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What's a predatory product? That seems silly to me: people only buy something when they value what they get more than what they give up to get it. And how does

What's a predatory product? That seems silly to me: people only buy something when they value what they get more than what they give up to get it. And how does it remove wealth from a country? Allowing people to satisfy their desires in the most direct way possible doesn't seem in conflict with the goal of creating wealth, so I'm honestly finding it hard to understand your reasoning here. I would argue that any form of trade protectionism is not intelligent: it's very short-sighted and sacrifices actual wealth for employment. It's the type of thing that sounded and felt good to me only before I actually tried to learn a bit of economics. Think of it in terms of a small town that passed a law banning any form of trade between residents. Technically, 100% of people would be employed. They would be employed knitting their own sweaters, milking their own cows, growing their own grain, cooking their own food, gathering their own building materials, pumping their own water, etc. So life would be paradise with 100% employment right? Without trade, people would be on the edge of starvation and extreme poverty constantly. Scale up that analogy to put the residents of that small town as countries, and you can see where protectionist policies protect jobs at the expense of actual prosperity. North Korea is an imperfect extreme example, but you can easily see what effects limiting trade has on prosperity. If I was a politician, I'd love to pass all kind of trade policies like this because most people haven't really studied economics so it's easy to spin up your consolidation of power as protecting jobs.

Spivak 10y ago
I'm not going to argue the whether protectionism is a good thing in general but a predatory doesn't mean that it's not worth it to the buyer, but that the profits of the sale leave the country. As an extreme example, if your country exports nothing but you have citizens buying goods from other countries then over time the country is going to become poorer and poorer as the capital flows out of the country. Free trade is good for regions with industry and when workers have the means to relocate to areas with employment. Until our immigration policy is indistinguishable from 'we're all basically one country' then trade protections are going to sometimes be a country's best option.
- gwright 10y ago
  This is way to simplistic of an argument. In particular you are ignoring the affect of currency exchange rates as it relates to foreign trade.
xoa 10y ago
>I would argue that any form of trade protectionism is not intelligent: it's very short-sighted and sacrifices actual wealth for employment. It's the type of thing that sounded and felt good to me only before I actually tried to learn a bit of economics. Frankly I think you're only part way through your stages of view development, and currently on a very common one for people who've learned "a bit of economics" but not yet delved much deeper. There are a couple of initial issues with your argument (which themselves rapidly spiral into far more complexity) once it reaches the real world. The first is that when labeling protectionism "not intelligent" you're failing to consider geopolitical and domestic realities. We do not have one world government, and there exist extremely genuine diametrically opposing views on proper governance amongst the world's sovereign nation-states. Trade between nations does not exist in a vacuum, leaders have a responsibility to at least consider future strategic priorities, how relations with a given nation may evolve in the future, whether trade will be strategically positive or not and in what industries, etc. Influence by focused interests, regulatory capture, and so forth are all serious issues that you correctly identify as economically destructive, and on the whole trade should be a huge net win. But that doesn't mean that all political concerns are unfounded, or that trade cannot be destructive longer term in some cases. On the domestic front, there have objectively been major issues with how the gains from trade have been distributed to populations. We can talk average net wins, but individuals are not entirely averages and the human factor must be taken into account. Simple classical economics often tends to treat humans as far more fungible and fluid then they actually are. Actual humans cannot necessarily simply switch jobs easily (or at all) into an entirely different field if their area of expertise is obsoleted, and while most systems can handle tiny numbers alright a significant enough shift can result in political unrest and a negative effect for the country, even if theoretically the country is "richer" for it. Now, there are certainly more and less efficient ways to deal with this. Ideally, a strong retraining system and some sort of electronic basic income combined with proper taxation would allow the gains to be spread out to some extent and enhance the ability to shift jobs, reducing the problem of those who lost out sufficiently. In practice this may not be politically or technically feasible for a given government at a given time, leaving cruder and less efficient measures up to and including pure protectionism. But don't confuse a negative, even a significant negative, vs an ideal with an absolute negative vs other goals. Whether the second issue applies depends on what exactly you're including in the basket of "any form of trade protectionism". It's common for economists arguing for pure Free Trade to include in this any sort of regulation or tariffs whatsoever, particularly if they could "benefit" domestic suppliers over foreigns ones even if that is not the specific goal. Here the problem is that that view puts Free Trade in direct conflict with the Free Market and sovereign cultural goal making, and the Free Market in particular is one of our most powerful and successful economic tools. Remember, a Free Market is a specific construct that requires certain foundations, and that it's also then up to a polity to decide exactly what sort of goals they want to optimize efficiency towards (and in turn other baselines). Foundations include things like information symmetry and cost internalization. Different countries can and do have radically different policies there, so if trade between them is not normalized then it will tend to be artificially destructive towards the markets one or both. Cost internalization is a simple example: if one country has a solid market wherein pollution costs are reasonably consistently internalized and controlled, and another does not, then absent trade controls companies will naturally tend to shift to the country where they can pollute without market price consequence to them. This however does not represent an actual real net efficiency gain, rather it represents an economic subsidization. The closer two countries are in Free Market quality, the lower the trade barriers should be in principle (and where they aren't really does represent more and more stupid waste), but when they diverge "trade protectionism" is a key tool to protect genuine efficiency.

