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Many educated people are very critical of this, but as far as I know most countries that have developed successful industries had a period of protectionism duri

Many educated people are very critical of this, but as far as I know most countries that have developed successful industries had a period of protectionism during which they prevented foreign competitors from bringing in competing products in order to give their industries time to develop. This was coupled with strong export requirements to ensure that the products these industries produced were globally competitive and high quality. The most recent examples I can think of are the successful Asian countries (Japan, China, Taiwan, and South Korea). Many times these countries directly defied World Bank recommendations that encouraged a more laissez-faire, free-market approach. Obviously the people critical of these policies are fairly well educated and should know what they're talking about, but I wonder how much is born out of academic ideas that don't hold up in practice or a projection of their disagreement with Trump's personality and other political actions. Edit: I'm not saying this is the right approach, but I don't see many people arguing for these trade reforms, and I think it's unlikely that there are no decent arguments for them.

JumpCrisscross 9y ago
I'm fine with this. It will certainly cost us jobs and money. But that seems like a reasonable cost to pay to counter a geopolitical competitor.
- kbutler 9y ago
  Wait - I thought the goal of "countering a global competitor" was to save jobs and thus money for US? Otherwise, what's the point?
  - davidw 9y ago
    "Cutting off your nose to spite your face", I guess.
  - JumpCrisscross 9y ago
    > Otherwise, what's the point? Encourage behaviour change. Same as with Iran. Everyone lost, economically (in the short term), as a result of the Iran sanctions. Those short-run losses were deemed sufficient compensation for the possibility Iran would agree to limit its nuclear program. Similarly, if China agreed to loosen access to its own market and stop forcing American companies to give up their IP to Beijing, that could be better for all in the long run.
    - fspeech 9y ago
      The market access you are referring to presumably involves setting up factories in China on a wholly-owned basis without forced technology transfer. That is all good but in what ways would that reduce the trade imbalance? So even if China agrees to that it would stay the perennial whipping boy, no?
      - JumpCrisscross 9y ago
        > even if China agrees to that it would stay the perennial whipping boy, no These tariffs were sloppily executed because they're for a domestic political audience that doesn't understand economics. Better tariffs would involve terms for release. If you do X, we release the tariffs. What China has to do to get these measures reversed is nebulous, but even the tacit link to forced tech transfers and the blocking of China's domestic market adds another variable to Chinese policymakers when considering additional measures.
- IAmEveryone 9y ago
  So you’re willing to hurt yourself as long as your enemies also suffer? That’s... quite sad? But in any case: power today derives far more from other’s willingness to do what you want without being paid or threatened. That idea is called “soft power”, and it’s really how the US managed to lead the free world after WW2. Hollywood and the WTO did so well that all the hatred you got for Vietnam etc. didn’t cause any lasting damage. Those alliances are obviously gone now. With China now taking the lead even in free trade and climate change mitigation, the US is losing its seat at the table.
cabaalis 9y ago
> or a projection of their disagreement with Trump's personality and other political actions. I see this often nowadays with callers into NPR, who I've generally thought of as very informed people over the years. At least twice in the past week has someone called in to criticize Trump, only to have the host correct them that Trump did indeed take a certain action or that a certain policy is more detailed or nuanced than they believed. After said correction, the caller still continued on with their criticism, for no other real reason than they don't trust him.
IAmEveryone 9y ago
I could see such a mechanism making sense while a low-wage country gains experience to achieve productivity (measured in output / labor cost). But what would the US be gaining during this time of protection? It cannot make the sort of productivity gains a developing economy can. I don’t know enough about these tariffs on China to offer judgement, and it may depend on the details. The stated rational mentions IP rights, so it may actually be more sensible than the alu and steel tariffs which seem rooted in some 1950s worldview. But sometimes politics trumps economics. Turning your relationship with Canada and Mexico into a zero-sum family brawl will without a doubt lead to a breakdown in trust that will haunt North America for decades. And for what, exactly? Selling a few more cars when unemployment is already at a record low?
jcfrei 9y ago
I doubt the reasons for these periods of protectionism were economical. Most of these countries had (and still have) companies which are very closely intertwined with the government. Protectionism ensured that these companies would keep their market share and that the government and its sponsors could keep their (economic) power. Once they could compete internationally these protections were reduced. However for the consumer an immediate opening of the borders would most likely have been better, with the difference that most of the economic decisions would then be made by foreigners and with less influence by the government.
cjalmeida 9y ago
There are argument for protectionism, just not for a highly developed country such as USA. But I'm not going over them for a single reason. This act will fail "bigly". China is the 3rd largest export market for USA. It imports a lot of grain and cars and can retaliate on politically sensitive goods. Midterms are coming and China may use it to restrict tourism to Florida, put tarifs on soybeans from midwest, cars from Michigan. Companies from those states will likely suffer more in short term than benefit from the protectionism - it takes a while to build up capacity and conquer markerts. Meanwhile people will put the blame on Republicans as companies start the lay offs.
