These days, tariffs are a hot issue for an obvious reason. Economists have of course made various analysis and commented already. Their opinions are usually negative. In particular, tariffs are said to generate higher prices and consumers will suffer although domestic firms may be protected by and benefit from tariffs. Hence, the basis for the negative result is consumers' interests, not the producers'.
In fact, in various other analyses, economists take consumers' interests seriously while producers' interests may not be similarly concerned. For example, economists also have negative comments on monopoly power. Why? This is because price will be increased by monopoly power (than that in the competitive market). Consumers will be hurt in this way and that's disliked in economics.
Perhaps you would say: an analysis as such is not biased towards consumers against producers. Monopoly power generates changes in both consumer surplus and producer surplus (when compared with a competitive market counterpart). The gain in producer surplus (due to a higher price) can't offset the loss in consumer surplus. As such, a net loss is resulted. Hence, what is concerned is the balance between producers' and consumers' interests, not purely consumers'.
You may argue further: a typical analysis in economics is to draw demand and supply curves. When economists comment on a policy, say, a price floor or tax, both the consumer surplus and producer surplus in such a diagram will be taken into account. The so-called deadweight loss analysis often shows that both consumer and producer loss are involved. It is not biased towards either side.
Nevertheless, this seemingly balanced emphasis on both sides cannot reflect the true practice in economics. The practice of concerning both sides is more a high-school economics practice. Ultimately, economics is not paying equal attention to both sides.
To understand this, we had better introduce a distinction not mentioned in high school: partial equilibrium analysis versus general equilibrium analysis.
Partial equilibrium analysis is not normally mentioned in high-school economics but it is exactly almost the only focus in high-school economics. It is about analyzing one single market's situation, without taking care of its impacts on other markets in an economy. If apple market is the concern, orange market is normally ignored, not to mention markets for coffee, pork, smartphone, car, residential properties, oil, .... When we analyze apple, we just focus on apple, and the demand and supply curves of it, as well as the consumer and producer surpluses of it. We ignore other markets. This is partial equilibrium analysis.
General equilibrium analysis is, however, about all markets in an economy at the same time. Even if a factor is mainly targeted at one market, say, a tax on apples, general equilibrium analysis focuses not only on that concerned market, say, only on the demand and supply curves of apples. It will also explore how other markets will be affected by the changes in the targeted market and how this will generate feedbacks into the original market. When apples are taxed, not only apple price will go up and quantity will go down, orange and other fruits, as substitutes for apples, will also be affected. Demands for apple substitutes will increase and their prices will go up too. This will generate a feedback to apple: if apple substitutes also become more expensive, some buyers will be back to apple market and so eventually apple quantity will still decrease, but shouldn't decrease as much as what may be seen in a partial equilibrium analysis.
At this point, you may get that a general equilibrium analysis is not only more complicated, but also more right. Taxing apples of course will affect orange and other markets, not just apples. Hence, a partial equilibrium analysis cannot be more right than a general equilibrium analysis. We sometimes focus on partial equilibrium simply because it is simpler and it may not be far from the truth under some conditions (say, for a product without good substitutes). But if we aim at a getting a more accurate analysis, we should opt for general equilibrium.
Then, why all these matter to our claim that economics is concerned more with consumers' interests than producers' interests? The point is this. An equal concern for consumers' and producers' interests happen only in a partial equilibrium analysis. In a general equilibrium analysis, consumers' interests are the ultimate concern.
When we draw the demand and supply (or cost) curves of a good and analyze how the consumer surplus and producer surplus will change due to an incidence, a policy or the presence/absence of monopoly power, it is an analysis focusing on one good and ignoring other sectors. So, this is a partial equilibrium analysis.
But we know this can only be a short-cut analysis. Ultimately, the full impact of the event or policy etc has to be analyzed in a general equilibrium setting. Of course, even if all sectors in an economy are taken into account, there are also demand sides and supply sides in each sector. But don't forget that the producers in one sector (say, apple farmers) must be the consumers in other sectors (say, pork, electricity, smartphone, etc). There is no producer who is not at the same time a consumer.
Meanwhile, are there consumers not producers? Yes, of course, some people are not producers, in particular, not those whose contributions can be recognized in producer surplus. But when they consume, their benefits got will be recorded in consumer surplus.
Now, when a producer must also be a consumer, the interests of the same person should be counted only once. Furthermore, if a producer's surplus is high but, say due to higher prices of consumer goods, the producer may not benefit a lot from such a situation. Eventually, a producer's interests lie in how many consumer goods that can be traded by the producer's outputs. So, what we need to count, ultimately, is the benefits of consumers, some of whom are also producers while some are not.
Perhaps not all economists are aware of this practice because some of them do only partial equilibrium analysis. In particular, economists in a subfield known as "industrial organization" often (but not always) do only partial equilibrium analysis. In such an analysis, there is no way to count the interest of a producer of a good as a consumer of other goods because other goods do not appear there. As such, counting both consumer and producer surplus is the only way to count the benefits from a deal or policy.
Meanwhile, economists in some other subfields are particularly aware of the abovementioned practice as they need to do general equilibrium analysis. Public economics and international economics are two such subfields.
One important task of a public economist is to design a tax system for an economy. Consider commodity tax such as GST, etc. This is a tax that will directly affect both consumers and producers. But public economics doesn't handle the analysis like what high-school economics may handle, which is to draw demand-supply diagrams for all the commodities that will be taxed and count all the consumer and producer surpluses from all the demand-supply diagrams.
