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Protectionism only works when two things are true: - Other countries can't produce the product better than your country can - Other countries can't sell the
by DougWebb 9y ago
Protectionism only works when two things are true:
- Other countries can't produce the product better than your country can
- Other countries can't sell the product to markets besides yours
If we were to enact a tariff on foreign-made smartphones that was so high that they couldn't compete with domestically-made smartphones, the smartphone manufacturers in China and the rest of the far east would just sell their phones across the rest of the world, where they would out-compete our phones on price (initially). Our domestic manufacturers would have a smaller market and less access to materials and technical advancements, causing our phones to become inferior in quality as well as overpriced. And that would eventually hurt our people and our entire economy as well, because we won't be able to enjoy the technological advancements and lower-cost goods that the rest of the world is benefiting from.
The Soviet Union used to have a pretty self-contained, very protectionist economy, and the low-quality of their goods was a standing joke in the US for decades. That's what protectionism gets you if you're not the sole manufacturer or sole market for a product.
- thevtm 9y agoManufacture IPhones in US to sell in the US. Manufacture IPhones in China to sell to the rest of the world. I bet that whats Apple is going to do.
- notlefthanded 9y agoThat didn't work too well with blackberry in Argentina. It's kind of an extreme case, but there are parallels that can be drawn.
- bduerst 9y agoHere's a good podcast on how terrible it was: http://www.npr.org/sections/money/2017/02/17/515850029/episode-755-the-phone-at-the-end-of-the-world http://www.npr.org/sections/money/2017/02/17/515850029/episo... Even with the tariff incentives, the demand within the country wasn't enough to cover the economies of scale to keep manufacturing costs effective.