4 ms·

The South Korean economist Ha-Joon Chang did an excellent job of documenting how protectionism was what allowed all industrialized countries to achieve their st

The South Korean economist Ha-Joon Chang did an excellent job of documenting how protectionism was what allowed all industrialized countries to achieve their status. This rambling missive is just wrong and not insightful at all, based on cherry-picked examples and ignorant of history. In short, a classic piece from a conventional economist.

tptacek 3y ago
The article points out that if you erect steel tariffs, you impose costs on car companies. That's not complicated academic economics; it's common sense: you're making steel more expensive, and steel is a major input to car companies. You've read Ha-Joon Chang. Maybe you can teach us what he has to say about why this observation is wrong.
- SenAnder 3y ago
  It's not wrong - it's incomplete. There is almost nothing a non-industrialized country can make more efficiently than an industrialized one. Except food and raw materials. Without protectionism, their industries don't stand a chance against advanced foreign incumbents, so they'll remain stuck doing farming and exporting their natural resources. A victim of economic colonization. If you erect steel tariffs, initially steel will be more expensive and of lower quality, but it will allow your smelting industry to develop until it is eventually on par with foreign offerings. Otherwise you'll be stuck exporting ore and importing steel. This is even more true of industries where the added value is higher, such as automotive and semiconductors. That is what the simple analysis misses - a country's efficiency at some economic endeavor is not static. Protectionism is what allows fledgling industries to develop to a point where opening trade won't see them immediately crushed by foreign competitors. More convincing is perhaps the simple empirical observation that none of the most successful trading countries reached their status through liberal trade rules: https://news.ycombinator.com/item?id=37229422 https://news.ycombinator.com/item?id=37229422
  - tptacek 3y ago
    Right, but protectionist populist economics are mostly a phenomenon of large developed countries, not fledgeling economies. I think everyone gets that if you don't have car companies, the fate of car companies under steel tariffs isn't a big consideration. I'm not an AskEconomics anti-Chang person (I don't know enough about economics to have a real opinion about any of this; I can just read stuff and make some sense about it). AskEconomics bristles at the idea that developing economies should use protectionism as a tool to establish industries, and liberalize only when they're situated to capture the advantages of free trade. But that seems totally reasonable to me. But that's not the proposition this article is really talking about!
    - miguelazo 3y ago
      > but protectionist populist economics are mostly a phenomenon of large developed countries, not fledgeling economies This simply isn’t true. To the extent that fledgling economies eschew protectionism it is generally a condition of trade agreements and “aid” imposed by rich countries. That some rich countries are returning to protectionism for critical sectors shows the dire consequences of deindustrialization, both politically and materially (as the pandemic laid bare).
      - tptacek 3y ago
        What would those dire consequences be? The US economy is humming right now.

tptacek 3y ago

The article points out that if you erect steel tariffs, you impose costs on car companies. That's not complicated academic economics; it's common sense: you're making steel more expensive, and steel is a major input to car companies. You've read Ha-Joon Chang. Maybe you can teach us what he has to say about why this observation is wrong.

SenAnder 3y ago
It's not wrong - it's incomplete. There is almost nothing a non-industrialized country can make more efficiently than an industrialized one. Except food and raw materials. Without protectionism, their industries don't stand a chance against advanced foreign incumbents, so they'll remain stuck doing farming and exporting their natural resources. A victim of economic colonization. If you erect steel tariffs, initially steel will be more expensive and of lower quality, but it will allow your smelting industry to develop until it is eventually on par with foreign offerings. Otherwise you'll be stuck exporting ore and importing steel. This is even more true of industries where the added value is higher, such as automotive and semiconductors. That is what the simple analysis misses - a country's efficiency at some economic endeavor is not static. Protectionism is what allows fledgling industries to develop to a point where opening trade won't see them immediately crushed by foreign competitors. More convincing is perhaps the simple empirical observation that none of the most successful trading countries reached their status through liberal trade rules: https://news.ycombinator.com/item?id=37229422 https://news.ycombinator.com/item?id=37229422
- tptacek 3y ago
  Right, but protectionist populist economics are mostly a phenomenon of large developed countries, not fledgeling economies. I think everyone gets that if you don't have car companies, the fate of car companies under steel tariffs isn't a big consideration. I'm not an AskEconomics anti-Chang person (I don't know enough about economics to have a real opinion about any of this; I can just read stuff and make some sense about it). AskEconomics bristles at the idea that developing economies should use protectionism as a tool to establish industries, and liberalize only when they're situated to capture the advantages of free trade. But that seems totally reasonable to me. But that's not the proposition this article is really talking about!
  - miguelazo 3y ago
    > but protectionist populist economics are mostly a phenomenon of large developed countries, not fledgeling economies This simply isn’t true. To the extent that fledgling economies eschew protectionism it is generally a condition of trade agreements and “aid” imposed by rich countries. That some rich countries are returning to protectionism for critical sectors shows the dire consequences of deindustrialization, both politically and materially (as the pandemic laid bare).
    - tptacek 3y ago
      What would those dire consequences be? The US economy is humming right now.