Economics Questions

Re: Should import restriction be complimented with even more export restriction (assuming the state exists)?

Phi est aureum — Wed, 03 Oct 2012 14:11:06 GMT

There was a Mises Daily last week that used this analogy to explain:

Say there are two towns, A and B. We know that voluntary trade is always beneficial to both parties involved. The two towns decide to build a road connecting each other. Say town A puts obstacles in the way of merchants from town B entering. This does not help trade. It not only hurts the importers from town B, but the consumers in the town A. Does it help if the town A also puts obstacles in the path of merchants leaving to trade with town B? Clearly not. It hurts town A's merchants and town B's consumers. Both towns would be better off if town A stopped putting obstacles in the way of exporters, even if they continued to put obstacles in the way of importers.

*Obviously, though, both towns would be best off if neither town put any obstacles in the way of any trade going in either direction.

Re: Should import restriction be complimented with even more export restriction (assuming the state exists)?

No2statism — Wed, 03 Oct 2012 11:12:24 GMT

I was thinking that export taxes equal to import taxes were complimentary because the latter cannot be good for production without the prices of the supply being driven down. Import taxes are meant to tax consumption but they wind up taxing everything because if American manufacturers of cars want to buy the cheapest steel when there were an import tax on non-American steel, then I don't understand why the market wouldn't want a balance to the price of steel by the govt taxing both its import and export (especially if it didn't give the govt more revenue).

"2 wrongs don't make a right" is very true, but I had been thinking perhaps an export tax would balance the anti-production and the anti-consumption effects of tariffs out... however, I guess they wouldn't because the export taxes could encourage over consumption (since they drive the price down artificially). What about import taxing some goods and then export taxing all the rest? Would that be as bad as all import taxes or taxing both imports and exports equally?

Re: Should import restriction be complimented with even more export restriction (assuming the state exists)?

Bogart — Tue, 02 Oct 2012 17:27:00 GMT

No, free and prosperous people should be able to use their property in any manner that does not violate the rights of someone else even if the two parties exist in different arbitrarily defined areas. Moreover, didn't your mother teach you that "Two wrongs do not make a right."?

Re: Should import restriction be complimented with even more export restriction (assuming the state exists)?

Smiling Dave — Tue, 02 Oct 2012 17:18:58 GMT

http://www.youtube.com/watch?v=2IB7NDUSBOo&feature=youtu.be

Re: Should import restriction be complimented with even more export restriction (assuming the state exists)?

gotlucky — Tue, 02 Oct 2012 15:27:13 GMT

Dave,

That's the price of living in a free society.

Re: Should import restriction be complimented with even more export restriction (assuming the state exists)?

Smiling Dave — Tue, 02 Oct 2012 14:33:34 GMT

The import taxes already distort the market....

You think that is the problem with import taxes, distorting the market? What do you mean by distorting the market?

I don't see how the export taxes being higher than the import taxes could distort the market more than having import taxes alone.

Say the USA makes no television sets, which is actually the case. A tax of 10% is slapped on all imported TV sets. On top of that a tax of 20% is slapped on top of all exports. So initially, the TV costs $100. The import tax kicks the price up to $110. In order to buy that TV from Japan, say, the Americans will need yen. So they export $100 worth of software to Japan to get $100 worth of yen, buy the TV set, and bring in to the States. The TV will have to sell for $130, to cover the $100 used to actually buy the set, $20 export tax on the software, and $10 import tax on the TV set.

Of course Japan may just get a bit upset at all this and decide to retaliate by charging a 10% import tax on that software, requiring $110 to buy the $100 TV set. Price now up to $140. Plus they retaliate on the export tax, so that the TV will be sold to the American importer for $120. Price now up to $160. All this ignoring the taxes on the taxes, for example a 20% export fee on the 10% import fee.

Can you afford to pay 60% more for everything?

Should import restriction be complimented with even more export restriction (assuming the state exists)?

No2statism — Tue, 02 Oct 2012 13:57:48 GMT

I was thinking so. For example, taxes are 10% ad valorem on all items coming in and then it requires people to pay more than 10% of the value of an item to export everything outside the borders. The import taxes already distort the market and don't necessarily increase efficiency, so I don't see how the export taxes being higher than the import taxes could distort the market more than having import taxes alone. I was thinking maybe 1/16 ad valorem import taxes and 2/5 ad valorem export taxes on all goods (including intaking human labor and off shoring human labor) with no international trade agreements. The biggest impracticality I can see is that it would restrict immigration and require too much census taking as well as other enforcement... it would cost more to enforce if the movement of human labor was taxed than it would benefit. Maybe the state could exclude taxing the movement of human labor.

If this would be better than import taxes alone, then... why has it never been suggested?