Why has protectionism never worked?
It didn't? How do you think Venice and Genoa got so filthy rich?
>>814004
Except when it has.
>>814004
It denies the increase in real wages, by driving up prices in home countries, and prevents increasing standards of living by stopping the setting up of jobs in foreign countries. It also stifles competition and prevents over all improvements in the economies.
Why would it work? It makes no sense.
>>814004
It honestly depends on the scenario open markets work great for equal economies but when you are so far back you need a certain period of protection to build your base
>loaded question
>>814005
Do you think Venice and Genoa got rich because they were autharchies that produced everything they needed and didn't import goods?
>>814014
Open markets work better for you when you are behind, due to technological diffusion.
See Latin America and how protectionism harmed their economies.
>>814018
>protectionism = autarky
No m8. It just means netting a positive trade balance.
>>814026
Do you think Venice and Genoa were very protective of their domestic market and preferred to produce inside their territories rather than trade, more than other regions?
>>814026
It doesn't.
If done right, protectionism does economic miracles. How else did the Asian Tigers got so filthy rich?
>>814025
It wasn't protectionism, but corruption and neo feudalism.
>>814041
Yes it does you non-white.
>>814004
>What is China
>>814042
Investing in education and having high saving rates. Those countries were not more protectionist than other poor countries.
Protectionism harmed productivity growth in Latin America.
>>814025
Yes but almost every successful economy went through protectionism while it was building up and then moved to open market once it was actually large enough to compete. If the initial advantage is too great the amount of time it would take to reach economic is far too great to be acceptable to most people
>>814042
>neo feudalism
I find it very easy to identify marxist posters as they tend to put "neo" in front of everything.
>neofascism
>neonazism
>neoliberalism
>neomarxism
etc.
Fuck off back to the Matrix with your Neo, nigger.
>>814004
Considering protectionism is what made America the most powerful economy in the world I'd say you're wrong.
It's only the last 50 years that the muh free trade meme has spread. America was literally almost mercantilist for 100 years, or maybe even more than that.
>>814070
His wording was bad but his point that their other economic flaws common to Latin America is not wrong. Free market or closed market won't make a difference when society is so patriarchial
>>814063
Australia developed without protectionism. I believe some Northern European countries also had very low trade barriers, but I'm not very sure of that.
Every non successful country had and has protectionism as well, so your point is kind of useless.
If every country, successful or not had the letter "A" in its name, you couldn't exactly say having the letter "A" makes a country rich because all rich countries have the letter "A".
Protectionism gave British textile manufacturers vital breathing space until high wages drove innovation.
Broadberry & Gupta 2009
>>814076
Citation needed.
>>814077
I was following you until you mentioned the word patriarchal. Like what in the fuck did you mean by that?
>>814083
>Australia developed without protectionism.
kek
>>814087
Male dominated power structures. Latin America is very sexist and this is what makes it poor, not protectionism.
>>814091
Nice bait.
>>814087
Not like feminism I guess another way to word it is tribal, people have a group or "clan" they care about and wider society be dammed so government becomes a group a people trying to gain the most advantage for their group instead of trying to rune the government
>>814090
Australia never had a great domestic market. It would make no sense for it to ever be protectionist.
>>814083
So then your argument is that protectionism doesn't make a difference
>>814004
The British enacted plenty of protectionist policies in the 1700s, specifically to protect its textile industries. It worked very well. They only rescinded protectionist policies in the mid-nineteenth century well after they had developed their industry.
>>814095
I think you mean rigid class hierarchy and limited social mobility, well yeah that's pretty typical for Latin American societies.
>>814087
patronization
>>814033
not that guy but I don't really understand what youre asking.
>>814110
Yeah I just a bunch of Francis Fukuyama so I used some of the terms he used.
>>814025
Actually you can argue on both sides because open market causes brain drainage and opens your local markets for international corporations which are more competitive than your local firms for obvious reasons.
>>814103
Mostly, yes. Also, it is hard to say anything either way because pretty much every country has been protectionist.
The only way it affects countries is by reducing technological spread. There are ways to test this, and the studies done show that protectionism reduces it.
