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13 sats \ 3 replies \ @Undisciplined 1 Mar \ parent \ on: Tariff Increases vs. Tax Cuts Politics_And_Law
Not at all like MMT. It's widely accepted amongst trade economists. Most others are either unaware of it or oppose the idea over concerns of retaliation. An informed free market economist would probably oppose it on the grounds that tax revenue should not be counted towards economic surplus.
Bob Murphy did a good job explaining it on a recent podcast: https://www.fountain.fm/episode/0O3VVgykLV79fPeHKD7B
The basic idea is that when a large country imposes a tariff, there's significant downward pressure on price, which partially offsets the increase from the tariff.
Not at all like MMT. It's widely accepted amongst trade economists. Most others are either unaware of it or oppose the idea over concerns of retaliation. An informed free market economist would probably oppose it on the grounds that tax revenue should not be counted towards economic surplus.
Sorry, the like MMT was a bit of sarcasm about current economic mainstream thought. I would oppose it on the grounds that any intervention in the economy by the state is bound to destroy prosperity and screw up the production and pricing mechanisms. As well as send the wrong signals to the entrepreneurs, investors, workers and landowners. I haven’t yet listened to Murphy, but he is unusually good with Austrian economic thought and the free markets. I really liked his dissertation on time preferences. He also did something really interesting with Hayekian triangles.
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Neither Bob nor I buy into the interpretation of Optimal Tariff Theory that holds that tariffs can be net benefits. I only brought it up because there are very good reasons for thinking tariffs are comparatively better than the kinds of taxes we have now and therefor substituting current taxes for them could be beneficial.
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Yes, I think you may be correct on being better in the consequences for first order consequences, but it is the second and third order consequences that are even more damaging. Introducing errors into the production mix of ever other good in society is not a happy sort of consequence. Also, protected industries are awfully hard to reallocate away from if they have been protected enough. Of course all of these consequences are from the beginning, when the state first decided to intervene in the economy.
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