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> But I think it fails to grasp the political and economical reality. If the US restricts importations, it harms itself as well as it harms the would-be exporte

by dpwm 9y ago

> But I think it fails to grasp the political and economical reality. If the US restricts importations, it harms itself as well as it harms the would-be exporter. It's quite ironic that this is the US we're talking about and that the US gained so much from protectionism. Abraham Lincoln remarked, “Give us a protective tariff and we will have the greatest nation on earth.” The US was born, after its independence, in protectionism. Through protectionism, the US was able to establish a very impressive manufacturing base in almost every sector of the economy. The US can drop all tariffs on imports to zero if it wants. Have you considered why it doesn't? If free imports really benefited the US in the way you're claiming they do, why would the US so aggressively seek trade deals with other nations? The only reason to engage in trade deals is to be able to gain regulatory influence of other countries and set mutual tariffs. It is in the US interest to make these tariffs lower for things they are net exporters of and higher for things they are net importers of (because if you're manufacturing, the raw materials generally cost less than the cost of the imported raw materials and so a larger tariff on a smaller value is better than a larger tariff on the larger value) Huge multilateral trade deals, the kind the US has been pushing, rely on the fact that they are the biggest single party and that the other signatories have a diversity of exports and imports. This is what makes Trump's bilateral approach slightly amusing: a bilateral trade deal with America First stamped on it seems like it would be a harder sell than the multilateral trade deal negotiated by the US as the largest single entity. It makes it easier to sell to the people in those countries that their politicians have signed away their power to choose a government that has the power to introduce nice things like an efficient (i.e. socialized) healthcare system . Because the trade agreement will explicitly forbid this in order to open up the healthcare market to all the signatories. > The idea that the US gains economic advantage by telling other countries to be open and remaining closed is just false. Its like a business man telling other business men that paying good wages is the way to retain employees and then he pays below market: he harms himself with the hypocrisy. That's a poor analogy and as hard as I try I really can't see the mapping. In this analogy the businessmen are countries. The workers are what, the citizens? The factories? That makes no sense. Each party wants their factories to make money, of course. Are the wages taxes? Because the state taxes people. Reflecting the analogy back, is the US saying "cut taxes, cut the services for workers" whilst hypocritically turning into a social democracy? But I like the businessmen analogy. We can say that one represents an entirely fictional Fortune 100 company (I'm sure none would behave this way) and another a tiny little manufacturer that is on the brink of going under. The Fortune 100 company uses its leverage to suggest it will give the smaller manufacturer a huge order subject to it giving it a free sample run or such of a bespoke part. The smaller manufacturer would never entertain such terms for any other customer in ordinary circumstances, but this contract would save it. So it bites, takes a hit and gets accelerated under. Then the Fortune 100 company buys it at a knock-down price when it's no longer a going concern. The US wants imports, but not of things that directly compete with US manufacturing. Things have gone a little wrong, because self-interest has led to the moving of production to the plundered world and has led to the perception amongst some people that the main thing the US has been exporting is jobs.

conanbatt 9y ago
> It's quite ironic that this is the US we're talking about and that the US gained so much from protectionism. Abraham Lincoln remarked, “Give us a protective tariff and we will have the greatest nation on earth.” The US was born, after its independence, in protectionism. Through protectionism, the US was able to establish a very impressive manufacturing base in almost every area. I contest this idea that protectionism is what spurred growth in america in the 1800's. At the time, federal spending was like 5% of gdp. It was a time of low regulations and lots of business freedom within the borders. Also take not that America was severely and artificially constrained as a colony, unable to legally build manufactures. After those restrictions were gone, the capital invested into machinery and production was going to shoot up immediately, regardless of tariffs. Also take into account the immigration the us had. The US kind of doubled its population every 20 years during the 1800's. It grew in spite of the tariffs, not because of them. > The US can drop all tariffs on imports to zero if it wants. Have you considered why it doesn't? If free imports really benefited the US in the way you're claiming they do, why would the US so aggressively seek trade deals with other nations? Of course I considered it, and already mentioned it: political support. Why does the US subsidize corn? Or restrict the importation of agricultural products, or limits immigration? Votes and private interests, and generally because the public has believed the lies those private interests push, like immigrants taking away jobs. Something that is repeated even in this platform when the H1B topic comes up. The only economical purpose of a trade deal is to improve free trade, by abridging the rules of both countries to merge the markets. There are then political reasons to do it, which relates to diplomacy or geopolitics, things that I cant speak much about. > The only reason to engage in trade deals is to be able to gain regulatory influence of other countries and set mutual tariffs. It is in the US interest to make these tariffs lower for things they are net exporters of and higher for things they are net importers of (because if you're manufacturing, the raw materials generally cost less than the cost of the imported raw materials and so a larger tariff on a smaller value is better than a larger tariff on the larger value) Trade deals with the purpose of protectionism, which definitely exist, show terrible results. You can see the Mercosur of south america, where Argentina and Brazil have deals that you can only import cars from one another. Result: cars cost twice as much as in the US with the labor force making less than what they make in the us. Disaster. It would be in the interest of any country, at any point, to completely liberalize is import/exports, even if the other countries don't. If the US decided not to import argentinian lemons, argentina retaliating by not allowing the import of internet services can only be reasonable as a retaliatory measure with the intent of receding the other restriction. But without that goal, if that cannot be achieved, then there is no point in restricting the import. Let argentina eat its own lemons while watching netflix, and let americans think they won a battle while they eat worse or more expensive lemons. But this is the part where people flare up their nationalism and lack of understanding of economics, and clamor for vengeance, or to teach a lesson. And thus,a politican gains votes by putting tariffs. > That's a poor analogy and as hard as I try I really can't see the mapping. In this analogy the businessmen are countries. The workers are what, the citizens? The factories? That makes no sense. Each party wants their factories to make money, of course. Are the wages taxes? Because the state taxes people. Reflecting the analogy back, is the US saying "cut taxes, cut the services for workers" whilst hypocritically turning into a social democracy? The citizens are the workers. They are being "harmed" by the employer giving them lower salaries, but naturally retaliate by less loyalty, costing the business-man as well. > The Fortune 100 company uses its leverage to suggest it will give the smaller manufacturer a huge order subject to it giving it a free sample run or such of a bespoke part. The smaller manufacturer would never entertain such terms for any other customer in ordinary circumstances, but this contract would save it. So it bites, takes a hit and gets accelerated under. Then the Fortune 100 company buys it at a knock-down price when it's no longer a going concern. Countries dont buy countries. And countries have great diversification, as there are 200 of them, and producers get to move their capital according to the risk and the benefit. If the us stopped importing a good only made for the us, the good will cease to exist, and capital will move to something else. There are no permanent results. > The US wants imports, but not of things that directly compete with US manufacturing. Things have gone a little wrong, because self-interest has led to the moving of production to the plundered world and has led to the perception amongst some people that the main thing the US has been exporting is jobs. My understanding is that the stronger import restrictions the us has is actually agricultural products. If the US prevented the tech imports from china its economy would go under in 2 days. You would be hard pressed to sell Apple shares if that happened. The US will stop producing things that other countries will do better and cheaper. A tariff can only move capital from competitive industries to non-competitive industries.