And a country usually don't get richer by trade policy. It gets richer by having higher productivity.
>>814096
And yet it was highly so.
>The economist Henry Ergas pointed out in The Australian recently that when the first FJ Holden rolled off the assembly line in 1948, manufacturing productivity in Australia was barely 70 per cent that in Britain.
>Which meant that if the expensive Australian-made Holdens and Fords were to be accepted by the public the industry that produced them would need protection from cheaper imports.
>A 40 per cent tariff was introduced which, on most manufactured imports, dropped to 20 per cent by the 1960s.
>But not on cars. They continued to attract an import tariff of as much as 50 per cent.
http://www.sbs.com.au/news/article/2014/02/11/australian-car-making-doomed-start
https://en.wikipedia.org/wiki/AWB_Limited
http://www.abc.net.au/landline/content/2010/s3287468.htm
Just a few examples.
>>814128
Open markets and open borders are not thr same thing. Latin America is very protectionist and always had brain drainage.
Usually, what happens is that companies from rich countries create new factories in poorer ones because there it is cheaper to produce. Those companies bring technologies and usually are productivity. Over time, some employees leave those companies and start new business, be it as suppliers, rivals or anything else, using the new techniques.
>>814117
patronization is a common, most banal manifestation of patriarchy (aka dick-sucking)
sucking cocks of your resident alpha males always work for societies with low intelligences and short term thinking
the natural consequence is patricide, ending with the emergence of the new papa
and the cycle repeats.
in the 'civilized' west, one of the name of the patrons are 'feminism'
>>814140
I see. I stand corrected. I probably confused it with another country in the Anglosphere.
>>814086
>Citation needed.
https://en.wikipedia.org/wiki/American_School_%28economics%29
>>814158
You have to prove causation.
>>814168
>You have to prove causation.
What? Actually read the article you mongoloid. You responded literally 90 seconds after I posted it.
>>814171
I know what the article is about.
But you have to prove causation.
>>814175
>But you have to prove causation.
I don't have to prove jack shit. You asked for a citation, and the reference pool in that wiki article is more than you'll be able to read the rest of the evening.
>>814180
That article don't prove what you claimed.
>>814193
>>814193
>That article don't prove what you claimed.
The article specifically mentions that the United States used protectionism in order to build a large pool of fledgling businesses.
>The American School included three cardinal policy points:
>Support industry: The advocacy of protectionism, and opposition to free trade - particularly for the protection of "infant industries" and those facing import competition from abroad. Examples: Tariff of 1816 and Morrill Tariff
>>814004
>workers abroad
>slave wages
ha
imagine i posted this with a smug face
only worked in big empires, its legit and meme at the same time
>>814128
See: Canada.
>>814004
infant industry
a newly-established industry, developed either by private-enterprise interests or set up by the government, often in developing countries, as part of their industrialization programmes. New industries are often subsidized by the government and/or protected from import competition in the hope that in due course they can exploit economies of scale and thus eventually withstand foreign competition.
Infant industries are often cited as a legitimate area for the application of protectionism, but policy in this area is often open to abuse.
See ECONOMIC DEVELOPMENT
Christopher Pass & Bryan Lowes, Collins Dictionary of Economics, second edition (1988)
Here you go OP, an answer by actual economists.
>>814223
This supports what I was thinking.
That protectionist policies can be a good thing when applied to specific, mostly underdeveloped industries, but bad as a general economic policy.
>>814198
Doesn't mean that this is what caused the US to be rich.
Just like bloodletting doesn't necessarily was the cause a patient improved.
>>814223
The vast majority of actual economists are against protectionism
>>814236
>Doesn't mean that this is what caused the US to be rich.
Not necessarily, but it completely destroys the claim that America has been some kind of free market utopia since it's founding, which is the predominate view on especially the Right in American politics.
>>814246
Of course America was not always for free trade. Most countries in the world, rich or not, had protectionism.
>>814257
Then why are you being so argumentative?
I never said protectionism was the *only* reason that the U.S became so rich and powerful, but this thread title tries to imply that protectionism had nothing to do with America becoming richer, and that protectionism in general is a bad thing, which I don't think is true.