- anilshanbhag 9y ago
  This argument goes both ways. If you look at the trade equation (https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china https://ustr.gov/countries-regions/china-mongolia-taiwan/peo...) - US imports 3 times it exports. So, for every $ of tariff that China imposes, US can impose roughly 3 times the pain. While it would increase prices in the US, it will just kill the Chinese economy which already has overcapacity and > 20% of its exports are to the US. There are many Chinese practices that are unfair. US companies cannot enter China alone, they need to do 50-50 joint ventures when they setup shop in China. They also need to transfer technology and there is little IP protection. Finally, China imposes tariffs on many manufactured goods while the US doesn't.
  - cjalmeida 9y ago
    It doesn't goes both ways. China is not a democracy and Mr. Xi is increasingly more powerfull. Trump is way below 50% ratings and Republicans are behind in the generic polls. This trade war is not about who gets hurt more. It's about who can sustain being hurt for longer time. There's a major election in 7 months, so I'm betting on China.
prewett 9y ago
It seems like free trade is beneficial when you're at the top or among relative equals. The educated people you are talking about are presumably American and/or European, so they benefit from free trade. However, countries that are behind in an area would benefit from protectionism in that area, otherwise the companies strong in that area will come in and take the market. This makes local competition much harder. Imagine a local African grocery store trying to compete with Walmart; there is no way they can match Walmart's worldwide distribution system. I think this is probably one of the reasons why there is no European equivalent of Facebook: it's not easy to compete with Facebook. By the time it was clear that Facebook was something useful, it had already ironed out any scalability and usability problems in the US college market. So unless a European competitor had started around when Facebook did, they would be behind both technically and in the fact that any American friends were already on Facebook. The only Facebook competitors that I am aware of are in protectinistic countries: Russia (VK) and China (Renren and WeChat Moments). (I don't know if Mastadon is European, but I don't see it as an actual competitor, at least at the moment.)
- JumpCrisscross 9y ago
  > free trade is beneficial when you're at the top or among relative equals Wealthy people tend to be politically connected. Politically-connected people do well in the midst of lots of red tape. There is no evidence free trade agreements effect in-country inequality [1]. [1] http://eprints.lse.ac.uk/6721/1/The_Long_and_Short_of_the_Canada-U.S._Free_Trade_Agreement.pdf http://eprints.lse.ac.uk/6721/1/The_Long_and_Short_of_the_Ca...
dmode 9y ago
India tried this approach for multiple years and was a catastrophic failure. Indians had to survive on subpar cars such as Ambassador and Maruti, expensive TVs and fridge with subpar quality, and a dwindling economy. The way many Asian economies have succeeded is not by protectionism, but by identifying their niche capability and focusing on them. For example, automobile in Japan, semi-conductor in Taiwan, appliances in Korea. The equivalent approach in the US would be to concede low end manufacturing to China and focus on improving high end manufacturing and future industries that can sustain higher labor costs. Not trade tariffs.
- dgut 9y ago
  The difference is that the US is home to some of the best universities, attracts a lot of educated/talented people and has the largest knowledge economy in the world. So while India might have failed to develop great cars and whatnot as you claim, the US could (and does) that just fine. Taiwan and South Korea can hyper-focus on one or two sole industries because their population's sizes are fairly small (comparatively), and that has turned out well for them -- but I think the US needs to at least partially dominate a range of industries to stay afloat. Also, people forget 1850 Germany essentially entered the industrial age through a good dose of protectionism. It worked because they already enjoyed a good educational system and skilled workforce.
- globuous 9y ago
  Although I wonder how much of that was helped by the US post WWII to counter communism. I remember looking online for something like 'how did japan become so wealthy after WWII considered how much they lost after WWII. I got a few links like this one: https://www.quora.com/How-did-Japan-become-wealthy https://www.quora.com/How-did-Japan-become-wealthy (points 1 and 3 of first answer, second answer is interesting as well) And what I got form it was that in was in the US' interest to have successful capitalist countries in the area during the cold war. Because there was so much communist influence is that area of the world.
- jeffreyrogers 9y ago
  But they don't just focus on one industry. South Korea has steel making, automobiles, ship building, and more. Japan has automobiles, steel, consumer electronics, and more. India hasn't even figured out how to get most of its population out of poverty, so I don't think it's a good example. It's hard to have competitive industry when your population can't feed itself. Plus it's a huge country that has had what are effectively ongoing civil wars within its states, and its problems are compounded by it's cultural and linguistic heterogeneity. The Asian countries I mentioned that succeeded all had major agricultural reforms (some violent, some not) prior to their industrial success.
forkandwait 9y ago
As I understand it, protectionis and mercantilistic policies were the norm in the USA until the close of world War 2. Same with Britain.
pc2g4d 9y ago
Making goods more expensive for Americans seems like short-sighted protectionism. But the desire to protect sensitive industries from Chinese takeover and IP exfiltration is a valid national security concern. So I'm both for and against this measure.

