It occurred to me that VAT imposed on a country is a great modulator of manufacturing activity. A lot of value creation happens on the processing and reprocessing of material into more and more refined products since the last industrial revolution. The act of charging a tax on each of these activities individually has the prima facie interpretation of penalizing manufacturing activities. If you make a polluting car, you have to pay tax on the value you added by putting parts together in that inefficient way. If you make a fighter jet, you must pay taxes on the value you have created by designing and assembling. If you make a lot of cheap and poor quality consumer products, you should suffer by paying VAT!
Yes, that is extremely polarized view of the world. But if one takes a step back to see the forest around the tree. Ultimately this VAT has a modulation effect to attenuate the amount of production. Only those value creation chains that humanity really need will be valued enough to survive this tax. The things we don’t need or shouldn’t be made will be discarded like unfit dinosaurs. The net effect is that we may see a total manufacturing production decrease. This change in term helps things like global warming and lost manufacturing jobs.
(My associates have commented that I fancy myself Elon Musk too much. Does this remind you of his account of how much his electric cars cost? He subtracted a dollar value of time saved at gas pump lines out of MSRP to produce a price for advertisements)
Yes, that is the totally opposite polar view of the world. But if you take a step back and see the ecosystem around the forest, and you look at present administration that way, doesn’t Trump’s tariff also stifle competition to produce more cheap goods? That also decreases production, and in fact world-wide production of goods.(it also reduces pollution caused by shipping those goods) If we take this perspective, Trump is the undeclared champion in the fight against global warming!!
Man, the politics of America in the early 3rd millennium is murky and has multi-phasic and multi-factor interpretations. This is a gnarly time in human history where purely best intentions are no longer satisfactory. Our collective wisdom must evolve to counter these intellectual evolutionary hurdles.
p.s. in a much later retrospection, Trump is a short lived winner, only to be kicked down to a second rated inadvertent enviromental champion by his much maligned Ku-Flu! Oh the irony! He, and other luminaries like Gore and Musk,…, are all biting the COVID dust… It’s just so hard to get on top, even on opposite days.
p.p.s. clean energy production was also decreased due to lessened economic demand as well as covid-related reductions. But in proportion, a slowed economy reduces pollution by a lot more than reduced anti-pollution activities. So, IMMHO, an instantaneous snapshot of the net of all human activities, slower economy is cleaner.