måndag 4 december 2017

The dead loss of trade tariffs

Tariffs always result in an overall economic loss because they distort people's purchasing decisions. That in turn leads to the misdirection of resources. You are good st fishing and your neighbour at growing vegetables, so you swap fish for vegetables. A tariff barrier means that you waste time growing vegetables and your neighbour not only wastes time fishing, but also has to spend money on fishing tackle. The same objection applies in principle to any tax on sales, such as VAT. This is the case however governments spend the money raised.

The chain of economic losses caused by tariffs spreads around the world because almost every country's government is at it.

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