Friday, September 30, 2016

Scott. Stumbler takes the biscuit

"This is a very basic error. International economists almost universally agree that a VAT is neutral with respect to trade. "
Assumptions please !

"An across the board 10% import tax, combined with a 10% export subsidy, offset each other, leaving no net impact on trade. Instead they convert the tax from a production tax to a consumption tax. But it's a consumption tax that applies equally to all goods, whether made domestically, or imported. This is not even a tiny bit controversial."

     My guess it's not a slip 
He's got an export subsidy where he needs an export tax 

And what he's got is the approximate equivalent of a devaluation that is not off set
Devals by trading partners 

Where this certainty comes from

The congealed teachings of his mentors 

Congealed mangled transposed over the years
in scotts mind vat ( the iron pot variety )
 in search of justifications  for sky hooked class ideology 

This prods a comment 

Lots of comp stat theorems get " generalized "
 In the eager mind 

Assumptions forgotten ?

Well if this above is influenced by say

Lerners symmetry theorem 

Not only has he got 
The export subsidy part wrong
It's a tax 

He's left out trade always in balance 
Preferences of citizenry identical 
Factors distributed evenly 
Tax revenue lump sum per capita
returned to the citizens 

Probably much else 
It's a model for Jesus sake !

And a beautiful counter intuitive one
Like Ricardo's " implicit "
comparative advantage theorem 

He seems to have reached into his virtual file draw and pulled out the consequences of a UUCD

Unilateral un off set
 currency devaluation