century tariffs often were high, but they were not the main reason the US became rich (they were an important means of funding the government, given the absence of an income tax). The best economic research shows that what
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That is the topic of my latest Bloomberg column, here is one excerpt:
It is true that 19th century tariffs often were high, but they were not the main reason the US became rich (they were an important means of funding the government, given the absence of an income tax). The best economic research shows that what drove US economic growth was population expansion and capital accumulation. Tariffs raised the price of imported capital goods and thus partially discouraged growth, while the US expansion was actually most rapid in non-tradeable goods.
That is Doug Irwin of course. And this:
The US might end subsidizing its domestic drone sector, for example, given the military importance of those devices. But there are limits to how many sectors the US can support or protect. Looking at some of the successes abroad, it is clear that those manufacturing jobs are often very high status and relatively well paid. They attract some of the best talent, as do chip factories in Taiwan or Korea. The US could benefit from reallocating some efforts to defense and defense-related sectors — but it can’t achieve everything all at once. Instead, it needs to prioritize where to put its best talent.
In some cases there is reason to be concerned, for instance by the decline of Boeing, which if anything has been protected too long by its reliance on government as a major customer. Industrial policy or government protections don’t automatically bring quality or commercial success.
And finally:
Most economists, whether on the left or right, still support free trade.
With national security qualifications, as noted above. Expertise really does matter, and the US has a lot of expertise in free trade. For all the sneering at rarified concepts such as “neoliberalism,” critics of free trade have no new arguments that economists have not already rebutted. And if Republicans are not going to respect expertise in this matter, do you really think they will follow the best available advice in setting up tariffs and industrial policy?
Recommended, interesting throughout.
The post What are Republican analysts getting wrong about free trade? appeared first on Marginal REVOLUTION.
Economics, Uncategorized
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