I don't think an economic policy like protectionism is *always* bad no matter what, I think it depends highly on what kind of natural resources a country has, trading partners, and how big the work force is etc.
>>814243
So are Pass and Lowes. The actual entry for protectionism is a 2 pages long rant against the dangers of price distortions, etc. They do however mention infant industries as one of the only legit instances. I quote "There are, however, some seemingly respectable arguments for protection. From the viewpoint of the welfare of the world as a whole the most popular claim made for tariffs, etc., is the infant industry argument. Protection can be an effective means of simulating the development of an industry that is well suited to a country (in terms of comparative advantage) but which finds impossible to get started unless it is protected from imports. Over time, suitably protected, such an industry is able to acquire internal economies of scale (i.e. lower costs through exploiting a larger domestic market) and take advantage of various external economies (a well-trained labour force or the learning-by-doing effect).
Eventually the new industry is able to become equally or more effcient than its older competitors. The tariff can then be removed, leaving behind a viable and competititve industry."
Rest of the entry is standard >muh free market, >muh vested interests >muh distortions >muh retarded govt. policies, etc, but I can't be bothered to type it out.
>>814261
Because you said protectionism caused America to be rich. This is not true.
>>814290
Right, so you're just butthurt at my choice of words.
Other factors did make America rich and powerful, but so did protectionism. Deal with it you lolspergtardian faggot.
>>814297
You can't really say protectionism was positive for the growth of the American economy. There is no evidence of that.
>>814304
>There is no evidence of that.
There probably exists evidence for that, but we both know you're not going to look for that evidence because you've already drank the free market Kool-aid.
>>814308
Its not his job to look for evidence if you cant present any
>>814308
Why are you so sure there is evidence?
>>814312
>Its not his job to look for evidence
Clearly it is, if he's being intellectually honest.
It seems to me retarded to assume protectionism had absolutely *zero* to do with America becoming rich and prosperous, when it was literally the national economic policy in the country from the Civil War all the way up to when Reagan dismantled it.
But believe whatever you want, I don't really care.
>>814304
>>814308
Hey guys I found this
"The U.S. has not always been a pro-free trade country. Before the Great Depression, the U.S.
went through waves of protection and liberalization, as the federal government’s demands for
revenue and industry pressure for protection waxed and waned. Some advocates of protection then as
now argued that it would enhance economic development: translated into the language of modern
economics, they argued that protection shifted American economic activity toward manufacturing,
and that increasing returns to scale and externalities made specialization in manufacturing uniquely
valuable for economic development.
But even if protection generated endogenous productivity growth by increasing economic
activity in the externality-generating manufacturing sector, it slowed the rate of growth of wages
because high tariffs on imported capital goods retarded capital deepening and delayed the
development of capital-intensive infrastructure and industry. For plausible magnitudes, this second
effect dominates: whatever Americans gained in faster mastery of technology as a result of protection
in the late 19th century, they lost more because the higher price of—imported—capital goods made it
more difficult and costly to build America’s transportation network and industrial base."
http://pages.ucsd.edu/~jlbroz/Courses/POLI142B/syllabus/delong.pdf
I do however slightly doubt that America had to import construction material outside of high tech machinery (train engines, textile mechanization. etc) in the 19th century and that these imports were so highly tarrifed they hurt the economy.
Then again I'm not an economist.
WHO WAS ALEXANDER HAMILTON
WHAT WERE THE EARLY REPUBLIC TRADE TARIFFS THAT CODDLED NATIVE INDUSTRY
WHAT IS THE MOST IMPORTANT ECONOMY IN THE WORLD
>>814005
desu small countries are forced to go the free trade route, their size and the size of their economy simple won't permit otherwise.
>>814033
>Do you think Venice and Genoa were very protective of their domestic market and preferred to produce inside their territories rather than trade, more than other regions?
Venetian glass makers were forbidden with capital punishment from ever leaving Venice.
Protectionism helps the American state, if a factory is located on its soil it can tax it, it doesn't care about the higher prices or the uneconomical location of the factory.
