Protectionism

[Enemy of the State]

Protectionism is of course, the restraining of trade between nations to protect companies from foreign competition. It is criticized by practically all economists, even Austrians and Keynesians agree here. Of course, there are still plenty of people, that are proponents of protectionist policies. I have a couple of questions for people who are, for whatever reason.

1. Let us for the sake of argument agree that protectionism might help the economy of one country, say the United States. Wouldn't it also then help regions inside the United States? If the US is suffering because jobs are being outsourced to China, maybe some state within the US is also suffering because of jobs moving to a neighboring state? Going further, wouldn't it help a county within a state to also enact protectionist measures? Logically, it would seem that we should do away with the division of labor entirely. Let us produce everything ourselves. Of course, 99% of the population would die, and the few survivors would revert back to life in caves, but at least other people wouldn't be taking our jeebs!

2. Of course, no protectionist takes their argument that far. They agree free trade is good, but only within arbitrary lines drawn on a map. What is most common is a feeling that the west is being harmed by jobs being outsourced to developing countries, such as India and China (Often quite paradoxically accompanied by the notion that the multinational corporations are harming developing countries) . I have to ask, is there a racial element at play here? Because I honestly can't see any other reason why trade within the EU/the west would be good and acceptable, but trade with China would not.

I noticed protectionist sentiments in another thread, but I felt it would be a bit too off-topic to bring the issue up there, so I decided to create a seperate thread.

[truth1337]

1. Let us for the sake of argument agree that protectionism might help the economy of one country, say the United States. Wouldn't it also then help regions inside the United States?

Let's for simplicitly say you have 50 states in USA with 100 jobs in each. That means a total of 5000 jobs in USA.

Then 30 jobs from each state suddenly get outsourced to China. That means you have a total of 3500 jobs left in USA.

Introducing protectionism, you keep all 5000 jobs you started with inside USA, but possible not evenly distributed among the states, but the jobs still belong to Americans.

It is a matter of whether you think a nation should form its political policies to help its citizens, or prioritize foreign nations above your own. Do you think US policy should focus on helping China, or Americans? It is also a moral argument - Americans created those companies so why should the jobs they created (with quite some effort!) be taken by others?

Of course, 99% of the population would die, and the few survivors would revert back to life in caves

Yeah, if we don't agree to your views we'll all die. And we'll be wearing cave man suits when we take our last breath, too.

[Enemy of the State]

Let's for simplicitly say you have 50 states in USA with 100 jobs in each. That means a total of 5000 jobs in USA.

Then 30 jobs from each state suddenly get outsourced to China. That means you have a total of 3500 jobs left in USA.

Introducing protectionism, you keep all 5000 jobs you started with inside USA, but possible not evenly distributed among the states, but the jobs still belong to Americans.
It is a matter of whether you think a nation should form its political policies to help its citizens, or prioritize foreign nations above your own. Do you think US policy should focus on helping China, or Americans? It is also a moral argument - Americans created those companies so why should the jobs they created (with quite some effort!) be taken by others?

"Let's for simplicity say you have 50 counties in California with 100 jobs each. That means a total of 5000 jobs in California. Then 30 jobs from each county suddenly get outsourced to New York. That means you have a total of 3500 jobs left in California. Introducing protectionism, you keep all 5000 jobs you started with inside California, but possibly not evenly distributed among the counties, but the jobs still belong to Californians"

"It is a matter of wheter you think a state should form its political theories to help its citizens, or prioritize other states above your own. Do you think Californian policy should focus on helping New York, or Californians? It is also a moral argument - Californians created those companies, so why should jobs they created (With quite some effort) be taken by others?"

The greatest fallacy you've shown is that you do not understand the purpose of economic activity. We do not produce for the sake of production, we produce to consume. Do you know how many jobs we could create if we got rid of the printing press? Think of all the people who could be employed copying texts by hand, like in the middle ages! Again, your logic leads to the conclusion that society is best when there is no such thing as society! Lets get rid of all technology. I guarantee you unemployment will no longer be a problem.

Yeah, if we don't agree to your views we'll all die. And we'll be wearing cave man suits when we take our last breath, too.

If you were truly consistent with your beliefs, you would indeed most likely die.

[truth1337]

There is no finance elite dictating economic theory. It is common
sense.

This doesn't match with your previous elitist attitude that "I can't explain why this is so, but the Chosen High Priests who know the Truth about these things can understand it, and thus we must give all power to them or we will suffer!"

