Quote:
Originally Posted by MelBridgeman
My original point is that the whole Tariff boogie man thing is over blown and hard to quantify.
I mean if you voted Liberal in Canada.. you shouldn't care because there is nothing worse for prices across the board than a carbon tax.
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Okay, so there's this concept in economics of specialization. It's a very good thing. Instead of having every person grow their own food, build their own house, solve their own health problems, someone becomes a doctor and looks after multiple patients, including, perhaps the builder and farmer. The builder builds homes of the doctor and the farmer. The farmer feeds them. Etc. This arrangement allows the individuals to excel at their specialization and their collective output grows.
Countries benefit from specialization too, and that's the point of free trade. Tariffs are a barrier to free trade and thus will be a barrier to specialization. It's not just inflation that's the problem, they are going to cause a real GDP drop. Especially in highly specialized countries that sell to America, but even in America, though it has a large and varied economy, will suffer.
There are still things America cannot or won't want to do. Does a country with 4.1% unemployment really want to make its own t-shirts? Its own toasters? Grow its own bananas? Or should it buy its bananas, toasters and t-shirts and focus its resources on tech, finance, entertainment, research, and the construction and services that can only be delivered with local labour?
Unlike economic specialization, pollution is a bad thing. The carbon tax is a pollution tax that gets rebated! Both raise prices, yes, but one is bad economic policy that causes a net loss and the other, done well, actually improves things for society by making companies pay for the environmental damage they do (thus pushing the free market to make better choices). That's why I could support a carbon tax (which, again, comes with a rebate) but not tariffs.