Protectionism

[pchalk]

read this article on the bbc: http://news.bbc.co.uk/2/hi/americas/7868631.stm

i was wondering, while im a bit under-informed about this sort of thing (so i dont really have an opinon yet), what is really bad about protectionism besides the threat of trade war?

this quote particularly from the article got me wondering: "protectionism is the crack cocaine of economics. It provides an immediate high that leads to economic death"

Im curious, so please discuss

[Giuliano Taverna]

The problem the west faces is simple. We have standards for workers, these hamper our ability to produce goods to export. Countries that do not have those standards will always outproduce us, saddling us with an unending trade deficit.

So We have 4 options

1. Keep being bleed to death via trade deficit.
2. Lower our standards
3. Become protectionist
4. Impose our standards on all of our trading partners

1 will kill us
2 will lead to riots
3 will lead to economic collapse
4 will require war

We don't have many great options, Me I'd go with 4, because aside from the initial war, going forward things look good. All the other ones will lead to compulsive self destruction in the long term.

[Chlodwig I.]

The problem the west faces is simple. We have standards for workers, these hamper our ability to produce goods to export. Countries that do not have those standards will always outproduce us, saddling us with an unending trade deficit.

So We have 4 options

1. Keep being bleed to death via trade deficit.
2. Lower our standards
3. Become protectionist
4. Impose our standards on all of our trading partners

1 will kill us
2 will lead to riots
3 will lead to economic collapse
4 will require war

We don't have many great options, Me I'd go with 4, because aside from the initial war, going forward things look good. All the other ones will lead to compulsive self destruction in the long term.

I'm not so sure about that if you take a look at Japan or Germany both export more then they import and these countries are western countries with high standards for thier workers

[Junius]

The problems with protectionism:

Protects inefficent industries
Limits consumer choice
Lower quality goods for higher price
Development of Trade Wars (the bloodies kind)
Law of Comparative Advantage shows that nations benefit from trade
Protecting native industries will be a drain on national resources, with no compensation.

Those are just some of the problems with protectionism. Of course, in a large enough state or super state they don't really matter, the EU would be a good example of this. Free internal trade, but, internationally, it is very protected.

In regard to the previous poster. The western world enjoys a huge advantage in production when it comes to skills training, education, machinery and technology. With the use of all these advantages some of the greatest net exporters are located in the west, for example, Germany and Japan.

[Akhil_The_Great]

Protectionism is necessary in a globalized world we live in, Economics theory states that who ever can produce a product at the lowest cost gets to produce a product. If the West wishes to continue at its current level of living standards it will need tariffs,

If you look at the agriculture sector it is heavily subsidized and protected with tariffs, even though we have a technological advantage compared to third world countries they still have a economic advantage, so without tariffs farmers would be jobless.

That would be the same case with manufacturing, there i no other sector in the economy that can employ mass labour and pay good wages , the sector should be protected from foreign countries, unless we all wanna be fliping burgers at mcdonalds or working at walmart (most people have only high school or limited post secondary schooling) the service sector doesn't provide much growth, or a good base for the economy

not to be picking on it, but China can produce everything that is produced in the west at a lower cost, their economic growth has come from manufacturing,

[Giuliano Taverna]

Or we could start employing convicts and welfare recipients, that would allow us to compete with china.

I still say tariff or world war three, but excuse my bleeding heart tendencies.

[IrishHitman]

i was wondering, while im a bit under-informed about this sort of thing (so i dont really have an opinon yet), what is really bad about protectionism besides the threat of trade war?

Countries that trade are less likely to go to war, as long as they aren't engaged in imperialist efforts, due to simple economics.
Though some protection of certain areas may be necessary in the national interest.

[Sphere]

not to be picking on it, but China can produce everything that is produced in the west at a lower cost, their economic growth has come from manufacturing,

When was the last time you flew in a Chinese airplane, used a Chinese operating system, drove a chinese car, used a Chinese MRI machine, played a chinese video game, used a building/bridge/road designed by a chinese engineer, used a Chinese produced CPU, drank Chinese wine/beer/liquor etc.

The US and other western nations have a huge competative advantages over china in many, many sectors. Just because you as a common consumer purchase mostly consumer goods and will never buy a Boeing 747, doesn't mean they don't get produced and bought on the world market.