"Let's for simplicity say you have 50 counties in California with 100 jobs each. That means a total of 5000 jobs in California. Then 30 jobs from each county suddenly get outsourced to New York. That means you have a total of 3500 jobs left in California. Introducing protectionism, you keep all 5000 jobs you started with inside California, but possibly not evenly distributed among the counties, but the jobs still belong to Californians"

"It is a matter of wheter you think a state should form its political theories to help its citizens, or prioritize other states above your own. Do you think Californian policy should focus on helping New York, or Californians? It is also a moral argument - Californians created those companies, so why should jobs they created (With quite some effort) be taken by others?"

That keeps the jobs within America. And Americans can move around more easily and take American jobs in other American states, than they're willing to go to China and get them. Besides, as long as they're kept within American borders they're likely to distribute evenly because Americans have rather similar education and if one area gets high unemployment salaries are slightly lowered there, thus tempting new employers to establish headquarters there.

If you were truly consistent with your beliefs, you would indeed most likely die.

I'm very thankful for you, Oh Great Oracle, for saving me from my harmful ways! Shall I leave a sacrifice upon thy altar to grant your whims remain with me?

[removeduser_4536284751384]

Let's for simplicitly say you have 50 states in USA with 100 jobs in each. That means a total of 5000 jobs in USA.

Then 30 jobs from each state suddenly get outsourced to China. That means you have a total of 3500 jobs left in USA.

Introducing protectionism, you keep all 5000 jobs you started with inside USA, but possible not evenly distributed among the states, but the jobs still belong to Americans.

Except you misunderstand economics. All of those jobs outsourced to China give create more, better jobs in the USA. So you'd have like 6,000 American jobs, many of them better paying than the ones that moved to China.

Is it better to have 10 people working in one factory, or 10 different factories maintained by one person each, plus a couple of admin jobs to manage the more complex company? Obviously the latter will create more produce and make everyone richer. This is the simple kind of economics that schools don't differ on at all.

Capitalism is not a zero-sum game.

[truth1337]

Except you misunderstand economics. All of those jobs outsourced to China give create more, better jobs in the USA. So you'd have like 6,000 American jobs, many of them better paying than the ones that moved to China.

Which explains our high degree of unemployment today? Perhaps we should outsource the rest too, then we'll have excess of jobs rather than unemployment!

The workers who used to be employed in producing that stuff will be free to work in some some other type of production.

You seem to forget, that not every American can become a rocket scientist. Also, being self-sufficient in food production, clothes and other commodities is very important for the military strength of the country, more so than a strong army. Finally, Chinese quality of manufacturing is often more expensive, since every item must be replaced so often. I'd rather buy an American or German product that lasted 10 times as long for twice the price, than 10 plastic Chinese products that over the whole period of time cost me 5 times as much. Sure it won't cause as rapid increase in our capacity to produce low-quality technology with high performance for the short amount of time that it actually works before having to be thrown away, but then again maybe we should value production of items that are actually durable and more cost-efficient over a 10 year period higher?

In the long run production becomes more efficient which leads to lower prices and higher returns to capital and labour.

I've personally watched outsourcing being sourced back after expenses due to lower education and vastly different work methodology and culture became too high. Ever heard of the concept "western yes"?

There is nothing much that can be said about the number of jobs that will result. It might be higher or it might be lower.

Sounds like a great deal! Replacing durable strong products at cheaper prices (taken over the period of its lifecycle for the buyer) and high employment with plastic trash, environment damages, and potentially higher unemployment.

[DimeBagHo]

You seem to forget, that not every American can become a rocket scientist.

Most rocket scientists are imports anyway.

Also, being self-sufficient in food production, clothes and other commodities is very important for the military strength of the country, more so than a strong army.

Maybe 60 years ago, or if you have to fight global wars that drag on for years.

Finally, Chinese quality of manufacturing is often more expensive, since every item must be replaced so often. I'd rather buy an American or German product that lasted 10 times as long for twice the price, than 10 plastic Chinese products that over the whole period of time cost me 5 times as much. Sure it won't cause as rapid increase in our capacity to produce low-quality technology with high performance for the short amount of time that it actually works before having to be thrown away, but then again maybe we should value production of items that are actually durable and more cost-efficient over a 10 year period higher?

Then there's no problem. The jobs won't be outsourced or they will come back when employers realise it isn't paying.

