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So protectionism is basically reducing the fitness of a whole industry sector, until it just vannishes?

mooreds 4y ago
Well, people make plenty of money while the fitness is being reduced. The costs are spread widely, but the benefits felt narrowly. The protected industry doesn't always vanish, sometimes it re-invents itself. The US semiconductor industry was protected in the 1980s: https://www.nber.org/system/files/chapters/c8717/c8717.pdf https://www.nber.org/system/files/chapters/c8717/c8717.pdf
PaulHoule 4y ago
Yes and no. It doesn't always go that far. Sometimes dirigisme has a success story such as the development of semiconductor manufacturing in Taiwan or Brazil's plan to back national champions in areas such as aviation and meatpacking. (Ride in an Embraer E-Jet, never mind a A220, and you will experience for yourself why the 737 is obsolete. On the other hand, massive subsidization of both Airbus and Boeing has contributed to an absence of competition for the narrowbody jets such that a 1967 jet competes with a 1987 jet -- although even an evolved 1987 car would struggle to meet current safety and environmental requirements.) More often a government chooses to coddle a "national champion" that turns out to be irrelevant in the larger industry, such as many European car manufacturers. Cases like that unfortunately don't lead to death but instead can linger on for decades and have a negative impact on all sectors of the economy (because of dirigisme in steel, you're stuck driving an expensive low quality car, paying extra taxes for the privilege, and forgoing public services and investment that really would help you.) See also https://en.wikipedia.org/wiki/Corn_Laws https://en.wikipedia.org/wiki/Corn_Laws a story which is by no means over...
- hungryforcodes 4y ago
  Specifically which European car manufacturers. The obvious ones seem just fine, btw.
csomar 4y ago
It can be complicated. Think, initially, protectionism will benefit almost everyone involved in the economy. But the effects will largely depend if the industries (ie: individual companies) being protected are able to recover fast to catch up with foreign competitions. This is where trouble happens. For that, if these industries fail to compete, what they'll ask for is more "protectionism" and usually it's downhill from there. They'll become a tax on the broader economy; and the practice of protectionism will find grounds to spread to other sectors.

Well, people make plenty of money while the fitness is being reduced. The costs are spread widely, but the benefits felt narrowly. The protected industry doesn't always vanish, sometimes it re-invents itself. The US semiconductor industry was protected in the 1980s: https://www.nber.org/system/files/chapters/c8717/c8717.pdf https://www.nber.org/system/files/chapters/c8717/c8717.pdf

PaulHoule 4y ago

Yes and no. It doesn't always go that far. Sometimes dirigisme has a success story such as the development of semiconductor manufacturing in Taiwan or Brazil's plan to back national champions in areas such as aviation and meatpacking. (Ride in an Embraer E-Jet, never mind a A220, and you will experience for yourself why the 737 is obsolete. On the other hand, massive subsidization of both Airbus and Boeing has contributed to an absence of competition for the narrowbody jets such that a 1967 jet competes with a 1987 jet -- although even an evolved 1987 car would struggle to meet current safety and environmental requirements.) More often a government chooses to coddle a "national champion" that turns out to be irrelevant in the larger industry, such as many European car manufacturers. Cases like that unfortunately don't lead to death but instead can linger on for decades and have a negative impact on all sectors of the economy (because of dirigisme in steel, you're stuck driving an expensive low quality car, paying extra taxes for the privilege, and forgoing public services and investment that really would help you.) See also https://en.wikipedia.org/wiki/Corn_Laws https://en.wikipedia.org/wiki/Corn_Laws a story which is by no means over...

hungryforcodes 4y ago
Specifically which European car manufacturers. The obvious ones seem just fine, btw.

csomar 4y ago

It can be complicated. Think, initially, protectionism will benefit almost everyone involved in the economy. But the effects will largely depend if the industries (ie: individual companies) being protected are able to recover fast to catch up with foreign competitions. This is where trouble happens. For that, if these industries fail to compete, what they'll ask for is more "protectionism" and usually it's downhill from there. They'll become a tax on the broader economy; and the practice of protectionism will find grounds to spread to other sectors.