Protectionism helps America, but not Americans. If an American would be wealthier setting up shop in Britbongistan during the early industrial revolution and exporting the cheap goods to America instead of situating the factory in America, why should they be denied this opportunity?
Perhaps in some situations protectionism prevents a rich person building a factory in Mexico making them build it in America and employ Americans instead, but if the purpose of protectionism is a kind of tax on the rich, why does this have to involve pressuring businesses into making uneconomical decisions? Why not let the business choose the best location for their factory and just increase taxes on the rich?
If you want to prevent unemployment, why not help the unemployed retrain and get new jobs instead of trying to preserve a declining industry? Eventually it will become unsustainable and there will be even bigger layoffs later, it is better if there is a slow trickle of unemployed that the economy can handle than a flood resulting in people unemployed for years. Because it is easier or politicians to say "muh jobs" and raise tariffs obviously.
There is no long term benefit to protectionism besides the benefit to the state and politicians that promote it. Because loss of economic growth indirectly reduces life expectancy they should be held responsible for the deaths and given the death penalty.
>>814444
>There is no long term benefit to protectionism besides the benefit to the state and politicians that promote it. Because loss of economic growth indirectly reduces life expectancy they should be held responsible for the deaths and given the death penalty.
This gave me cancer, you should be put down.
Outside of the infant industry argument, another case can be made for protectionist policies using the optimal tariff theory.
If a country is a sufficiently large enough player in the world trading scene, it could, in theory, set a tariff from a monopoly-like situation that would increase total surplus. This leaves aside any sort of trade Wars that could result from a policy like this though.
Can someone explain to me how protectionism would be bad if the country has its own industry and simply wants to provide cheap labour for its skill-less workers
>>814070
You don't use "neo-nazism" and "neo-liberalism" as labels? Do you call skinheads "nazis" and the US Democratic Party "liberals"? Really? Why are you on /his/? You clearly don't know shit.
>>814602
You're disincentivizing modernization, as well as driving up product cost and lowering consumer buying power.
You're also paying in opportunity cost and inefficient spending of money.
>>814223
If there is enough information in the market to suggest that the industry would be profitable i.e competitive after short term losses, then investors would invest in that industry with or without protectionism. If there isn't enough information in the market then I'm not sure how the government would know accurately which industries "need" to be protected and although there might be a few success stories there would also be many expensive failures. One can speak about the success of South Korea, which mainly focused on export promotion rather than import substitution and loans to industries in which it had a comparative advantage in anyway. Nigeria tried tariffs to protect infant industry and that led to its infant industries not being able to import machines/raw materials so the policy backfired.
This thread stinks to high heaven of free-trade dogmatists. The absolute worst sorts of people.
>>814304
Not him but holy shit dude, saying "that's not true" over and over again is one of the worst ways to do anything
>>814076
>Considering protectionism is what made America the most powerful economy in the world
>>814710
>then investors would invest in that industry with or without protectionism
You make the crucial mistake of trusting private entrepreneurs to do a single intelligemt thing famalom.
Seriously though, consider the sitaution about 25 years back when the Warsaw Block and Yugoslavia collapsed. There were many industries that would have probably managed to survive the transition just fine (TAM - https://en.wikipedia.org/wiki/Tovarna_avtomobilov_Maribor). But in the general confusion and sudden flood of cheap Renaults and Citroens, the biggest commercial vehicle manufacturer in Yugoslavia just collapsed nad nobody outside Slovenia gave much of a shit. So they went bankrupt and laid of 4/5 of Maribor's population (most of the city worked there).
In the end if we dont count the mingling of a few ex-UDBA (yugoslav KGB) kleptocrats TAM is a textbook example of a good industry that simply died because the government didn't protect it and nobody noticed it in time.
>>814449
I was kidding about the death penalty, but something tells me you would actually put me down for wanting to hold politicians accountable for decisions that affect millions of people.
If the government reduces GDP by 1% due to failed policies that is $168 billion gone, the equivalent of 6.72 million years with a median income of $25000 or the life's work of around 168000 people. Not directly equatablee to death, but people don't work because they enjoy it, it is time in their limited lives they are sacrificing. Also the increased poverty does increase death rates. The only thing that redeems politicians is that someone has to do it and they apparently believe they are doing the right thing, though that is up to debate.