I've personally watched outsourcing being sourced back after expenses due to lower education and vastly different work methodology and culture became too high. Ever heard of the concept "western yes"?

It's happening already.

[truth1337]

Most rocket scientists are imports anyway.

From nazi Germany, yes.

Maybe 60 years ago, or if you have to fight global wars that drag on for years.

The submarines of ww2 showed quite clearly how important it is to be self-sufficient in the event of a larger war.

Then there's no problem. The jobs won't be outsourced or they will come back when employers realise it isn't paying.

There is indeed a problem, because while they're playing around with their short-term games people lose their jobs. And not all jobs are sourced back, for example manufacturing. America is no longer a manufacturing world power, but rather a world power of "managers".

[DimeBagHo]

Let's for simplicitly say you have 50 states in USA with 100 jobs in each. That means a total of 5000 jobs in USA.

Then 30 jobs from each state suddenly get outsourced to China. That means you have a total of 3500 jobs left in USA.

No. Not even close. If 30 jobs from each state get outsourced then (1) Whatever those jobs used to produce will be available at a lower cost. That is a gain for whoever was buying those goods and services. (2) The capital that used to be employed in producing that stuff is now free to be invested in some other type of production. (3) The workers who used to be employed in producing that stuff will be free to work in some some other type of production.

In the short run the are often losses due to capital that can't be reallocated (because it's tied up in product specific plant and machinery for example), retraining workers, etc. In the long run production becomes more efficient which leads to lower prices and higher returns to capital and labour. There is nothing much that can be said about the number of jobs that will result. It might be higher or it might be lower.

[Town Watch]

protectionism vs free trade is an interesting conflict.

Sadly though, protectionism is pretty much alive and well in most countries in the world. In some countries it's the ruling philosophy like Russia, China, even USA etc... in others it plays a more minor role.

Wasn't it Putin himself who was warning against worldwide protectionism some time ago in a speech of his? Too bad that Putin himself is a champion of strong protectionism in Russia. Tariffs, import bans based on trumped up charges, corruption of legal system and laws, monopolization, subsidization...

[Celsius]

Protectionism is of course, the restraining of trade between nations to protect companies from foreign competition. It is criticized by practically all economists, even Austrians and Keynesians agree here. Of course, there are still plenty of people, mostly economically illiterate, that are proponents of protectionist policies. I have a couple of questions for people who are, for whatever reason.

1. Let us for the sake of argument agree that protectionism might help the economy of one country, say the United States. Wouldn't it also then help regions inside the United States? If the US is suffering because jobs are being outsourced to China, maybe some state within the US is also suffering because of jobs moving to a neighboring state? Going further, wouldn't it help a county within a state to also enact protectionist measures? Logically, it would seem that we should do away with the division of labor entirely. Let us produce everything ourselves. Of course, 99% of the population would die, and the few survivors would revert back to life in caves, but at least other people wouldn't be taking our jeebs!

2. Of course, no protectionist takes their argument that far. They agree free trade is good, but only within arbitrary lines drawn on a map. What is most common is a feeling that the west is being harmed by jobs being outsourced to developing countries, such as India and China (Often quite paradoxically accompanied by the notion that the multinational corporations are harming developing countries) . I have to ask, is there a racial element at play here? Because I honestly can't see any other reason why trade within the EU/the west would be good and acceptable, but trade with China would not.

I noticed protectionist sentiments in another thread, but I felt it would be a bit too off-topic to bring the issue up there, so I decided to create a seperate thread.

I wouldn''t say racial. The Chinese work for far less pay than American workers, and Indians also do not come near the salary of equal American workers.

In Europe, many workers work for wages that, though they may not be as high as America, they are still higher than China and India, therefore the competition is close enough to compete with.

You can't compete when you pay someone $10 an hour in America when someone in China will do it for $1 an hour. You can compete when an American is paid $10 an hour while someone in Europe is paid $8.

[removeduser_4536284751384]

The World's largest source of poverty is the agricultural protectionism of the EU and the USA. How the CAP still exists I have no idea.

You can't compete when you pay someone $10 an hour in America when someone in China will do it for $1 an hour.

No you can't, and you shouldn't want to. Chinese labour is so cheap because most Chinese workers cannot diversify into more complex work. The average American worker meanwhile is educated enough to do work it would cost a fortune to do in China.

As China develops and gains a workforce more like America's, its unskilled work price will also skyrocket and crappy jobs will move once again to Africa. And eventually it will simply be automated.