by dpwm 9y ago

conanbatt 9y ago

> It's quite ironic that this is the US we're talking about and that the US gained so much from protectionism. Abraham Lincoln remarked, “Give us a protective tariff and we will have the greatest nation on earth.” The US was born, after its independence, in protectionism. Through protectionism, the US was able to establish a very impressive manufacturing base in almost every area. I contest this idea that protectionism is what spurred growth in america in the 1800's. At the time, federal spending was like 5% of gdp. It was a time of low regulations and lots of business freedom within the borders. Also take not that America was severely and artificially constrained as a colony, unable to legally build manufactures. After those restrictions were gone, the capital invested into machinery and production was going to shoot up immediately, regardless of tariffs. Also take into account the immigration the us had. The US kind of doubled its population every 20 years during the 1800's. It grew in spite of the tariffs, not because of them. > The US can drop all tariffs on imports to zero if it wants. Have you considered why it doesn't? If free imports really benefited the US in the way you're claiming they do, why would the US so aggressively seek trade deals with other nations? Of course I considered it, and already mentioned it: political support. Why does the US subsidize corn? Or restrict the importation of agricultural products, or limits immigration? Votes and private interests, and generally because the public has believed the lies those private interests push, like immigrants taking away jobs. Something that is repeated even in this platform when the H1B topic comes up. The only economical purpose of a trade deal is to improve free trade, by abridging the rules of both countries to merge the markets. There are then political reasons to do it, which relates to diplomacy or geopolitics, things that I cant speak much about. > The only reason to engage in trade deals is to be able to gain regulatory influence of other countries and set mutual tariffs. It is in the US interest to make these tariffs lower for things they are net exporters of and higher for things they are net importers of (because if you're manufacturing, the raw materials generally cost less than the cost of the imported raw materials and so a larger tariff on a smaller value is better than a larger tariff on the larger value) Trade deals with the purpose of protectionism, which definitely exist, show terrible results. You can see the Mercosur of south america, where Argentina and Brazil have deals that you can only import cars from one another. Result: cars cost twice as much as in the US with the labor force making less than what they make in the us. Disaster. It would be in the interest of any country, at any point, to completely liberalize is import/exports, even if the other countries don't. If the US decided not to import argentinian lemons, argentina retaliating by not allowing the import of internet services can only be reasonable as a retaliatory measure with the intent of receding the other restriction. But without that goal, if that cannot be achieved, then there is no point in restricting the import. Let argentina eat its own lemons while watching netflix, and let americans think they won a battle while they eat worse or more expensive lemons. But this is the part where people flare up their nationalism and lack of understanding of economics, and clamor for vengeance, or to teach a lesson. And thus,a politican gains votes by putting tariffs. > That's a poor analogy and as hard as I try I really can't see the mapping. In this analogy the businessmen are countries. The workers are what, the citizens? The factories? That makes no sense. Each party wants their factories to make money, of course. Are the wages taxes? Because the state taxes people. Reflecting the analogy back, is the US saying "cut taxes, cut the services for workers" whilst hypocritically turning into a social democracy? The citizens are the workers. They are being "harmed" by the employer giving them lower salaries, but naturally retaliate by less loyalty, costing the business-man as well. > The Fortune 100 company uses its leverage to suggest it will give the smaller manufacturer a huge order subject to it giving it a free sample run or such of a bespoke part. The smaller manufacturer would never entertain such terms for any other customer in ordinary circumstances, but this contract would save it. So it bites, takes a hit and gets accelerated under. Then the Fortune 100 company buys it at a knock-down price when it's no longer a going concern. Countries dont buy countries. And countries have great diversification, as there are 200 of them, and producers get to move their capital according to the risk and the benefit. If the us stopped importing a good only made for the us, the good will cease to exist, and capital will move to something else. There are no permanent results. > The US wants imports, but not of things that directly compete with US manufacturing. Things have gone a little wrong, because self-interest has led to the moving of production to the plundered world and has led to the perception amongst some people that the main thing the US has been exporting is jobs. My understanding is that the stronger import restrictions the us has is actually agricultural products. If the US prevented the tech imports from china its economy would go under in 2 days. You would be hard pressed to sell Apple shares if that happened. The US will stop producing things that other countries will do better and cheaper. A tariff can only move capital from competitive industries to non-competitive industries.