JumpCrisscross 9y ago

I'm fine with this. It will certainly cost us jobs and money. But that seems like a reasonable cost to pay to counter a geopolitical competitor.

kbutler 9y ago
Wait - I thought the goal of "countering a global competitor" was to save jobs and thus money for US? Otherwise, what's the point?
- davidw 9y ago
  "Cutting off your nose to spite your face", I guess.
- JumpCrisscross 9y ago
  > Otherwise, what's the point? Encourage behaviour change. Same as with Iran. Everyone lost, economically (in the short term), as a result of the Iran sanctions. Those short-run losses were deemed sufficient compensation for the possibility Iran would agree to limit its nuclear program. Similarly, if China agreed to loosen access to its own market and stop forcing American companies to give up their IP to Beijing, that could be better for all in the long run.
  - fspeech 9y ago
    The market access you are referring to presumably involves setting up factories in China on a wholly-owned basis without forced technology transfer. That is all good but in what ways would that reduce the trade imbalance? So even if China agrees to that it would stay the perennial whipping boy, no?
    - JumpCrisscross 9y ago
      > even if China agrees to that it would stay the perennial whipping boy, no These tariffs were sloppily executed because they're for a domestic political audience that doesn't understand economics. Better tariffs would involve terms for release. If you do X, we release the tariffs. What China has to do to get these measures reversed is nebulous, but even the tacit link to forced tech transfers and the blocking of China's domestic market adds another variable to Chinese policymakers when considering additional measures.
IAmEveryone 9y ago
So you’re willing to hurt yourself as long as your enemies also suffer? That’s... quite sad? But in any case: power today derives far more from other’s willingness to do what you want without being paid or threatened. That idea is called “soft power”, and it’s really how the US managed to lead the free world after WW2. Hollywood and the WTO did so well that all the hatred you got for Vietnam etc. didn’t cause any lasting damage. Those alliances are obviously gone now. With China now taking the lead even in free trade and climate change mitigation, the US is losing its seat at the table.

cabaalis 9y ago

> or a projection of their disagreement with Trump's personality and other political actions. I see this often nowadays with callers into NPR, who I've generally thought of as very informed people over the years. At least twice in the past week has someone called in to criticize Trump, only to have the host correct them that Trump did indeed take a certain action or that a certain policy is more detailed or nuanced than they believed. After said correction, the caller still continued on with their criticism, for no other real reason than they don't trust him.

IAmEveryone 9y ago

I could see such a mechanism making sense while a low-wage country gains experience to achieve productivity (measured in output / labor cost). But what would the US be gaining during this time of protection? It cannot make the sort of productivity gains a developing economy can. I don’t know enough about these tariffs on China to offer judgement, and it may depend on the details. The stated rational mentions IP rights, so it may actually be more sensible than the alu and steel tariffs which seem rooted in some 1950s worldview. But sometimes politics trumps economics. Turning your relationship with Canada and Mexico into a zero-sum family brawl will without a doubt lead to a breakdown in trust that will haunt North America for decades. And for what, exactly? Selling a few more cars when unemployment is already at a record low?

jcfrei 9y ago

I doubt the reasons for these periods of protectionism were economical. Most of these countries had (and still have) companies which are very closely intertwined with the government. Protectionism ensured that these companies would keep their market share and that the government and its sponsors could keep their (economic) power. Once they could compete internationally these protections were reduced. However for the consumer an immediate opening of the borders would most likely have been better, with the difference that most of the economic decisions would then be made by foreigners and with less influence by the government.

cjalmeida 9y ago

There are argument for protectionism, just not for a highly developed country such as USA. But I'm not going over them for a single reason. This act will fail "bigly". China is the 3rd largest export market for USA. It imports a lot of grain and cars and can retaliate on politically sensitive goods. Midterms are coming and China may use it to restrict tourism to Florida, put tarifs on soybeans from midwest, cars from Michigan. Companies from those states will likely suffer more in short term than benefit from the protectionism - it takes a while to build up capacity and conquer markerts. Meanwhile people will put the blame on Republicans as companies start the lay offs.