Spivak 10y ago

I'm not going to argue the whether protectionism is a good thing in general but a predatory doesn't mean that it's not worth it to the buyer, but that the profits of the sale leave the country. As an extreme example, if your country exports nothing but you have citizens buying goods from other countries then over time the country is going to become poorer and poorer as the capital flows out of the country. Free trade is good for regions with industry and when workers have the means to relocate to areas with employment. Until our immigration policy is indistinguishable from 'we're all basically one country' then trade protections are going to sometimes be a country's best option.

gwright 10y ago
This is way to simplistic of an argument. In particular you are ignoring the affect of currency exchange rates as it relates to foreign trade.

xoa 10y ago

>I would argue that any form of trade protectionism is not intelligent: it's very short-sighted and sacrifices actual wealth for employment. It's the type of thing that sounded and felt good to me only before I actually tried to learn a bit of economics. Frankly I think you're only part way through your stages of view development, and currently on a very common one for people who've learned "a bit of economics" but not yet delved much deeper. There are a couple of initial issues with your argument (which themselves rapidly spiral into far more complexity) once it reaches the real world. The first is that when labeling protectionism "not intelligent" you're failing to consider geopolitical and domestic realities. We do not have one world government, and there exist extremely genuine diametrically opposing views on proper governance amongst the world's sovereign nation-states. Trade between nations does not exist in a vacuum, leaders have a responsibility to at least consider future strategic priorities, how relations with a given nation may evolve in the future, whether trade will be strategically positive or not and in what industries, etc. Influence by focused interests, regulatory capture, and so forth are all serious issues that you correctly identify as economically destructive, and on the whole trade should be a huge net win. But that doesn't mean that all political concerns are unfounded, or that trade cannot be destructive longer term in some cases. On the domestic front, there have objectively been major issues with how the gains from trade have been distributed to populations. We can talk average net wins, but individuals are not entirely averages and the human factor must be taken into account. Simple classical economics often tends to treat humans as far more fungible and fluid then they actually are. Actual humans cannot necessarily simply switch jobs easily (or at all) into an entirely different field if their area of expertise is obsoleted, and while most systems can handle tiny numbers alright a significant enough shift can result in political unrest and a negative effect for the country, even if theoretically the country is "richer" for it. Now, there are certainly more and less efficient ways to deal with this. Ideally, a strong retraining system and some sort of electronic basic income combined with proper taxation would allow the gains to be spread out to some extent and enhance the ability to shift jobs, reducing the problem of those who lost out sufficiently. In practice this may not be politically or technically feasible for a given government at a given time, leaving cruder and less efficient measures up to and including pure protectionism. But don't confuse a negative, even a significant negative, vs an ideal with an absolute negative vs other goals. Whether the second issue applies depends on what exactly you're including in the basket of "any form of trade protectionism". It's common for economists arguing for pure Free Trade to include in this any sort of regulation or tariffs whatsoever, particularly if they could "benefit" domestic suppliers over foreigns ones even if that is not the specific goal. Here the problem is that that view puts Free Trade in direct conflict with the Free Market and sovereign cultural goal making, and the Free Market in particular is one of our most powerful and successful economic tools. Remember, a Free Market is a specific construct that requires certain foundations, and that it's also then up to a polity to decide exactly what sort of goals they want to optimize efficiency towards (and in turn other baselines). Foundations include things like information symmetry and cost internalization. Different countries can and do have radically different policies there, so if trade between them is not normalized then it will tend to be artificially destructive towards the markets one or both. Cost internalization is a simple example: if one country has a solid market wherein pollution costs are reasonably consistently internalized and controlled, and another does not, then absent trade controls companies will naturally tend to shift to the country where they can pollute without market price consequence to them. This however does not represent an actual real net efficiency gain, rather it represents an economic subsidization. The closer two countries are in Free Market quality, the lower the trade barriers should be in principle (and where they aren't really does represent more and more stupid waste), but when they diverge "trade protectionism" is a key tool to protect genuine efficiency.