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?

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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 21 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.

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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.