Protectionism is unforgivable, it tramples people's rights and stifles the economy.
You guys really need to read the book 'Kicking away the ladder'. The central argument is basically that the Western countries developed themselves and enriched themselves by pursuing a protectionist policy and are actively preventing developing economies from doing the same.
The argument is based off of the 'Washington consensus' which largely came to the same conclusion. Protectionism is awesome if you are a shit economy, pity that the developed countries of the world are forcing LEDCs to adopt free trade policies through various bits of legislation.
>>814892
You might want to think about reading the rest of the thread before shitposting nigger.
>>814898
If the tariffs and the economic cost of buying TAM cars were instead added to taxes and used to subsidize TAM, would the public have gone along with it? Would they prefer to have lower taxes instead?
Did the assets and human capital of TAM evaporate into thin air or did they move somewhere where they could be of more use?
How can you be sure protecting TAM was the right move?
>>814941
No rampant protectionism leads to situations like Yugoslavia in the late 1980's. Protectionism, in order to be useful, needs to be:
a) targeted at specific industries that have a chance of holding comparative advantage if properly developed
b) finite in time. Protecting unprofitable industries forever is simply bad for everyone involved
and most importnant c) should never be taken for granted.
see
>>814223
>>814279
Protectionism works, just look at China. Where they still have massive fucking tariffs on foreign made goods.
>>814941
>protectionism is the sole cause of the industrial revolution
trashed
>>814990
it benefits the state, not Chinese citizens
>>814953
>would the public have gone along with it
Good question. Affraid I wouldn't know what people outside Maribor were feeling about it
>Did the assets and human capital of TAM evaporate into thin air or did they move somewhere where they could be of more use?
That's the sad part. After GM briefly considered buying them, but ultimatively decided not to, the company was sold to some ex-UDBA cleptocrats who promptly sold all of the equipement as scrap metal and laid of everyone. Now everything did not go to waste since the opened a Renault plant in Celje (a smaller city not that far from Maribor) and that allowed some relief to the crippling unemployment, but during most of the 90's and early 00's Maribor was a post-industrial wasteland full of alcoholic ex-heavy industry bluecollar unemployed people and a heavy tax drain as they all lived on welfare. Pic related is what remains of the TAM plants today
>How can you be sure protecting TAM was the right move?
TAM's equipement was not that high tech, but it was by no means obsolete. In a just world it would have been bought of by some big Euro/American/Japanese manufacturer and Maribor today wouldn't be some barely recovering Soviet Detroit.
globalists get out
reeee
>>815064
And TAM is just one of the biggest fish in the pond there are thousands of stories like this, viable or semi-viable industries being ignored by western investors and simply stolen and sold by some UDBA cleptocrat.
>>815084
>>815093
>>814898
That's the problem with such protectionism, it enables firms to survive (subsidised by the taxpayer) which will collapse when markets are opened, although I'd agree with having a gradual transition to soften the blow and let firms such as TAM adapt. Maribor looks lovely by the way, have most of the population found new jobs? What new industries are there?
>>815098
Since Slovenia is so small it's also more flexible which allowed Maribor to avoid the worst excesses of Detroit or Katowicz. The population noticably fell as people moved to places with more job opportunities. Today it's mostly service industries, tourism and education. Some heavy industry such as the Maribor Steel Mill, the chemical industries with Henkel Maribor and the TALUM Aluminium Mills have managed to survive and now make a living by specializing in top end quality production.
Good thread with actual decent replies. I would just like to add something. Everyone assumes that protectionism is restricted to trade with other nations. This is not true, a country may trade within it's boarders. The example of America is a great one. While America had quite high external tariffs for most of it's history (such as the Smoot-Hawley tariff which, when coupled with the gold standard, prolonged and worsened the great depression) there was complete free trade within the country. There were no tariffs on goods going from Texas to Kansas, just tariffs from Texas to Mexico.
