Jagdish Bhagwati has an op-ed in yesterday's FT where he says the US Congress's objections to that huge WTO ruling last month that declared we are unfairly subsidizing our exports to the tune of $4 billion are hypocritical, nationalistic and wrong. No argument from me there. But he makes one argument I can't follow:
<quote> Then others argue that the EU does it too. Here, they are wrong again on the economics. Citing value-added taxes, they object to the rebates on exports therefrom as a parallel offence. But as my former student Gene Grossman, now of Princeton, has shown, this tax system does not distort comparative advantage. <unquote> I'm not sure I understand this: At first glance, the critics' argument looks quite plausible. What makes value added rebates different than income tax rebates? Is Bhagwhati not elaborating because the counter argument is now so obvious and well-known that he feels no need? Or is he being disingenous and passing off something long and complicated and controversial as if it were an agreed fact? Inquiring but ignorant minds want to know. Michael __________________________________________________________________________ Michael Pollak................New York [EMAIL PROTECTED]
