New features now available on EconSpark:
Ask a Question
Ask a Question
Different policy approach to tariffs against low-costing exporters.
Current Economic Issues
The expenditure in low-costing products from abroad get us a good chance to improve our people's quality of life. Here is just a thought concerning a different policy than tariffs, that would eliminate the doom, which is related to increasing product quality in devaluated economies, what leads to the hoard of wealth and the destruction of economies with a high standart of living shrinking their productive net.
This is a long-term policy approach. Maybe difficult to include in the agenda because of the short-terminism of nowadays.
Considering that low costing goods reduce the expenditures of the people and companies and that this sectors dominated by low costing are disappearing from the US economy i.e manufactures. This reduction of expenditures leave a higher income directed to national companies. This companies tend to increase their profits, but if they lower prices maintaining profits the same as before, a new increase in disposable income is ready to be spent. This chain can reduce prices in order to make them alluring for Chinese low income workers while increasing the quality of life of US householders. China's market is huge and the profits earned with this operation would get a huge market position for US firms increasing revenues and turning upside-down the wealth direction importer-exporter.
All this done, they can rise tariffs and expulse firms of their market but they would be the expelled from the WTO and not the US. Meanwhile, quality of life can be increased among the US workers.
Give me your opinion.
With kind regards.
Production increases a lot but the price limit is close to the marginal cost. So if the production had increasing returns to scale, the price would decrease by a great amount.
to add a comment.
to answer this question.