Hacker News new | past | comments | ask | show | jobs | submit login

Economic theory and history [0] day Tariffs are a bad idea. I like Senator Warren but this seems like an idea that will be just as painful as the least time we tried despite the differences in implementation.

[0] https://en.m.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_...




Theory like this deserves a thorough review. The classic example oversimplifies, leaving out many important factors - such as what happens when jobs are moved around, and where a nation's wealth is built.

Classic example: America can produce 5 cars a year and 6 apples. Japan can produce 3 cars a year and 2 apples. If America devotes its energy to making all the apples and Japan does the same for making all the cars, Japan could make 10 cars a year and America could make 9 apples - so thus, there will now be 10 cars available versus 8 and 9 apples a year versus 8. So there is more product available for everyone, true, that is an undisputed fact. But several questions remain unanswered:

What are the effects to the American people if making cars provided a lot of well-paying jobs to its working class which cannot be replaced? The answer is that many people are out of work; and they cannot go make apples because agriculture is heavily automated. They cannot all go to college because they don't have the money and student loans are very expensive.

What happens if America spends more money on importing cars from Japan than it makes from selling apples? Is there not a net drain on American wealth?

So I think classic theory about these things overlooks many important topics. It reduces a nation's health to the amount of goods that are producible between its economy and its trade partners; if more goods are produced overall then everything is better. But it does not take into account the effects of job losses or trade deficits.

Edit: Might I also add that the American economy was heavily protected by tariffs throughout almost its entire development? Tariffs were significantly higher from the 1800s to the 1900s; it is only in recent decades that they have been consistently lower. Andrew Carnegie's Carnegie Steel for example experienced tremendous benefit from high tariffs on steel; the impact of his fortune can still be seen today in almost all American libraries. While the relevance of this anecdote can be disputed, it serves a valuable purpose if it gets us to question our trade dogmas.


"Smoot-Hawley" is not relevant to our current situation because we had a trade surplus when it was passed. And trade penalties should be applied more gradually to avoid shocking markets.

I agree China cheats, and we need to do something, else they will cheat more. Economic models suggest that lopsided trade is still overall good for the "loser" side, but that's in aggregate: specific sectors can still end up with a nasty hit, like the rust-belt did.


Consider that right now, we have a huge tariff on locally produced human labor. How much does that hurt people in this country, and how big does a tariff on imported goods have to be, to be worse?




Join us for AI Startup School this June 16-17 in San Francisco!

Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: