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kubafu 3 hours ago

Tell me you don't see the value in the tax as a way of discouraging people from ordering a pair of socks from the other side of the globe, while they can buy them locally?

jvuygbbkuurx 3 hours ago | parent | next [-]

Why let a middleman rentseek?

d1sxeyes 2 hours ago | parent | next [-]

It’s not a “middleman rent seeking”, it’s protectionism. If lower cost production is available elsewhere in the world, there are three options.

1. Stop producing locally. Allow the market to take care of it.

2. Deregulate minimum wages to allow local businesses to price locally produced goods competitively.

3. Impose a tariff on incoming goods to protect local producers.

Which is your preference?

mantas 2 hours ago | parent [-]

Market has already did the thing. In this case it's protecting local retailers who import in bulk over consumers importing individually.

d1sxeyes 22 minutes ago | parent [-]

For phone cases, maybe, but not for everything under 150 EUR…

On top of that, local retailers have to comply with EU regulations etc. while Chinese imports are notorious for not following safety/recycling standards etc., which unbalances the playing field away from local retailers anyway.

tiahura 2 hours ago | parent | prev [-]

Where is the rentseeking in that example? Rentseeking is the expenditure of resources to influence the rules so you can charge rent. The sock merchant in the example isn’t.

kmeisthax 2 hours ago | parent [-]

There are two levels of rentseeking in any tariff example.

The first level is the intended rentseeking: we make imported socks from China more expensive so you buy domestically made socks instead. There are various excusable reasons why you would want to do this, but at the end of the day, we are still assigning the class of people who make socks domestically the ability to charge a supra-competitive price, which is a rent.

The second level is unintended rentseeking. Maybe it turns out the economy really, really doesn't want to fund a domestic sock industry. Maybe our sockmakers are just really, really bad at making socks. Or maybe people really, really want foreign socks. In any of these cases, the people just pay the tariff no matter the cost.

For example, Brazil has had extraordinarily high import tariffs on all sorts of consumer electronics. The intent is to create a domestic electronics industry. The reality is, however, Brazil was never going to be able to support that. Electronics are a highly exportable industry and the global market can only support a few countries being involved in it. So the result is that game consoles and smartphones are just really expensive purely for the benefit of people involved in the tax scheme.

Silhouette 2 hours ago | parent | prev | next [-]

This is global trade and comparative advantage at work. If someone outside the country can produce an equivalent product to what a local producer would make, they can supply it to our market more efficiently than our local producers, and there are no moral qualms (for example people working under conditions that are unacceptable by our standards) then everyone benefits from the import arrangement except for the local producers who can't compete.

From an economic perspective the local producer then needs to become more efficient and/or produce a better product to remain competitive. Alternatively they can do something else that is a more productive use of their time and skills. Again this is just a free market at work. The economic principle is no different if another local producer opened down the road from the existing local producer and they were the ones making the same product cheaper or a better product for the same price.

Protectionism arguably has a place. For vital interests like national defence there is an argument for making certain things locally so you have complete control because of the security implications and because the normal rules of international trade and diplomacy might not be working properly at the time when you need those products. But even in fields like defence and strategic infrastructure and perhaps the most obvious example of simply putting enough food on everyone's plate to survive there are few if any Western nations that don't rely significantly on international trade.

There is an example I always remember from the Brexit debates here in the UK. The Remain campaigners talked a lot about the advantages of being in the EU's Single Market and Customs Union. (These are the two big economic arrangements in the EU that allow member states to trade freely among themselves without tariffs or non-tariff barriers.) And certainly for intra-EU trade they do offer many economic advantages.

However the cost of being under the protectionist umbrella was much less discussed - surprisingly even by Leave campaigners. All member states are required to apply the common EU-based tariffs to anything coming into their country from outside the union. So when the EU introduced extremely high tariffs to protect the fruit growers in its Mediterranean member states that was good for those growers. But we don't exactly grow a lot of citrus fruit in the UK with our milder northern European climate. We also already had some established trade routes with north African nations that could supply similar products at potentially lower cost and would have liked to increase that trade with us - a mutual benefit for both their suppliers and our consumers that would have cost neither of us anything directly. The EU tariffs made that financially unviable and therefore benefitted some of the southern member states but at the expense of both consumers in the UK (also an EU member state at the time!) and the more efficient suppliers from Africa.

Protectionism is inherently inefficient economically. Sometimes it might be appropriate for other reasons but in purely financial terms it's almost always a negative effect.

ajsnigrutin 2 hours ago | parent | prev [-]

Because we don't make those socks locally. They come from the other side of the globe.

For example, i want to buy a phone case... i can order one on aliexpress for ~1eur (free shipping) + 3eur tax + 88cents of vat and pay 4.88for it.

Or I can go to my local mall, and buy the identical case, made by the same chinese manufacturer for 12-15eur. The middleman can order 100 of those cases and since they're the same TARIC code, he'll still just pay 3eur (total) in customs for all of them (3% customs, instead of 300% if you order 1 piece only) and still be much more expensive than if I order directly from china.

So instead of paying 1eur + having 4 eur left over to go for a beer, i now pay almost 5eur, no local beer and 75% of that tax doesn't even go to my country but directly into EU budget. I can afford less and won't get anything out of that money. Yes, there's an employee in that cell phone store, but so is there an employee in my local bar where I can't afford beer anymore because EU took my money.