Cosmopolitism is the idea that all people on the planet are part of a global community. The philosophy of cosmopolitism is very broad and sometimes advocates universal rules, or that we all have to have the same partiality for people who are far away than we do closer to us. By adding the modificator ‘Methodologically’ to ‘cosmopolitism’, I mean by calling on a appeal that resembles the philosophical but more limited to only someone’s analytical method. In short, I just use the expression “methodological cosmopolitism” to mean that when investigating the economic effects of something, the costs and benefits for all The affected parties must be taken into account. Random awards such as race, nationality, gender, wealth, class, etc., do not determine whose costs for it and whose not.
Methodological cosmopolitism is necessary for economic understanding. Consider the so -called optimum rate. In view of certain conditions, a sufficiently small rate may result in a net profit for social well -being: consumer surplus loss plus the deadweight loss of the rate can be less than the surplus profit for the producers and the government. This outcome is quite unique under taxes: with the exception of taxes on goods that generate external effects, the model of taxes indicates a net welfare loss. Rates are not taxes on external effects. So how do they generate a net welfare gain? Something by an accounting expert. Optimal rates only suggest a net welfare gain because the reduction in the surplus of foreign producers is not counted in the model. If those reductions were counted, the optimum rate no longer creates a net welfare gain.
Many economic nationalists object to this point. When discussing the above point, I often get an answer in the lines of: “What does it matter that foreigners have reduced their well -being? We just have to care for our nation!” Whether or not the well -being of a foreigner does not matter from a moral position is not relevant; It is important from one economic position. Trade, all trade, is mutual. In the first exchange, both parties benefit (the buyer gets something of higher value than his money and the seller gets something of higher value than the good they sell). But the exchange process does not end there. The seller has sold and now has dollars. They can do a number of things: buy goods from the other nation, invest in the other nation, etc. When the trade is reduced between two countries, then economic well -being is reduced twice: once the rate reduces the primary exchanges, and again when the foreigner, which has been provided, now has fewer dollars to spend export or investments in the economy. When Abba Lerner pointed out in 1936A rate on the input has a similar reductive effect on exports.
This effect, well -known with economists (indeed, one of the reasons why an optimal rate should be sufficiently small, is the minimization of the loss for domestic producers/consumers connected to the export market) is missed by nationalists and others who reject methodological cosmopolitism. Even if someone does not think that the well -being of foreigners should matter, must Be a methodological cosmopolitan to fully appreciate and consider the total effects of policy (in contrast to simple effects with one margin).