Recommended Economics Reading List

Just discovered a very interesting, and very prescient, book concerning income inequality in the 21st C., looking forward to learning what the future has in store for us: "Capital in the Twenty-First Century", by Thomas Piketty, translated by Arthur Goldhammer; Stratfor had a good synopsis of the book in this week's report: https://www.stratfor.com/weekly/lunch-question?mc_cid=833f04473a&mc_eid=6df540a918
 
Closing our borders to trade is really, really dumb.
We’ve known this for a very long time.​

Georgios Karras, in Applied Economietrics and International Development, 2003:
“The results [of a study of 56 countries, 1951-98, and 105 countries, 1960-97] show that the effect of trade openness on economic growth is positive, permanent, statistically significant, and economically sizable.”
https://www.usc.es/economet/reviews/aeid311.pdf

Eduardo A. Cavallo and Jeffrey A. Frankel, John F. Kennedy School of Government, Harvard University, December 2005:
“We find that openness indeed makes countries less vulnerable, both to severe sudden stops [in capital inflows] and currency crashes, and that the relationship is even stronger when correcting for the endogeneity of trade.”
https://conference.nber.org/confer/2...06/frankel.pdf

Selina Jackson, writing in the World Bank blog, November 25, 2015:
“No country has developed successfully in modern times without harnessing economic openness – to international trade, investment, and the movement of people.”
https://blogs.worldbank.org/en/trade...not-sufficient

Douglas A. Irwin, writing in The World Bank Research Observer, February 2025:
“At the microeconomic level, the gains in industry productivity from reducing tariffs on imported intermediate goods are even more sharply identified. They show up time and again in country after country.”
https://academic.oup.com/wbro/advanc...xt&login=false
 
DOR said:
Closing our borders to trade is really, really dumb.
We’ve known this for a very long time.​

Georgios Karras, in Applied Economietrics and International Development, 2003:
“The results [of a study of 56 countries, 1951-98, and 105 countries, 1960-97] show that the effect of trade openness on economic growth is positive, permanent, statistically significant, and economically sizable.”
https://www.usc.es/economet/reviews/aeid311.pdf

Eduardo A. Cavallo and Jeffrey A. Frankel, John F. Kennedy School of Government, Harvard University, December 2005:
“We find that openness indeed makes countries less vulnerable, both to severe sudden stops [in capital inflows] and currency crashes, and that the relationship is even stronger when correcting for the endogeneity of trade.”
https://conference.nber.org/confer/2...06/frankel.pdf

Selina Jackson, writing in the World Bank blog, November 25, 2015:
“No country has developed successfully in modern times without harnessing economic openness – to international trade, investment, and the movement of people.”
https://blogs.worldbank.org/en/trade...not-sufficient

Douglas A. Irwin, writing in The World Bank Research Observer, February 2025:
“At the microeconomic level, the gains in industry productivity from reducing tariffs on imported intermediate goods are even more sharply identified. They show up time and again in country after country.”
https://academic.oup.com/wbro/advanc...xt&login=false
Click to expand...

It's not necessary to be an economist, to see that a tariff; or trade war, is the equivalent of a "Mexican Showdown", no winners just lossers.:confused::rolleyes:
But, to play "Devils Advocate", are there any instances that proponents of a tariff war can point to, where there were winners?:frown:
 
Tariff "war" ?
No. No winners.

There are historic examples where restricting imports, in order to protect domestic infant industries, has been temporarily useful, but those are nothing at all like what is happening today. These tariffs are neither targeted so as to protect something nor useful in raising revenue.

Putting an import tax on useful things that your economy does not produce is, to put it technically, dumb.
 
DOR said:
Tariff "war" ?
No. No winners.

There are historic examples where restricting imports, in order to protect domestic infant industries, has been temporarily useful, but those are nothing at all like what is happening today. These tariffs are neither targeted so as to protect something nor useful in raising revenue.

Putting an import tax on useful things that your economy does not produce is, to put it technically, dumb.
Click to expand...

In a parallel universe? Trump could probably get away with a 10% tariff on all imports. Announce it, give everyone 6 months notice so they have time to adjust and only threaten more tariffs if anyone retaliates. Business gets certainty, other nations get time to grumble, confirm they won't be exempted and lay the ground work at home. The global economy gets time to adapt and the US gets a revenue stream to help reduce it's deficit (plus a once off hike in inflationary pressures of course).

But, as I said - in a parallel universe. :confused:
 
Revenue stream?
Import tariffs contributed 1.4% of federal revenues in 1962-2024. Now, assuming that there isn’t a quick reversal when the economy tanks – don’t think a $327 billion (10% of imports) tax hike won’t knock consumer and business spending sideways.

With a 6-month lead time, hoarding kicks in, which means sales fall off the cliff on day 181.

