I think you mention good points but I would counter a few of them.
- the comparative advantage that you talk about only works in the absence of industrial policy. The moment a nation has industrial policy driving their growth like China it’s no longer about comparative advantage. Solar industry being prime example.
Secondly, you don’t want to have efficient industries in every sectors. Some sectors are strategically important for national security. Take steel and aluminum, China is a big exporter and its prices are the most competitive, you can let those flow in and over a period of 5-10yrs domestics steel and aluminum industry will be hollowed out. And you may say “yes we get cheap steel and aluminum in return which benefits everyone” But what happens if war breaks out or America is part of a proxy war. How do you ramp up production towards a war economy when you have forgotten to efficiently build those things essential for war.
Free market and free trade works only when everything is free. The moment you inject interventions, nothing is free or efficient. Lot of economic theory is built under the assumption of “ideal conditions” which almost never hold true in reality.
I feel like you consistently bring a more data-driven in depth perspective that adds some nuance that really hasn’t been explored deep enough in the public conversation with your articles and podcasts.
This unfortunately seems to be an exception to this pattern and is a more regurgitated I must interact with my community to hit a metric post. I don’t disagree with the content here, just expected a bit more substance. For example, can we measure (or speculate) macro impact of chips act, can we tease out how trump tariffs impacted specific industries and macro metrics from 2016-2020, how can we compare and learn from the Japanese US relationship and numbers in the 80s and 90s to today.
Good article. Just found out about the Smoot-Hawley Tariff Act from 1930, the tariffs introduced then were similar to ones introduced today and they turned the starting US recession in to a full blown depression that spread globally and destroyed global trade. Congress removed them in 1934 and first then could US start getting out of the depression. Similarities to todays situation are unbelievable..
You have missed a major point. In 1930 US was a major net surplus country and today it’s a big net deficit country. You are in a completely different regime.
Tariffs hurt everyone but it hurts the surplus countries way way more.
I think you mention good points but I would counter a few of them.
- the comparative advantage that you talk about only works in the absence of industrial policy. The moment a nation has industrial policy driving their growth like China it’s no longer about comparative advantage. Solar industry being prime example.
Secondly, you don’t want to have efficient industries in every sectors. Some sectors are strategically important for national security. Take steel and aluminum, China is a big exporter and its prices are the most competitive, you can let those flow in and over a period of 5-10yrs domestics steel and aluminum industry will be hollowed out. And you may say “yes we get cheap steel and aluminum in return which benefits everyone” But what happens if war breaks out or America is part of a proxy war. How do you ramp up production towards a war economy when you have forgotten to efficiently build those things essential for war.
Free market and free trade works only when everything is free. The moment you inject interventions, nothing is free or efficient. Lot of economic theory is built under the assumption of “ideal conditions” which almost never hold true in reality.
I feel like you consistently bring a more data-driven in depth perspective that adds some nuance that really hasn’t been explored deep enough in the public conversation with your articles and podcasts.
This unfortunately seems to be an exception to this pattern and is a more regurgitated I must interact with my community to hit a metric post. I don’t disagree with the content here, just expected a bit more substance. For example, can we measure (or speculate) macro impact of chips act, can we tease out how trump tariffs impacted specific industries and macro metrics from 2016-2020, how can we compare and learn from the Japanese US relationship and numbers in the 80s and 90s to today.
Good article. Just found out about the Smoot-Hawley Tariff Act from 1930, the tariffs introduced then were similar to ones introduced today and they turned the starting US recession in to a full blown depression that spread globally and destroyed global trade. Congress removed them in 1934 and first then could US start getting out of the depression. Similarities to todays situation are unbelievable..
You have missed a major point. In 1930 US was a major net surplus country and today it’s a big net deficit country. You are in a completely different regime.
Tariffs hurt everyone but it hurts the surplus countries way way more.