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Yeah! , that is why India is not (yet) a participant on RCEP. Given that I am in rural India , if protectionism saves someone from starvation , I am fine with i

Yeah! , that is why India is not (yet) a participant on RCEP. Given that I am in rural India , if protectionism saves someone from starvation , I am fine with it.

kenneth 6y ago
I imagine if you're posting on HN, you're not at imminent risk of starvation. (No value judgement on your position though, I generally think that this treaty is a bad thing due to its role in expanding China's power and influence, when it should be contained.)
- cocoland2 6y ago
  Point taken! It was not so much about me , financials are not a stance for my living. Philosophical as it may sound , my worry is for the hand cart puller who walks all day in pretty hot sun here , or for that maid whose husband has lost his daily wages due to COVID and how she makes ends meet for her kid selling milk to a co-operative here. India lives in its villages (quot: Mahatma Gandhi) and taking a livelyhood off in the name of globalization may not augur well with rural households in the long run
  - simonh 6y ago
    I do understand and sympathise, genuinely, but I think this approach is what has held India back for the last few generations. Just look at the speed with which China has modernised over the last 30 years in comparison. Protectionism freezes an economy and society in place. Yes this policy helps some rural families, but it also condemns all the other rural families to getting only variable quality, intermittently available, expensive dairy products. Every protectionist support for a local industry imposes a cost on everyone else, to the point where everyone benefits a bit from protection, but also pays costs on all the goods and services they themselves consume. It may even be sustainable, but only at the price of sacrificing the chance of a better future. Change is painful, no doubt about it, but opening up to international markets can also mean opening up to international investment, technical skills and partnerships. It needs to be coordinated and there should also be transition plans to mitigate some of the pain. I do believe it’s for the best though.
inopinatus 6y ago
Protecting a failed industry from modernised competitors doesn't work. The industry has still failed and now lacks incentive to invest in new technology and infrastructure. Having committed to protecting it with tariffs and quotas in the name of jobs, government is now a captured regulator and props up the failed sector further with grants and tax breaks; in other words, it's now a leech on every other sector. Those commanding the sector pocket the majority of the support funds, since government is incapable of ring-fencing or auditing their use. So the strategy as a whole feeds a cycle of decrepitude, decay, and corruption. Since it's unsustainable, eventually the house of cards collapses and everyone at the bottom of the economic pyramid starves anyway. It's a particularly nasty case of a policy measure harming the people it was supposed to help. There's an adage in economics, "trade favours the poor"⁽¹⁾. Mark it well. As a rather extreme example, the so-called "Great Depression" of the 1930s was significantly exacerbated by protectionist trade policies, ostensibly rushed in to shore up local industries with tariffs; in practice this caused the already-declining global levels of trade to collapse entirely. Protectionism is the opposite of investment and renewal, and an enemy of prosperity. ⁽¹⁾ there's a related saying in political science; "trade stops wars".
- ksquarekumar 6y ago
  Protectionism in agriculture is quite common all across the board is it not? And India doesn't even fare that bad If I am not recalling it correctly. I agree with you in your assessment that protectionism breeds inefficiency, but you are imposing your strictly one sided take on 'what should be' without stopping to consider 'why it is', it's an answer fit for a class of undergrads, quotes and all, but has little to no real world value as its so generalist in its assumption. Economics is a black art, and subjectivity matters more than the principles.
  - inopinatus 6y ago
    What you say of agriculture is true, but exposes the strength of landowners as a lobby group, not some innate quality of protectionism. When tariffs, barriers, and subsidies are removed from agriculture, prices fall, and the people eat. This isn't some abstract argument. If you want to talk about India, notwithstanding that India is so vast and complex a nation that only the unwary say "India this" or "India that" broadly, the country had a decades-long history of protectionism since independence, trying to get by with very low levels of international trade, and this being a crucial factor in the 1991 economic crisis: the government had no foreign currency reserves at time when the balance of trade was catastrophic due to rising global oil prices and the demand for modern goods from abroad. Liberalization of trade is not without its problems - in particular, increasing wealth inequities, and cultural imperialism by economic means. Nevertheless, the subsequent lowering of barriers corrected the crises and has defined India's catapult to the top levels of international manufacturing and service provision.

