As a matter of fact I am not opposed to all tariffs. In fact, in the case of lower income countries I think that tariffs often have a strong and positive role to play in the development of economies, firstly by protecting local business and secondly by providing an easy, cost-effective, and desirable tax base that is charged on the effective rent that they are due for the loss of their natural resources.
What does that last clause even mean?
But so too, necessarily, in situations such as this (but not in the case of low income countries, as I previously described) well-being is reduced because whilst there are, undoubtedly, problems with the Ricardian theory of trade, it is also undoubtedly true that some countries do have a competitive advantage over others in some activities, and it is to the overall benefit of all that they be permitted to exploit that advantage so long as others are able to do so in their own area of advantage as well.
It’s comparative advantage, dingbat.
And yes, it gets worse:
James E says:
March 8 2018 at 12:16 pm
“easy, cost-effective, and desirable tax base that is charged on the effective rent that they are due for the loss of their natural resources.”
Is there a typo in there? Isn’t the tariff paid to the importing country, not the exporting country?
So if a developing country charges tariffs on imports (as part of its tax base and to protect domestic industry), aren’t the imported goods using up natural resources of the exporting country (ie another country), not those of the importing country charging the tariff?
Richard Murphy says:
March 8 2018 at 12:22 pm
No: many of these were effectively export charges and were for a long time considered unacceptable
I think they are just fine
Ritchie thinks export tariffs are a good idea. What he’s trying to crawl to is the idea that the taxation of resource rents is a good idea. Which it is. Stunningly good idea. But that’s different from export taxes. Because resource rent taxation is upon all uses of the resource, not just that portion exported. Tax the hell out of the location value of, say, oil. But don’t distinguish between domestic and foreign consumers.
Sigh, no wonder he thinks there’s a problem or two with Ricardo. He doesn’t understand Ricardo.