Tuesday, December 5, 2023

Trade does not kill Americans jobs & a carbon tax is vastly more effective and efficient than any other route to lower these emissions

See Congress’s Bipartisan Alfred E. Neuman Caucus: On issues that matter to economists the attitude on Capitol Hill seems to be, ‘What, me worry?’ by Alan Blinder. Excerpt:

"Turning to trade, America has a long history of one major party being pro-trade and the other being protectionist. Which party was which has changed several times over the country’s history. But today, both parties lean protectionist. Why? Certainly not because trade kills Americans jobs, though politicians and pundits make that false claim all the time.

Despite continuously large trade deficits—running around 3% of GDP lately—the unemployment rate has been 4% or lower for 23 consecutive months. Are we to believe that unemployment would have been below 1% if the 3% trade deficit had been zero instead? Of course not. Trade is mainly about the composition of employment—it creates jobs here and destroys jobs there—not about the overall level of employment.

That said, society should do much more to cushion the blow for those who lose their jobs—even using taxpayer money where necessary. You don’t hear enough about that from either economists or members of Congress. That’s agreement of sorts, but in the wrong place.

Finally, there is climate change, and in particular, the idea of using a carbon tax to put a price on carbon-dioxide emissions. It’s only a very slight exaggeration to say that all economists favor a carbon tax to mitigate climate change. It is vastly more effective and efficient than any other route to lower these emissions. Yet, of the 100 U.S. senators, can you think of even one who advocates a carbon tax?

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