[Celsius]

The World's largest source of poverty is the agricultural protectionism of the EU and the USA. How the CAP still exists I have no idea.

No you can't, and you shouldn't want to. Chinese labour is so cheap because most Chinese workers cannot diversify into more complex work. The average American worker meanwhile is educated enough to do work it would cost a fortune to do in China.

As China develops and gains a workforce more like America's, its unskilled work price will also skyrocket and crappy jobs will move once again to Africa. And eventually it will simply be automated.

But as it stands currently, you have to compete with China and those wages. Unless you have protectionism, then it becomes less likely.

But automation will likely take over before China moves completely forward with their workforce.

[removeduser_4536284751384]

But as it stands currently, you have to compete with China and those wages. Unless you have protectionism, then it becomes less likely.

China cannot hope to compete with the USA in engineering, science, art, education and countless other industries like that. The USA way outcompetes China in these fields. Why implement protectionism?

I don't think protectionism can be automatically labeled as being wrong. There can be cases where it could be beneficial and cases where it could be disastrous. It's not as simple as the OP puts it...

In the short term maybe. In the long run it is always bad.

[PointOfViewGun]

In the short term maybe. In the long run it is always bad.

The same goes for the alternative a well. There maybe a time when lack of protectionism can lead to disastrous results. However, I don't think it's always bad. Why would it be?

[PointOfViewGun]

I don't think protectionism can be automatically labeled as being wrong. There can be cases where it could be beneficial and cases where it could be disastrous. It's not as simple as the OP puts it...

[Enemy of the State]

Between the two parties involved. Not with the people of America, when for example a Jewish banker who is citizen of America makes a deal with a Chinese businessman abroad. Then it is beneficial to the Jewish banker and the Chinese fascist-communist company owner.

Wealth isn't a zero-sum game.

I find it interesting you would specify the ethnicity of the banker. I wasn't wrong was I, this is about race?

Why should American jobs go to China? Or Somalia either for that matter? These societies are not operating under the same culture. China may be just as technologically advanced in some areas, but they treat their citizens like cattle. Somalia has prioritized the joys of having offspring over technological development and high living standards. Why should the hard work of Americans be given away to these people? That is not trade, it is not mutually beneficial. The beauty of cultural differences is that each people is free to organize their society in their own way, and when one model becomes incredibly successful, why should it give away its hard work to societies built upon oppression, hatred and short term thinking, so that it itself suffers?

You have yet to prove that work is itself the purpose of economic activity. Why is it bad when we have less work to do?

Politically, of course, there is plenty wrong with China. Their government is one of the most protectionist and authoritarian in the world, which harms both the Chinese people and us. Trade with them however would only enrich us both, and a growing middle class in China will eventually demand political freedoms.

The same goes for the alternative a well. There maybe a time when lack of protectionism can lead to disastrous results. However, I don't think it's always bad. Why would it be?

Because it restricts trade between people, always making them less well off than they would have been if they could trade freely.

[PointOfViewGun]

Because it restricts trade between people, always making them less well off than they would have been if they could trade freely.

I just don't see why it should be always true. Free trade can lead to very bad economies for certain countries that can't meet the quality of products of other countries. Say you're from country A and a bunch of countries B, C, D, E and F are surpassing your domestic production in prices, quality and quantity. Your wealth is transported outside of your country with each merchandise you buy.

[Enemy of the State]

I just don't see why it should be always true. Free trade can lead to very bad economies for certain countries that can't meet the quality of products of other countries. Say you're from country A and a bunch of countries B, C, D, E and F are surpassing your domestic production in prices, quality and quantity. Your wealth is transported outside of your country with each merchandise you buy.

Ever heard of comparative advantage?

Your wealth is transported outside of your country with each merchandise you buy.

This implies that value is objective, and thus there are winners and losers in trade. As I've previously pointed out, value is in fact subjective, and thus trade always benefits both sides.

[PointOfViewGun]

Ever heard of comparative advantage?

Yes. Comparative advantage assumes that two states have different fields that they have an advantage of. I'm talking about an asymmetric advantage. How could a developing or an underdeveloped nation battle against free trade if it doesn't have much of a national resources to exploit?

This implies that value is objective, and thus there are winners and losers in trade. As I've previously pointed out, value is in fact subjective, and thus trade always benefits both sides.

Not necessarily. When Turkey imports electronic products, car products and whatnot at great quantities and it can't meet the imports with it's exports how is it better off?