March 27, 2018

NATIONALISM BREEDS CRONYISM:

Trump embraces trade policy set by cronyism (Bruce Yandle, March 26, 2018, Washington Examiner)

Generally speaking, economists and other freedom-lovers who oppose tariffs do so because of the costs imposed on all consumers taken together. Tariffs interfere with the enormous gains from trade that we all enjoy and blunt incentives to specialize and produce the things that we can produce best and most simply. In short, they make the average citizen poorer.

That's problematic enough. But when a tariff program is administered by politicians who can pick industrial winners--which also means picking losers by omission--the potential costs to the economy become even more crippling. We pay higher prices for consumer goods, and get less of them. And we get a politically entangled, less-vibrant economy and a sad case of economic hardening of the arteries.

But while all this seems bad enough, the program also allows Trump to decide which countries will be winners and losers, since he has the power to lower the tariffs for those that he favors. It is highly likely that the economic gains from regulatory and tax reform will be more than offset by losses from tariff and industrial policy.

Posted by at March 27, 2018 6:37 PM

  

« OH, HAPPY DAY!: | Main | MAYBE HE SHOULD BE FBI DIRECTOR: »