Wednesday, May 29, 2013

More on export subsidies ... why can't we see the light?

A few posts back I briefly discussed the EU's nonsensical idea of whacking a tariff on cheap solar panels from China. After a quick Google search, I find a nice supporting paper from Cafe Hayek:

"Compared to the no-subsidy alternative, we non-Chinese people get larger quantities of valuable outputs at lower prices. From our perspective, it is as if production conditions in China naturally allow firms there to produce at these very low costs. Because economic theory is clear that the home economy benefits if  lower-cost foreign suppliers are permitted to serve the home economy unimpeded by protectionist measures, if the costs of creating these artificially low prices of exports fall on foreigners and not on us, we in the domestic economy should welcome such lower prices, whatever their source."

As to the question posed in the title "why can't we see the light?," the answer is because vested interests, like charity, begins at home.

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