anilshanbhag 9y ago
This argument goes both ways. If you look at the trade equation (https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china https://ustr.gov/countries-regions/china-mongolia-taiwan/peo...) - US imports 3 times it exports. So, for every $ of tariff that China imposes, US can impose roughly 3 times the pain. While it would increase prices in the US, it will just kill the Chinese economy which already has overcapacity and > 20% of its exports are to the US. There are many Chinese practices that are unfair. US companies cannot enter China alone, they need to do 50-50 joint ventures when they setup shop in China. They also need to transfer technology and there is little IP protection. Finally, China imposes tariffs on many manufactured goods while the US doesn't.
- cjalmeida 9y ago
  It doesn't goes both ways. China is not a democracy and Mr. Xi is increasingly more powerfull. Trump is way below 50% ratings and Republicans are behind in the generic polls. This trade war is not about who gets hurt more. It's about who can sustain being hurt for longer time. There's a major election in 7 months, so I'm betting on China.

prewett 9y ago

It seems like free trade is beneficial when you're at the top or among relative equals. The educated people you are talking about are presumably American and/or European, so they benefit from free trade. However, countries that are behind in an area would benefit from protectionism in that area, otherwise the companies strong in that area will come in and take the market. This makes local competition much harder. Imagine a local African grocery store trying to compete with Walmart; there is no way they can match Walmart's worldwide distribution system. I think this is probably one of the reasons why there is no European equivalent of Facebook: it's not easy to compete with Facebook. By the time it was clear that Facebook was something useful, it had already ironed out any scalability and usability problems in the US college market. So unless a European competitor had started around when Facebook did, they would be behind both technically and in the fact that any American friends were already on Facebook. The only Facebook competitors that I am aware of are in protectinistic countries: Russia (VK) and China (Renren and WeChat Moments). (I don't know if Mastadon is European, but I don't see it as an actual competitor, at least at the moment.)

JumpCrisscross 9y ago
> free trade is beneficial when you're at the top or among relative equals Wealthy people tend to be politically connected. Politically-connected people do well in the midst of lots of red tape. There is no evidence free trade agreements effect in-country inequality [1]. [1] http://eprints.lse.ac.uk/6721/1/The_Long_and_Short_of_the_Canada-U.S._Free_Trade_Agreement.pdf http://eprints.lse.ac.uk/6721/1/The_Long_and_Short_of_the_Ca...

dmode 9y ago

India tried this approach for multiple years and was a catastrophic failure. Indians had to survive on subpar cars such as Ambassador and Maruti, expensive TVs and fridge with subpar quality, and a dwindling economy. The way many Asian economies have succeeded is not by protectionism, but by identifying their niche capability and focusing on them. For example, automobile in Japan, semi-conductor in Taiwan, appliances in Korea. The equivalent approach in the US would be to concede low end manufacturing to China and focus on improving high end manufacturing and future industries that can sustain higher labor costs. Not trade tariffs.

dgut 9y ago
The difference is that the US is home to some of the best universities, attracts a lot of educated/talented people and has the largest knowledge economy in the world. So while India might have failed to develop great cars and whatnot as you claim, the US could (and does) that just fine. Taiwan and South Korea can hyper-focus on one or two sole industries because their population's sizes are fairly small (comparatively), and that has turned out well for them -- but I think the US needs to at least partially dominate a range of industries to stay afloat. Also, people forget 1850 Germany essentially entered the industrial age through a good dose of protectionism. It worked because they already enjoyed a good educational system and skilled workforce.
globuous 9y ago
Although I wonder how much of that was helped by the US post WWII to counter communism. I remember looking online for something like 'how did japan become so wealthy after WWII considered how much they lost after WWII. I got a few links like this one: https://www.quora.com/How-did-Japan-become-wealthy https://www.quora.com/How-did-Japan-become-wealthy (points 1 and 3 of first answer, second answer is interesting as well) And what I got form it was that in was in the US' interest to have successful capitalist countries in the area during the cold war. Because there was so much communist influence is that area of the world.
jeffreyrogers 9y ago
But they don't just focus on one industry. South Korea has steel making, automobiles, ship building, and more. Japan has automobiles, steel, consumer electronics, and more. India hasn't even figured out how to get most of its population out of poverty, so I don't think it's a good example. It's hard to have competitive industry when your population can't feed itself. Plus it's a huge country that has had what are effectively ongoing civil wars within its states, and its problems are compounded by it's cultural and linguistic heterogeneity. The Asian countries I mentioned that succeeded all had major agricultural reforms (some violent, some not) prior to their industrial success.

forkandwait 9y ago

As I understand it, protectionis and mercantilistic policies were the norm in the USA until the close of world War 2. Same with Britain.

pc2g4d 9y ago

Making goods more expensive for Americans seems like short-sighted protectionism. But the desire to protect sensitive industries from Chinese takeover and IP exfiltration is a valid national security concern. So I'm both for and against this measure.