Friday, January 27, 2017

Don’t know much about an economics book

Our household understands little about economics. But yesterday we tried to reason out the threatened twenty-percent tariff on goods imported from Mexico. Wouldn’t it just lead to higher prices for U.S. consumers? Or to a dearth of Mexican goods? We were thinking especially of produce. Wouldn’t such a tariff harm both the Mexican and U.S. economies?

Maybe we know more about economics than we thought: “Donald Trump’s Mexico Tantrum” (The New York Times).

[We do know a lot about home economics. Post title with apologies to Sam Cooke.]

comments: 7

Chris said...

Since the intended effect would by its nature involve a wealth transfer from Mexico to the US (and presumably into the coffers of the corporations who are contracted to do the wall-building) it would seem likely to create pressure on Mexicans to emigrate. Mucking up the Middle East is one thing, but trying to put the screws on a poor country you share a 2,000-mile-long border with is not terribly bright.

Michael Leddy said...

“It would seem likely to create pressure on Mexicans to emigrate”: we wondered about that too.

The Arthurian said...

Well you've probably put more thought into it than I have. And it certainly could
lead to higher prices for U.S. consumers. But, blindfolded, I can tell you that it wouldn't just lead to higher prices for U.S. consumers. Any time something happens in the economy, at least two things happen. If there is a purchase, there is a sale. If there is lending, there is borrowing. If money goes into one pocket, it came out of another.

Michael Leddy said...

I hope you’ll write something about this proposal (if it remains a proposal).

Anonymous said...

With respect to not tread on political opinion per se, Mexico is close to being a failed state. Narcotics and rampant corruption are forces which the top dogs in that nation have failed to confront, and the income inequality there is massive, given that PEMEX is a state entity and income from foreign workers -- mostly in the United States, but also elsewhere as a colleague here in Germany sends money "home" -- is become the largest source of income in the nation. Given that the PRI has dominated politics there, one may well ask what the leaders of Mexico have done, other than rely on foreign sources? Baja California could be wealthy, but buying property without a Mexican national as majority partner is not possible. Ditto for most businesses. Additionally, the Mexican stance on immigrants staying in Mexico makes Trump (and Obama before him) look like saints. Enforcement via deportation is fast and there is no due process as Americans understand it. One would do well to use a search engine to learn of Mexico's draconian immigration stance, because it makes the United States and Germany also seem very patient and forgiving. As to tariffs, these are used in many nations to counter everything from dumping to unfair price supports between nations, a growing problem within the EU as with Mexico. Our Mexican colleague is saddened that so little progress has been made in Mexico, as the old elite still control so much, and, as he says, there needs come a true revolution in Mexico. Who knows? Perhaps a change in US policy will spark such a thing. If revolution was good for the United States historically, and if the current stance of the Left favors revolutionary progress, then it is time and past time for revolution in Mexico, against the old regime, against the cartels and against the corruption which has filtered down to local police. It is an interesting time in which to live.

Michael Leddy said...

Yes, tariffs are used for many purposes and have many effects. That’s what my post was meant to wonder about.

Michael Leddy said...

Just a suggestion, Anon.: you’d have a much greater chance to air your thinking if you were to create your own page online. (I’m surprised that you haven’t figured that out.) Most people read the RSS feed; very few follow up to see comments.