One of the problems with policy, in general, is that more policies are not evidence-based. Nobel laureate Edmund Phelps emphasized that. I have seen that during my long career in every country I worked in. They are more sever in some places than others, of course, but it remains astonishing that advanced nations like the US still suffers. In my view, the problem is not in the researchers, but more in policymakers, and more in ignorant politicians.
Policy errors are persistent. They cause lots of damages over time. This is true whether we are talking about economics, science, or politics, or any other filed. In politics, people suffer for decades or more because one politician's error, or bad policy. In economics, the damages could be externally high. Above-all, it is very costly to undo the errors.
But there is a still some puzzling aspects to economic policy errors and that is why economic advisers to the policymaker, Trump in this case, do not explain to him that his tariff policy violates 101 economic principles?
In economics 101, net exports (exports less imports) = net foreign investments (US investments abroad less foreign investments in the US). Period. So if his policy reduces imports, it must reduce foreign investments in the US too. That would reduce employment in the US and cause more suffering to American workers. http://econ101help.com/net-
Trade economists know more about the dynamics, but I would say eventually that must happen. There is no free lunch.
Policy errors are persistent. They cause lots of damages over time. This is true whether we are talking about economics, science, or politics, or any other filed. In politics, people suffer for decades or more because one politician's error, or bad policy. In economics, the damages could be externally high. Above-all, it is very costly to undo the errors.
But there is a still some puzzling aspects to economic policy errors and that is why economic advisers to the policymaker, Trump in this case, do not explain to him that his tariff policy violates 101 economic principles?
In economics 101, net exports (exports less imports) = net foreign investments (US investments abroad less foreign investments in the US). Period. So if his policy reduces imports, it must reduce foreign investments in the US too. That would reduce employment in the US and cause more suffering to American workers. http://econ101help.com/net-
Trade economists know more about the dynamics, but I would say eventually that must happen. There is no free lunch.
No comments:
Post a Comment