Venezuela's 'socialist paradise' turns into a nightmare: Medical shortages claim lives as oil price

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148. You be surprised what can be made locally with local material

Last edited Wed Feb 4, 2015, 03:59 PM - Edit history (1)

Any Tariff has to be against ANYTHING that can be produced locally. The propose of the Tariff would be to compensate for what the exportation of oil is doing to the rest of your economy. Thus the parts have to be imported, the Tariff will apply to them to encourage local development of those parts.

Remember the propose of the Tariff will be to protect the NON-oil parts of the Economy. Global companies are truly global but they also work around local laws all the time. You will be surprised at what is produce where to satisfy local requirements and if the supplier do not, a local supplier will fill in for that local supplies can rely on higher prices do to the protection of the Tariff.

As to your third argument, the answer is simple, the Tariff itself AND the profits one makes by not having to pay the Tariff because you are producing locally. Your argument is a variation of the Chicken and Egg debate i.e. which comes first?? The answer is one leads to the other thus both come first and both comes last. From the Egg comes the Chicken, from the Chicken the Egg,

The same with where will the money come from. As to local non-oil economy booms, it will lead to more expansion of the non-oil economy, which in turn produce more profits, which in turn expand the internal non-oil economy. Profits lead to more profits. The problem with oil, is the rest of the Economy ends up losing money and losing money leads to more losing money and pretty soon you are like West Virginia in the middle of a coal slump. On the other hand if the Government protects local industry by use of a Tariff, profits will lead expansion, which leads to profits, which leads to expansion.

You have to accept the unpleasant fact that oil has a tendency to kill off the non-oil economy in region (just like coal did so in the late 1800s and while into the 1900s and to a degree today in the coal mining areas of the US). You have to protect the non-energy related parts of the economy from the negative effects of the energy producing parts. Regulation including Tariffs are one way to protect the non-energy parts of the economy, and that has to be done unless you economy is so large that energy production and exportation is a minor part of your economy (as is the case in the US).

One of the advantages of a Tariff is you can still import any item you want, but the price is high. Thus if you really need it, you will pay for it.