Saturday, 23 October 2010

Tariff s costs jobs

Some people even in the US seem to understand this point:
"Think about the IPod, for instance. It is designed in America and its 451 parts are made in dozens of different countries. But just because it is finally assembled in China, it officially counts as a Chinese import and therefore a contributor to America’s trade deficit — never mind that the Chinese add only $4 to the IPod’s $150 final value. Imposing duties on IPods to slash the deficit, then, won’t just cost Chinese jobs in Beijing assembly plants, but American jobs in Cupertino (Apple’s headquarters) computer labs."
And hurts the worst-off of people,
But if raising the barricades against Chinese products will hurt highly-paid techies in America, it will hurt working class folks even more.

Consider the research by University of Chicago economist Christian Broda. Contrary to conventional wisdom, he found that inequality in this country has gone down – not up — thanks to trade with China. Between 1994 and 2005, he found, any rise in income inequality was offset by a decline in prices of goods consumed by poorer households. Indeed, inflation for the richest 10% of U.S. households, which tend to spend more on services, was 6% higher than the poorest 10%, who spend more of their income on household goods supplied by China. “In sectors where there is no Chinese presence,” Broda has pointed out, “inflation has been more than 20%.” In short, China has likely done more to help America’s poor than the stimulus, TARP or any other program invented by Uncle Sam.
That is Shikha Dalmia in Forbes.

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