Trade Restrictions and Disaster Relief
What is the best way to amplify the damaging effects of a natural disaster? From The Emirates Economist:
It is sad, but politicians will tend to respond to the arguments of domestic suppliers, not consumers, and the effects of the disaster are made all that much worse as a result.
As an example, EmEc links to this item, which points out that hurricanes Katrina and Rita severely damaged the U.S. sugar crop, thus shifting its supply curve to the left and nearly doubling the price of sugar. Opening the borders to imported sugar could help reduce the size of this effect...
Of course, if foreign suppliers rush in, domestic suppliers will scream about "carpet-baggers" and "foreigners" ripping them off and exploiting them. But these complaints will be smoke to disguise their attempts to protect their local market power.
Use the strong arm of the government to prevent foreign suppliers from rushing in when domestic supplies are disrupted.
Who loses? The consumer.
It is sad, but politicians will tend to respond to the arguments of domestic suppliers, not consumers, and the effects of the disaster are made all that much worse as a result.
As an example, EmEc links to this item, which points out that hurricanes Katrina and Rita severely damaged the U.S. sugar crop, thus shifting its supply curve to the left and nearly doubling the price of sugar. Opening the borders to imported sugar could help reduce the size of this effect...
Category: Disasters, Economics, International Trade Posted on
Tuesday, December 20, 2005 at 11:26pm
<< main