That parallel universe needs to be Trump-free to really work.
 
DOR said:
Revenue stream?
Import tariffs contributed 1.4% of federal revenues in 1962-2024. Now, assuming that there isn’t a quick reversal when the economy tanks – don’t think a $327 billion (10% of imports) tax hike won’t knock consumer and business spending sideways.

With a 6-month lead time, hoarding kicks in, which means sales fall off the cliff on day 181.

That parallel universe needs to be Trump-free to really work.
Click to expand...

Depends on how quickly the 10% gets imposed. Scale it in over a year? Anyway I didn't say it was a good idea (tariffs generally aren't a good long term solution to any problem). Just that if you had to have them then 10% is manageable (compared to known historical rates) and would raise revenue without causing the world's trade system into chaos. As it stands?
 
Again with the raising revenue?
What's that about?

A couple of things to bear in mind:
First, 10% isn't going to protect any infant industries (as if that were the plan).
Second, 10% isn't going to move any large-scale capital investment (including infrastructure!) from a $35/day economy to a $35/hour one (as if that were the plan).
Third, there are many more fair, far more efficient, and far more politically attractive ways to raise useful amounts of revenue.
 
DOR said:
Again with the raising revenue?
What's that about?

A couple of things to bear in mind:
First, 10% isn't going to protect any infant industries (as if that were the plan).
Second, 10% isn't going to move any large-scale capital investment (including infrastructure!) from a $35/day economy to a $35/hour one (as if that were the plan).
Third, there are many more fair, far more efficient, and far more politically attractive ways to raise useful amounts of revenue.
Click to expand...

What is with me? Nothing really. I've already said I'm not a fan of tariffs and don't think they should be in place. Worse than the tariffs themselves however has been Trump's execution of their implementation!. Its been a complete shambles. I've just accepted that in this instance? They're a fait accompli. That being the case?

They will raise revenue, just so long as Trump doesn't decide to compensate 'losing' domestic industries like he did with the farmers back in 2018 and end up spending all that revenue in transfer payments. Which was the case back then & coincidentally did end up consuming almost all the revenue those traffics raised before he dropped them near the end of his term. And again any money raised? If not spent? Could be used to reduce the deficit, however since Trump has also hinted at potential tax cuts (for the rich)?

Basically if I can't change something? I'm looking for any possible benefit, no matter how small that can be derived from an economic event, even hypothetical benefits! And in this case? Sadly it's almost certain they will be exactly that - hypothetical.
 
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Monash said:
What is with me? Nothing really. I've already said I'm not a fan of tariffs and don't think they should be in place. Worse than the tariffs themselves however has been Trump's execution of their implementation!. Its been a complete shambles. I've just accepted that in this instance? They're a fait accompli. That being the case?

They will raise revenue, just so long as Trump doesn't decide to compensate 'losing' domestic industries like he did with the farmers back in 2018 and end up spending all that revenue in transfer payments. Which was the case back then & coincidentally did end up consuming almost all the revenue those traffics raised before he dropped them near the end of his term. And again any money raised? If not spent? Could be used to reduce the deficit, however since Trump has also hinted at potential tax cuts (for the rich)?

Basically if I can't change something? I'm looking for any possible benefit, no matter how small that can be derived from an economic event, even hypothetical benefits! And in this case? Sadly it's almost certain they will be exactly that - hypothetical.
Click to expand...

Don’t assume that the kinds of tariff rates we’re talking about here raise any money at all. There are costs that must be borne when one slaps around the supply/demand curve. Layoffs. Bankruptcies. Unemployment insurance. Lower tax collections from people who can’t make as much money as they used to.

When dealing with the Orange Anti-Christ, looking for any possible benefit is a losing proposition.
 
DOR said:
Don’t assume that the kinds of tariff rates we’re talking about here raise any money at all. There are costs that must be borne when one slaps around the supply/demand curve. Layoffs. Bankruptcies. Unemployment insurance. Lower tax collections from people who can’t make as much money as they used to.

When dealing with the Orange Anti-Christ, looking for any possible benefit is a losing proposition.
Click to expand...

All taxes impose costs. I just pointed out that they do raise revenue and sensible President could use that revenue constructively. But since its Trump we're talking about I'm pretty sure whatever revenue his tariffs do bring in? Is going to pissed away on wall somewhere. In this case possibly even a real wall! :frown:
 
DOR said:
No, all taxes do not, net of other impacts, raise revenue.
Some just make poorer people more miserable.
Click to expand...

What was the quote? Something like "The art of collecting taxes is like plucking a goose! In both cases the aim is to get the most amount of feathers for the least amount of hissing.'
 
The best level of tax on imports is what is needed to pay for necessary examination, registration, classification, documentation, etc., of the imported item. Anything more than that needs a really, really convincing argument ... which is totally absent this year.
 
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