In public economics, both the producers and consumers will be concerned. However, the producers are concerned in a specific way. What public economists truly concern is the efficiency of the production sector. The sector is efficient if an economy can't produce more of one good without reducing the outputs of any other goods. In so far as the production sector is efficient, public economics turns to concentrate on consumers' benefits.
Why is this practice justified?
First, if production is inefficient, we can increase the output of a good while the outputs of all other goods remain unchanged. The extra output, if given to any one of the consumers in the economy, can make some consumers better off. So, from consumers' perspective, the first job of a taxation policy is to ensure that production is efficient, or the consumers' interests are not best promoted.
Second, if production is efficient, we don't need to care about producers' interests anymore as they are also consumers. Caring about the consumers' benefits is sufficient.
Public economics effectively care only about consumers' interests while the producers' problem is limited only to its efficiency aspect. This is justified as it is doing a general equilibrium analysis.
Similarly, international economics is concerned with the whole economy. It is concerned with whether trades will benefit a trading country on the whole or not. The comparative advantage principle shows us that trade generates mutual benefits to both trading countries. But what benefits? Consumers' or producers' benefits?
On the surface, it seems that comparative advantage simply enables a greater production when producers in each country can specialize in what one can do best. Thus, it is about producers' interests. But producing more in both countries doesn't mean that the producers can earn more. A higher output supply actually likely pushes down prices and so (domestic) producers may earn less (though not necessarily so). Then, do we need to calculate if a lower price due to trade makes the producer earn more or less? In fact, we don't. International economists don't do this. The reason is: if the same resources can produce more in both countries, the consumers have more goods to enjoy. That's a sure gain from trade.
Well, perhaps some producers facing lower prices of their products will be hurt. But producers are also consumers, who will benefit from trades. Some producers may earn less and so can buy fewer goods at the same prices (of other goods). But prices are lower with international trades. Hence, as consumers, they may still be able to buy more goods even if they earn less. Even if they can't buy more goods (as they may earn much less), some others must be able to buy more goods. Taken as a whole, people in a country must be able to buy more goods after trade (don't forget that trades make total outputs available in both countries increases). So, on the whole, consumers must be better off. As everyone is a consumer but not everyone is a producer, it is sufficient to know what happens to consumers so as to know if a country is made better by international trade.
Now, we can revisit the point of tariffs. Most economists do not want higher tariffs. Trades will be impeded by tariffs. Prices will become higher. And consumers will be hurt. Perhaps some (domestic) producers will benefit from tariffs. They may earn more as their foreign rivals are weakened by tariffs. But as a whole, the country is made worst off in terms of consumer interests, based on the logic outlined above.
At this point, I think my point made in this post is clear: economists do not pay equal attention to consumers' and producers' interests; actually, they pay more attentions to consumers' interests, or ultimately they are concerned with consumers' interests.
At this point, you may then understand why sometimes economists' viewpoints are not welcomed, in particular, by businessmen. The former cares more about consumers' interests while the latter cares about their own interests, which are producers' interests. Yes, businessmen are also consumers. But why should they think like an economist? Would they convince themselves that even if they earn less, they as consumers will benefit? Of course not. A businessman's loss may be partly offset by their gains as a consumer but normally the latter gain is too little to be compared with the loss in business. Even if all consumers' gains are big enough such that, from a social viewpoint, the gain can more than offset the loss of some businessmen, the hurt businessmen will not want to sacrifice themselves for the society (while economists will think this is worthwhile).
As an economist, I of course will by and large concur with such an economics viewpoints: ultimately, it is the consumers' interests that matter. But these years I start to rethink. The trigger point is exactly the tariff issue. Yes, tariff wars happened in the past in human history. But that's a long time ago. That's not what are experienced by the current generations of economists. And after the tariff wars happened in history, economists reflected and concluded that tariffs were not good and so proposed free trade. Nevertheless, history can return and we now face a new wave of tariff bombs launched. Economists will certainly reflect on this.
I also start to reflect on it. My first reflection result is that economics is concerned more with consumers' interests, not equally with consumers' and producers' interests. Somehow we may not be fully aware of it but that's what economists effective do, upon reflection. This result also means that economists may often disagree with businessmen, who are concerned more with producers' interests. There is a conflict between us and them.
My second reflection points to something more fundamental: is the economics approach reliable, justifiable, or acceptable from a broader perspective? I have no doubt that consumer interests are the ultimate concerns. But the economics approach to take consumer interests into account is specific approach, in the following sense.
Consider a change that makes each gains $1 in a society with population of 100 million while each producer, a total of 10,000, suffers $6,000. The economics approach, as implied in the international trade theory, will consider this change makes the society better off as a net gain of $40 million will be resulted. The 100 million includes all consumers (some are also producers), and so the 10,000 producers lose on net $5,999. Nonetheless, as there are much more consumers gain, on the whole, the society still gains.
Well, there may be nothing wrong about this judgment. But this analysis obviously cannot take something into account: when the 10,000 producers lose, each may lose their whole career - lose their job forever or lose their businesses forever. It is an extremely deep loss. Meanwhile, each consumer gain very little. They can buy goods a little cheaper. Even if they must buy it a little bit more expensive, they won't suffer a lot. The economics analysis as normally practiced will not try to evaluate how painful is a loss from $6,000 and how little is a gain from $1. We just add the money values up. But is there something missed in such an analysis?
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