Home › Forums › Financial Markets/Economics › Global Free trade costs the US big time
- This topic has 6 replies, 7 voices, and was last updated 18 years ago by LookoutBelow.
-
AuthorPosts
-
September 29, 2006 at 5:37 PM #7631September 29, 2006 at 7:03 PM #36870PerryChaseParticipant
I refuse to even listen to anything that Buchanan has to say, much less debate his arguments. Not worth to dignify with a response.
September 29, 2006 at 10:27 PM #36875DanielParticipantFully agree with PerryChase.
September 29, 2006 at 11:08 PM #36877AnonymousGuest“While the United States has a corporate income tax, our trade rivals use a value-added tax”: or how to confuse 2 completely different taxes.
The US has corporate taxes, so do all European countries. European countries have VAT, the US has a “sales tax”, same thing. The only things that differ are the tax rates.
So the article is flawed from its premise.September 30, 2006 at 1:28 AM #36878rankandfileParticipantPerry and Daniel why did you both respond to the post by saying that you aren't going to dignify it with a reponse? Isn't that considered saying one thing and doing another? Why post a response at all?
September 30, 2006 at 9:56 AM #36891rseiserParticipantHere is my limited knowledge, but you might post the question on Cafe Hayek, Mises Institute, or some other Austrian Economist forum.
First of all, a wise economist once said: “Nothing in economics is that simple that it can be explained in one sentence, except this sentence”.
Regarding the VAT, there seem to be a lot of moving parts. First, I would distinguish between an internal tax on consumption (i.e. VAT, sales tax) and an external tariff. In the case of the VAT you are taxed whatever you consume, while in the tariff your are only taxed if you consume some other country’s product. I think history has shown that the former seems to work ok, while tariffs have caused more problems. I assume that tariffs don’t work, since it just prevents the division of labor. If I make a tariff against Middle-east oil and try to use more expensive domestic oil (from under the Rockies and offshore) what’s the point? It’s probably better to use Middle-east oil and sell them something we are good at (e.g. computer chips). Here, everybody benefits.
The VAT, however, could be justified by the Austrian motto: “First, you have to produce, before you can consume.”, and that supply and demand are not exactly symmetric (demand is infinite, but supply isn’t). So a VAT would steer people a little away from borrowing to consume before they have produced anything. Not sure, if that makes it worth by itself, but I think a VAT (or sales tax) could be useful if other people get hurt too by someone’s consumption. If you buy as much stuff as you want, you probably create a lot of pollution and waste that other people have to deal with in one way or the other without getting compensated.Back to the original question.
I don’t see how the Japanese example would constitute a tariff. It doesn’t earn Toyota more on a car that they export vs. sell in Japan. All it does is to make the exported car cost 2,000,000 Yen, and the car sold in Japan costs 2,000,000 + 200,000 Yen, if VAT was 10%. (Toyota gets 2,000,000 either way.) So a guy driving in Japan has to pay 200,000 VAT, and a guy in the US not. So what? That doesn’t make anybody chose a Japanese car over an American car. It just makes people in Japan a little more cautious in whatever they consume. And if the government receives a lot of VAT, they can lower income-taxes or provide infrastructure or education (as long as that doesn’t get squandered). Or they could cover some of their deficit and print less money (something the US might want to think about, haha).October 1, 2006 at 6:32 AM #36917LookoutBelowParticipantGlobalization is a hideous failure.
People and govts like to dream up new words, catch phrases and colloquilisms to describe the age old capitalistic method of exploiting cheap labor from poor, uneducated 3 rd world countries with corrupt govts.
Do the people of China live a better life now that Wal-Mart and everybody else manufactures there ? I should say definitely NOT ! Do a few of the elite Chinese live better ? Decidely YES !
Charity begins at home.
Its the way of the world, get used to it, eventually like in the 30's it all fails and we begin again.
-
AuthorPosts
- You must be logged in to reply to this topic.