> Why are you equating a 25% tax with a 25% blockade? Because a tax...
· Comment — Archer T. Ships replied to Damjan Cvetkov-Dimitrov's comment. · View on Facebook · Markdown source
> Why are you equating a 25% tax with a 25% blockade? Because a tax and blockade have functionally the same effect economically. To the extent that German U-boats sink some of their cargo, the sellers have to raise prices to make up for the losses. Suppose they have raise prices 25% to make up for the U-boat losses. That will have a similar effect on demand as a 25% tax increase. (It's not exactly the same, since the tariff goes to the government, whereas the U-boat losses are entirely deadweight losses. But governments impose so many losses on the economy that burning the money may be better than financing the government's predations. ) > So Country A passes a tariff on widgets from country B, to make them more expensive. But there are typically many manufacturers in country B. An across the board tax punishes all of them, regardless of how much methylmercury they release. Why couldn't Country A mandate that Country B manufacturers independently certify that they don't release any methylmercury? Also, your example makes the rosey assumption that the government of country A actually gives a shit about methylmercury. Instead, it's often the case that the current President received many donations from unions (or farmers, or chip firms, or stell firms), who don't like competing with workers from Country B, who are willing to work harder for less money than union guys. The methylmercury story is just a cover to obfuscate that the President is beholden to union donations/muscle. Also, tariffs are often on_all_ goods originating from Country B, including goods that don't produce methylmercury at all. Should all of your products be taxed 25% extra just because you were born in a town with a dirty coal plant?