Author Archives: Menzie Chinn

“It’s almost as if you have no economics training at all…”

With apologies to Kramer’s boss in Seinfeld. From Oren Cass’s “Trump’s Most Misunderstood Policy Proposal: Economists aren’t telling the whole truth about tariffs,” The Atlantic:

Their first mistake is to consider only the costs of tariffs, and not the benefits. Traditionally, an economist assessing a proposed market intervention begins by searching for a market failure, typically an “externality,” in need of correction. Pollution is the quintessential illustration. A factory owner will not consider the widespread harms of dumping pollutants in a river when deciding how much to spend on pollution controls. A policy that forces him to pay for polluting will correct this market failure—colloquially by “making it his problem.” It imposes a cost on the polluter in the pursuit of benefits for everyone else.

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