Though I'm not an economist, I think I understand the negative possible consequences of tariffs. But, I think it's time for a recalibration of trade. Why should we be the brunt of such unequal tariffs? There is so much hysteria because it seems that most people have no clue about the ridiculously high tariffs against our products while our tariffs have been low. The howling that we hear from other countries is high drama for their own benefits.
I think Trump is using tariffs as a negotiating tool for a number of different reasons. As usual the media has whipped up the hysteria as though bad results are fait accompli. I'd like to wait and see how it plays out.
Yogi Berra: "In theory, there is no difference between theory and practice. In practice, there is." In other words, things don't always happen the way the experts predict. We see these failures all the time.
I don't recall that Yogi Berra-ism, although I must have heard it at some point.
I did get a question from a friend last week that went to your point about reciprocal tariffs: What's wrong with reciprocal tariffs?
I answered, nothing per se, although the orthodox theory would advise dropping all tariffs no matter what other countries do. But once we see that there are big social costs to outsourcing all of a country's production ... and that a country (like Korea) can cultivate and develop its own industrial base from nothing ... the calculus deviates from the orthodox textbook prescription.
I would argue that the missing part of the lesson from South Korea and similar nations is that export-led growth, with an industrial policy and trade protection, can be successful if (and only if) there are other countries who will buy your exports.
If other countries are all trying to do the same thing, it doesn't work. Plus you need the institutions etc as you allude to.
I have to admit that one factor I still puzzle over is the susceptibility of the Korean's gatekeeping of financing had been to corruption and bribery. Two ideas:
(1) When the economy was simpler, there was more visibility into the financing programs. It would been harder to get away with bribing government officials.
(2) Leadership matters: Park Chung Hee himself was serious about promoting economic development, and the broad understanding seems to be that he didn't use his office to enrich himself.
Then there was that transition from a simpler economy to a more sophisticated one. Some officials did get away with serious corruption... for a while.
The 1980's were very go-go, but demands were increasing for the government to relinquish its tight controls of preferred financing.
By 2010 or so, the Economic Planning Board ended being folded into the Ministry of Finance. It marked the end of a 50-year run.
Could a Korean-styled financing program be replicated elsewhere, or would it fall apart under the weight of corruption? ... I remember attending a presentation by Jean Ensminger in which she illuminated the corruption of a program somewhere in East Africa to support goat herders. Long story short: A goat cost about $18, but the authorities back in the capital found ways to fictionalize the sale of goats and to pocket that $18. Pathetic.
Though I'm not an economist, I think I understand the negative possible consequences of tariffs. But, I think it's time for a recalibration of trade. Why should we be the brunt of such unequal tariffs? There is so much hysteria because it seems that most people have no clue about the ridiculously high tariffs against our products while our tariffs have been low. The howling that we hear from other countries is high drama for their own benefits.
I think Trump is using tariffs as a negotiating tool for a number of different reasons. As usual the media has whipped up the hysteria as though bad results are fait accompli. I'd like to wait and see how it plays out.
Yogi Berra: "In theory, there is no difference between theory and practice. In practice, there is." In other words, things don't always happen the way the experts predict. We see these failures all the time.
Funny! Well said.
I don't recall that Yogi Berra-ism, although I must have heard it at some point.
I did get a question from a friend last week that went to your point about reciprocal tariffs: What's wrong with reciprocal tariffs?
I answered, nothing per se, although the orthodox theory would advise dropping all tariffs no matter what other countries do. But once we see that there are big social costs to outsourcing all of a country's production ... and that a country (like Korea) can cultivate and develop its own industrial base from nothing ... the calculus deviates from the orthodox textbook prescription.
I would argue that the missing part of the lesson from South Korea and similar nations is that export-led growth, with an industrial policy and trade protection, can be successful if (and only if) there are other countries who will buy your exports.
If other countries are all trying to do the same thing, it doesn't work. Plus you need the institutions etc as you allude to.
I have to admit that one factor I still puzzle over is the susceptibility of the Korean's gatekeeping of financing had been to corruption and bribery. Two ideas:
(1) When the economy was simpler, there was more visibility into the financing programs. It would been harder to get away with bribing government officials.
(2) Leadership matters: Park Chung Hee himself was serious about promoting economic development, and the broad understanding seems to be that he didn't use his office to enrich himself.
Then there was that transition from a simpler economy to a more sophisticated one. Some officials did get away with serious corruption... for a while.
The 1980's were very go-go, but demands were increasing for the government to relinquish its tight controls of preferred financing.
By 2010 or so, the Economic Planning Board ended being folded into the Ministry of Finance. It marked the end of a 50-year run.
Could a Korean-styled financing program be replicated elsewhere, or would it fall apart under the weight of corruption? ... I remember attending a presentation by Jean Ensminger in which she illuminated the corruption of a program somewhere in East Africa to support goat herders. Long story short: A goat cost about $18, but the authorities back in the capital found ways to fictionalize the sale of goats and to pocket that $18. Pathetic.