Yeah! , that is why India is not (yet) a participant on RCEP. Given that I am in rural India , if protectionism saves someone from starvation , I am fine with it.

kenneth 6y ago

I imagine if you're posting on HN, you're not at imminent risk of starvation. (No value judgement on your position though, I generally think that this treaty is a bad thing due to its role in expanding China's power and influence, when it should be contained.)

cocoland2 6y ago
Point taken! It was not so much about me , financials are not a stance for my living. Philosophical as it may sound , my worry is for the hand cart puller who walks all day in pretty hot sun here , or for that maid whose husband has lost his daily wages due to COVID and how she makes ends meet for her kid selling milk to a co-operative here. India lives in its villages (quot: Mahatma Gandhi) and taking a livelyhood off in the name of globalization may not augur well with rural households in the long run
- simonh 6y ago
  I do understand and sympathise, genuinely, but I think this approach is what has held India back for the last few generations. Just look at the speed with which China has modernised over the last 30 years in comparison. Protectionism freezes an economy and society in place. Yes this policy helps some rural families, but it also condemns all the other rural families to getting only variable quality, intermittently available, expensive dairy products. Every protectionist support for a local industry imposes a cost on everyone else, to the point where everyone benefits a bit from protection, but also pays costs on all the goods and services they themselves consume. It may even be sustainable, but only at the price of sacrificing the chance of a better future. Change is painful, no doubt about it, but opening up to international markets can also mean opening up to international investment, technical skills and partnerships. It needs to be coordinated and there should also be transition plans to mitigate some of the pain. I do believe it’s for the best though.

inopinatus 6y ago

Protecting a failed industry from modernised competitors doesn't work. The industry has still failed and now lacks incentive to invest in new technology and infrastructure. Having committed to protecting it with tariffs and quotas in the name of jobs, government is now a captured regulator and props up the failed sector further with grants and tax breaks; in other words, it's now a leech on every other sector. Those commanding the sector pocket the majority of the support funds, since government is incapable of ring-fencing or auditing their use. So the strategy as a whole feeds a cycle of decrepitude, decay, and corruption. Since it's unsustainable, eventually the house of cards collapses and everyone at the bottom of the economic pyramid starves anyway. It's a particularly nasty case of a policy measure harming the people it was supposed to help. There's an adage in economics, "trade favours the poor"⁽¹⁾. Mark it well. As a rather extreme example, the so-called "Great Depression" of the 1930s was significantly exacerbated by protectionist trade policies, ostensibly rushed in to shore up local industries with tariffs; in practice this caused the already-declining global levels of trade to collapse entirely. Protectionism is the opposite of investment and renewal, and an enemy of prosperity. ⁽¹⁾ there's a related saying in political science; "trade stops wars".

ksquarekumar 6y ago
Protectionism in agriculture is quite common all across the board is it not? And India doesn't even fare that bad If I am not recalling it correctly. I agree with you in your assessment that protectionism breeds inefficiency, but you are imposing your strictly one sided take on 'what should be' without stopping to consider 'why it is', it's an answer fit for a class of undergrads, quotes and all, but has little to no real world value as its so generalist in its assumption. Economics is a black art, and subjectivity matters more than the principles.
- inopinatus 6y ago
  What you say of agriculture is true, but exposes the strength of landowners as a lobby group, not some innate quality of protectionism. When tariffs, barriers, and subsidies are removed from agriculture, prices fall, and the people eat. This isn't some abstract argument. If you want to talk about India, notwithstanding that India is so vast and complex a nation that only the unwary say "India this" or "India that" broadly, the country had a decades-long history of protectionism since independence, trying to get by with very low levels of international trade, and this being a crucial factor in the 1991 economic crisis: the government had no foreign currency reserves at time when the balance of trade was catastrophic due to rising global oil prices and the demand for modern goods from abroad. Liberalization of trade is not without its problems - in particular, increasing wealth inequities, and cultural imperialism by economic means. Nevertheless, the subsequent lowering of barriers corrected the crises and has defined India's catapult to the top levels of international manufacturing and service provision.