Henry Farrell on LLMs as cultural technologies; Ian Morris on the shape of human history; investing in America; very briefly noted; Bruce Stirling on Frankenstein vs. cyberpunk; Apple’s unfortunate...
Didn't we learn in Trade Theory 101 that it is better to promote production of an activity, (taking as given that the activity should be promoted) with a production subsidy (that leaves producer indifferent between domestic and export sales) than tariffs? Noah writes as if he has never heard of that idea, or the Learner theorem (that an import restriction is the equivalent of an export tax) or that fiscal deficits mean capital inflows => encouragement of imports/discouragement of exports.
If industrial policy is worth doing, surely it is worth doing right.
But the high import tariffs encourage relocation of production domestically. Unless Congress [stupidly] bans Chinese autos, then Chinese manufacturers wil locate some production in the US. The EU has done similar with taxes on autos made with a certain percentage of foreign components. If US factories are run as well as home ones, then this would stimulate competition, drive down prices, and make EV adoption more favorable.
However, if national security is an issue, and auto factories need to be controlled by US companies, then keeping manufacture in US hands may be better ensured by creative ways to exclude foreign brands. A high tariff with no option to evade it by relocating manufacturing to the US would favor US manufacturers at the expense of consumers. Not efficient when worrying about global heating and EV adoption rates, but maybe effective to ensure domestic production can be fully ramped up to build weapons in time of war. Whether this makes war more likely, is something for the strategists to figure out. [Denying advanced chips to China must make China's invasion of Taiwan to get TSMC's factories more likely. Hence getting TSMC to build factories in the US as a strategic hedge.]
we get the same benefit by just allowing foreign investors to access the same production subsidy. Indeed, the subsidy would need to be lower if foreign investors come. Tariffs are just a rookie mistake and Biden was not supposed to be a rookie. :)
Thornhill: How wonderful it is that the US is putting money into manufacturing depende on a) that the money actually goes into the manufacturing capacity, not NEPA evaluations, NIMBY fights etc.
and b) what the resources could otherwise have been used for.
The real stroke of genius was singling out Truman as the paragon of mos maiorum. Truman! The guy who kicked off the presidential pension gravy train saying "the United States government turns its chief executives out to grass. They’re just allowed to starve.” And lied about his finances to do it: Truman was already rich when he left the White House and had gotten even richer by the time the FPA was passed. Peretz is being ... creative here.
I am more worried about the supply of Treasuries. I'd like to see more of that spending financed with progressive consumption taxes. I am not persuaded that the IRA, Chips, and infrastructure investments even when evaluated using the shadow price of CO2 emissions avoided have NPV>0
Didn't we learn in Trade Theory 101 that it is better to promote production of an activity, (taking as given that the activity should be promoted) with a production subsidy (that leaves producer indifferent between domestic and export sales) than tariffs? Noah writes as if he has never heard of that idea, or the Learner theorem (that an import restriction is the equivalent of an export tax) or that fiscal deficits mean capital inflows => encouragement of imports/discouragement of exports.
If industrial policy is worth doing, surely it is worth doing right.
But the high import tariffs encourage relocation of production domestically. Unless Congress [stupidly] bans Chinese autos, then Chinese manufacturers wil locate some production in the US. The EU has done similar with taxes on autos made with a certain percentage of foreign components. If US factories are run as well as home ones, then this would stimulate competition, drive down prices, and make EV adoption more favorable.
However, if national security is an issue, and auto factories need to be controlled by US companies, then keeping manufacture in US hands may be better ensured by creative ways to exclude foreign brands. A high tariff with no option to evade it by relocating manufacturing to the US would favor US manufacturers at the expense of consumers. Not efficient when worrying about global heating and EV adoption rates, but maybe effective to ensure domestic production can be fully ramped up to build weapons in time of war. Whether this makes war more likely, is something for the strategists to figure out. [Denying advanced chips to China must make China's invasion of Taiwan to get TSMC's factories more likely. Hence getting TSMC to build factories in the US as a strategic hedge.]
we get the same benefit by just allowing foreign investors to access the same production subsidy. Indeed, the subsidy would need to be lower if foreign investors come. Tariffs are just a rookie mistake and Biden was not supposed to be a rookie. :)
From a purely economic POV, yes. But is it also the strategic defense POV?
Bruce Sterling (not Stirling). Correct in the reference.
Thornhill: How wonderful it is that the US is putting money into manufacturing depende on a) that the money actually goes into the manufacturing capacity, not NEPA evaluations, NIMBY fights etc.
and b) what the resources could otherwise have been used for.
The real stroke of genius was singling out Truman as the paragon of mos maiorum. Truman! The guy who kicked off the presidential pension gravy train saying "the United States government turns its chief executives out to grass. They’re just allowed to starve.” And lied about his finances to do it: Truman was already rich when he left the White House and had gotten even richer by the time the FPA was passed. Peretz is being ... creative here.
I am more worried about the supply of Treasuries. I'd like to see more of that spending financed with progressive consumption taxes. I am not persuaded that the IRA, Chips, and infrastructure investments even when evaluated using the shadow price of CO2 emissions avoided have NPV>0