Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
Upside of Inequality Oxford Unintended Consequences

AI Summary. An across-the-board tariff would shift American workers and capital toward producing goods currently imported more cheaply, lowering productivity, wages, and returns on capital while reducing output in industries where the US is more efficient. Because half of US imports are component parts used by domestic producers, tariffs would also raise production costs and reduce competitiveness.

Phil Gramm and Donald Boudreaux Wall Street Journal
Date Posted:

Phil Gramm and Donald Boudreaux argue that across-the-board tariffs would lower US productivity and the return on capital by channeling US capital and workers away from goods and services where we have a comparable advantage. @AEIecon

Do across-the-board tariffs lower productivity, wages, and competitiveness?

Core argument: Half of U.S. imports are component parts used by American producers, so an across-the-board tariff would raise domestic production costs and reduce U.S. competitiveness at home and abroad, the author argues.

An across-the-board tariff would stimulate U.S. production of goods that we now import more cheaply. To produce these goods at home, American workers and capital would be drawn away from producing other goods and services that we produce more efficiently. Productivity, wages and the return on capital would fall as we produce things at home that we could buy more cheaply abroad. This would simultaneously reduce production in industries for which our labor productivity and capital returns are higher. Moreover, because half of our imports are component parts used by U.S. producers, tariffs would further increase our production costs and reduce our competitiveness at home and abroad.

Takeaways by Macro Roundup® AI

  1. Half of U.S. imports are component parts used by American producers, so an across-the-board tariff would raise domestic production costs and reduce U.S. competitiveness at home and abroad, the author argues.
  2. An across-the-board tariff would stimulate U.S. production of goods now imported more cheaply, drawing American workers and capital away from goods and services the U.S. produces more efficiently.
  3. Productivity, wages and the return on capital would fall as the U.S. produces domestically what it could buy more cheaply abroad, cutting output in industries where U.S. labor productivity and capital returns are higher.

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  • How Will Trumponomics Work Out? — With US federal debt at 100% of GDP and primary deficits projected near 3%, the measures under consideration would add 1–2 points, implying a sustained 4–5% primary deficit and rapid debt growth. Stabilizing the debt ratio would require an adjustment worth 16–20% of the federal budget.
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