I would point you to a paper called 'Australia in the Perspective of the Rise and Decline of Nations' by a guy called Mancur Olsen. It's Australia-centric (I'm from Aus) but it explains this point quite well. It is important to note that there is some other good shit in there ( Assesing how protected an industry is by seeing how much it exports) the conclusion is total garbage.
>>814941
>You guys really need to read the book 'Kicking away the ladder'.
Ha Joon Chang is widely considered as a hack by economists.
>>815467
Is that why he is a reader at Cambridge?
>>815544
Yeah.
Cambridge is not very strong in Economics research.
>>815584
In the UK, the best Economics departments are the UCL and LSE.
Ha Joon Chang really has a very poor reputation among economists.
>>815467 http://www.thecompleteuniversityguide.co.uk/league-tables/rankings?o=Research+Quality&s=economics Cambridge comes 4th in research,not too shabby, maybe a bit low for Keynes' and Marshall's university I suppose
Name one global power who has used the free market to rise to the top and has secured either regional or global hegemony.
You can't.
>>815638
That, in the UK... Doing slightly better than Warwick...
Ha Joon Chang is not a top economist. This is a really uncontroversial opinion among economists.
>>815648
If you want global hegemony then proper free markets aren't the path for you. They tend to maximise overall wealth although some groups do lose out e.g job losses from the UK as jobs are outsourcedto China, but life has been made much better (by material standards) for lots of poor Chinese people.
>>815660
I tend to disagree with his ideas, and I would never say that he isn't a heterodox economist but he mustn't be a complete and utter hack, if he has some position at a uni and has been invited to speak at events by the IMF. In no way did I say that he was a top economist.
>>814168
This is what I call "Hume trolling" - whenever someone offers evidence for a view, fall back on the indeterminacy of causation
>>815710
> he mustn't be a complete and utter hack, if he has some position at a uni and has been invited to speak at events by the IMF
That's a cute way of thinking.
Steve Keen also has a position at an uni.
>>814004
>Why has protectionism never worked?
I know right, I always ask if they on the pill, but they keep coming to me 9 months later for child support.
Protectionism worked very well for the United States 1860s-1920s.
Protectionism worked very well for South Korea.
>>815736
In the case of the United States I'd say the strategic umbrella provided by the British Navy and the US's own forces were important in facilitating the protectionist policies of the US, and the same for South Korea with the US providing strategic assurances.
You should check out "Economics and World History: Myths and Paradoxes" by Paul Bairoch http://bookzz.org/book/2207593/dfba33
Goes over questions like was there a golden era of free trade, has protectionism always had a negative impact, were third world raw materials central to western industrialization, the "balance sheet" of colonialism, is more population growth always good, and many more.
>>815064
>>815084
>>815093
>>815097
This assumes that TAM could be saved, apparently it existed until 2011 so there was plenty of time for someone to make use of all that factory space and cheap labor. If it was inherently uneconomical then protectionism and capital investment would have only hurt the economy, making people buy more expensive cars and diverting capital from better investments.
The problem seems to be the government failing to help the few who would inevitably lose out in the new economy rather than a lack of protectionism. At best you could argue that the economy could make a slower transition giving people time to adjust, though I think free trade would have been the final goal. Also the war might have had a role in this.
>>815736
They worked in spite of protectionism.
>>815870
>inherently uneconomical
I wonder what conditions or criteria one could give for evaluating something as 'inherently uneconomical', or if in fact this is an unsubstantiated post-hoc rationalisation that we use to condemn anything that poses a counterexample to our laissez-faire worldview. If something fails partly due to vulnerability created by insufficient protection, those who have an axiomatic hostility to protectionism may always claim that such an enterprise was 'inherently uneconomical' and therefore bound to fail, even though we aren't in a position to say with any confidence whether that enterprise was in fact 'inherently uneconomical'. If we criminally neglect a child, we can rationalise our actions (or lack thereof) and assuage our conscience by reassuring ourselves that the child was 'inherently uneconomical' - it wouldn't matter if we fed him or not, so that we didn't feed him is perfectly excusable.
It may further be asked whether the concept of 'inherent' economic potential is even coherent, given that economics is a very soft science that deals with emergent properties rather than inherent ones.
