Tariffs and Growth in 19th Century
The late 19th century was a period of high tariffs and economic growth for many countries. This is somewhat puzzling to us since we typically associate free trade
The late 19th century was a period of high tariffs and economic growth for many countries. This is somewhat puzzling to us since we typically associate free trade with economic growth. But, if higher tariffs are correlated with economic growth in the late 19th century, does that mean tariffs caused the economic growth? This video explores this question by looking at the economies of Argentina, Canada, and other countries during this period.
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Maybe in those cases the benefits of tariffs were not direct? One fact rarely addressed by the advocates of free trade is that governments need to collect taxes, if taxes are not collected through tariffs then they need to be collected somewhere else. Therefore the equation is not |effects of tariff" vs "effects of no tariff", it is ("effects of tariff") vs ("effects of no tariff" + "necessity to create disruption somewhere else in the economy in order to raise those taxes"). Depending on the economic circumstances the latter may be worse off. In case of those countries living off beef and wheat exports, there might be a connection in the form of that thanks to the tariffs the producers of those commodities were less burdened with taxation regarding their production costs and that made their exports more competitive.