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Tag Archives: International Trade

Just blow it all up?

In addition to the split between the left and the right, there’s also a split between people who favor incremental change and those who want to “blow it all up.”  In 2016, the British voted in a referendum in favor of exiting the EU.  The referendum did not have the force of law, but the government (quite reasonably) was reluctant to ignore the results of this poll.  After all, why even have a referendum if you plan to ignore it? The supporters of the Brexit campaign...

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Haiti > Cuba

Tiny Sunrise Airways runs 12 direct flights weekly from the Cuban cities of Havana, Camaguey and Santiago to Port-au-Prince. Cubans interviewed in the market said they spend about $700 on airfare, food and lodging and another $700 on merchandise, which they resell at a markup high enough to make several hundred dollars profit per trip. Most of those interviewed said they made near-monthly trips, generating more than $2,000 in extra income a month in a country where...

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What is the United States?

In “Can anything hold back China’s economy?” Larry Summers makes a number of good points. By the way, his implicit answer to the question he raises in the title seems to be “No.” Along the way, though, he writes as if the United States has one mind rather than over 300 million minds. Good point #1: At the heart of the problem in defining an economic strategy toward China is the following awkward fact: Suppose China had been fully compliant with every trade and...

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Brits Could Have a Brexit Cake and Eat It Too

In an essay on “The Great Brexit Breakdown” (Wall Street Journal, December 7, 2018), Gerard Baker quotes the director of a London-based think-tank: “You can have national sovereignty—and that’s fine. Or you can have economic integration—and that’s fine. But you can’t have both,” says Mr. Grant. This is true if “national sovereignty” means that the national government has the right to control its subjects’ decisions to become integrated to the world economy, that is,...

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Parmesan cheese and Sunbucks Coffee

What are we to make of firms that sell products under name that misleads consumers? Consider an American firm selling “Parmesan” cheese that is actually made is Wisconsin, or a Chinese firm selling “Sunbucks Coffee” using a non-Starbucks recipe? I see good arguments both ways.  On the one hand, actual Parmesan cheese and actual Starbucks coffee are likely (albeit not certainly) better than the counterfeit version.  On the other hand, how much harm does counterfeiting...

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Recession risk and the circularity problem

[Trigger warning for acrophobics like me.] I have fond memories of growing up in the Midwest, and seeing big white mushroom-shaped water towers on the outskirts of small towns: Back in 1970, a friend of mine told me about some guys he knew that played a game of dare.  They’d go to the top of one of these, and then gradually crawl down as far as they dare, before climbing back up.  But if you make a mistake and go to far, over the horizon, then it’s all over.  I’m a...

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Consumer Sovereignty: A Response to Greg Autry

Should public policy favor producers at the expense of consumers? A few days ago, I was involved in a short Twitter conversion with Greg Autry that touched this subject. Professor Autry is the co-author, with Peter Navarro, of Death by China (2011). (A recent article of mine in Regulation says more about this book.) I had mentioned that tariffs hurt the consumers of the country in which they are imposed. The essence of Autry’s response was: You also continue the...

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Post Scriptum on Steel Tariffs

A Wall Street Journal story of today (“Foreign Steel Keeps Flowing Into U.S. Despite Tariffs,” December 5, 2018) expresses surprise at the most standard results of elementary trade theory: a tariff raises all prices equally, those of domestic producers as much as those of foreign ones; domestic quantity supplied increases; and imports decrease. The Journal writes: Instead of isolating imported steel as the most expensive in the market, domestic steel producers have...

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Does the Chicken Tax Imply Prices Lower for Domestic than for Foreign Pickups?

I just finished writing a review of Bas Van der Vossen and Jason Brennan’s recent book, In Defense of Openness: Why Global Freedom is the Humane Solution to Global Poverty.  (It should be in the Spring issue of Regulation.) The economics of this book is good, but here is a questionable minor point. The authors write: Suppose Jason typically buys American pick-up trucks, because he wants to avoid the 25% tariff on imported trucks. This is not correct. The tariff on...

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Trump’s Shocking Trade Preferences

I knew that  DonaldTrump has long been suspicious of international trade and has worn his uninformed anti-trade preferences as a badge of honor. I’ve argued with pro-Trump friends that his proposed replacement for NAFTA is good only because it isn’t as bad on trade as I feared it would be: it will, if passed, reduce gains from trade for both sides, but not as much as I had feared. So none of what I saw come out of the renegotiation of NAFTA came as a surprise. None,...

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