This is a great example of bad policy. The U.S. Government, in all its infinite wisdom, is placing a tariff on imported Chinese paper goods to protect a small paper company in
I love the reason for the protection: the Chinese government is “dumping” paper products in American markets for a price lower than they can be domestically produced. What that means is that the Chinese can profitably sell paper products cheaper than we can make them ourselves. If the Chinese can do it cheaper, why shouldn’t we let them? This means the Chinese have a comparative advantage on us and we should devote our time to tasks that we have a comparative advantage in. Trade makes both participants better off. After all, there are two ways that we can produce cars: we can build them in
There are a million reasons why this tariff is a bad idea. You learn about many of them on the first day of Macroeconomics class. If you skipped class that day, you can learn what you missed by reading this excellent (and short) book.
1 comments:
I wish you would stop talking about good books, I have more than enough to read.
By the way, as reported last week in Financial Times, American auto makers have been giving thought to having their cars built in China.
Just a thought, we want better Health Care, so the savings on cars built over seas could be put to paying higher premiums for better coverage. Of course at the cost of higher unemployment for auto workers. What a confusing world.
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