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Why targeted tariffs are more effective than broad tariffs
But there are two very different ways by which tariffs can lower consumption as a share of GDP. One way is by increasing GDP as a whole. This happens when a tariff’s implicit subsidy to production results in more jobs and higher wages, which in turn leads to an overall increase in total consumption. The higher savings—or the gap between the increas
... See moreMichael Pettis • How Tariffs Can Help America
Of course it is not at all clear that a consumption tax or a tariff would leave the total domestic production of goods and services unchanged. This would depend crucially on how the proceeds of that tax are spent. Depending on how this happens, the total production of goods and services can rise, decline, or remain unchanged.
Michael Pettis • The Great Rebalancing
Exporting your way out of a recession is fine and good — it’s basically how Germany and South Korea shrugged off the Great Recession in the early 2010s.3 But China’s export boom is heavily subsidized, both with explicit government subsidies, and — more importantly — with ultra-cheap abundant bank loans. Subsidies are distortionary — they mean that ... See more
Noah Smith • The Pettis Paradigm and the Second China Shock
Second, Trump is threatening to put tariffs on U.S. allies like Canada and Mexico. This will deprive American manufacturers of the cheap parts and components they need to build things cheaply, thus making them less competitive against their Chinese rivals. It will also provoke retaliation from allies, limiting the markets available to American manu
... See moreNoah Smith • Manufacturing Is a War Now
Gains from trade are greatest when there’s a big discrepancy in comparative advantage,
Peter Thiel, Blake Masters • Zero to One
1/OK, let's talk about UBI!