And why should the US put up a bunch of tarriffs and make overpriced socks when we could be designing and building airplanes and skyscappers and selling them to the rest of the world.

[bushbush]

since late 1800, the world economy has been fairly consistent in growth thanks to increasing trade liberalization and global economic integration.

the only period that the world economy declined was during the inter-war period, when protectionism dominated. After ww2, when such policy was reversed, the global economy recovered very quickly and went into another boom.

to me that's strong evidence that protectionism is not good for the big picture.

[Scar Face]

Mild protectionism is a good thing. In certain industries only, and used to a limited extent. Completely free trade sometimes means the Nation can not realistically compete, and loses jobs. It's stupid to commit so solely to an ideology of free trade, that you will not even ensure your people remain at work.

[BNS]

As stated above protectionism focuses only on the immediate benefits of a certain group and fails to look at the ill effects on the greater economy in the long run. It is in our greater interest that our limited capital be put only in the best industries, protecting weak industries draws capital away from the more efficient industries and lowers wealth potential.

In reference to the article I really wish our leaders would pay more attention to history before promoting such junk.

[Viking Prince]

Protectionism is a wasted effort that favors a small segment of workers and business owners to the damage of the broader market of consumers and business owners. You do not need to look beyond the borders of the USA to find a protectionist practice harming more than helping. Free trade is to the benefit of the aggregate citizens within the USA and it is clearly in our self interests.

As to the poster remarking on China -- Since there is no such thing as an aggregate trade surplus in isolation, why is this a problem. The need to do something with the procedes since the proverbial matress is not an option.

[Ahlerich]

people liked to use protectionism like that:

sell your own goods at home and keep your countries money in the country and sell your goods as well in other countries to get their money.

unfortunately the "other" countris dont like that and would react in a same manor. in the end all lose as they have to pay a higher price for imports they rely on and they lose a huge portion of their export coz only those who desperately rely on it would still buy it.

so its a nice idea but since you need 2 to trade it just doesnt work the way you want it.

[BNS]

people liked to use protectionism like that:

sell your own goods at home and keep your countries money in the country and sell your goods as well in other countries to get their money.

unfortunately the "other" countris dont like that and would react in a same manor. in the end all lose as they have to pay a higher price for imports they rely on and they lose a huge portion of their export coz only those who desperately rely on it would still buy it.

so its a nice idea but since you need 2 to trade it just doesnt work the way you want it.

It's a good idea only if you want industrial regression. Free trade works both ways it also brings in money into the country.

[wilting]

Im curious, so please discuss

If country A is good at making wine, and country B is good at making computer chips, then country A gets better cheaper computer chips by buying them from country B, than it would if it used computer chips made at home and B gets better cheaper wine by buying from A.

If A and B block each others products, then both societies get more expensive, poorer qualities products, and are less well off as a result.

Have a nice day.

[shalis]

the question is how many sectors can be transferred over to asia/south america for cheaper operational cost than in US/Canada? And what is left after that? How many jobs will that provide to the US/Canada population?

you need a market for those products. doesn't matter if you paying an employee 2 dollars an hour instead of 20 back home if you have no one left that can afford to buy your product.

then again maybe they just intend to make you work for 2 dollars an hour too. In the end you might not have a choice.

[Viking Prince]

the question is how many sectors can be transferred over to asia/south america for cheaper operational cost than in US/Canada? And what is left after that? How many jobs will that provide to the US/Canada population?

you need a market for those products. doesn't matter if you paying an employee 2 dollars an hour instead of 20 back home if you have no one left that can afford to buy your product.

then again maybe they just intend to make you work for 2 dollars an hour too. In the end you might not have a choice.

You have really shown a misunderstanding of comparative advantage and what constitutes productive output in an industrial and capital intensive society compared to a developing country sichas China. Please read up and return with a report on what you have learned.

Regards,

VP

[Exarch]

protectionism gets u votes
makes u look 'patriotic'

in the end, it's BS
free trade is best because it promotes efficiency.

[Aetius]

Huzzah Capitalism!

Too bad it is being beaten on a daily basis with a proverbial baseball bat.

[Admiral Piett]

Some protectionism is necessary.

However I laugh at organizations like NAFTA and the WTO that are supposed to be free trade organizations but basically act like little bureaucracies what we can and can't trade. I am pretty adamant about that, Viking Prince.