Protectionism?

[mur'phon]

With the economy tanking, jobs disapearing, and peoples mood in the red allert range, one idea seems to have become (in my mind frighteningly) common. Protectionism, the basic idea that a country should protect it's own firms/ the bits of firms in said country by providing it with advantages (from tax breaks to tasty contracts) its foreign competetors don't have.

 

My main gripes with it is simple, it alows uncompetetive firms to stay alive, while handing the bill to consumers through increased prices, and in most cases worse quality (due to reduced competition). It also screw the economy by making it profittable to start up/expand uncompetetive businesses, so instead of a country focusing on what it's good at (i.e Germany shouldn't produce solar power due to its location, yet does so because of generous incentives).

 

That's basicaly why I'm currently afraid what we are heading towards if politicans listens to the protectionists. Which is why I'd like you guys to ridd me of such worries by showing me the virtues of protectionism.

 

@: could a mod remove the , from the title?

[Darth Avlectus]

Well, I have to say this sounds awful similar sounding to what unions do, paying for non-production. It is folly, I have to agree with you on that specific point. While many have never been a fan of government subsidized crops, frankly, I think paying farmers to NOT grow is folly considering there are still those poor and hungry here in the US that the government is also paying even more to feed... <shrugs>

 

Frighteningly? Well, I suppose I could use a little enlightening from someone outside the states. Still...I do not think "protectionism" is quite on the table because quite simply since NAFTA floodgates were opened, many things will depend upon the free trade (though I do wish for a little more responsibility, ho hum) in order to keep things moving. So I think you can calm down just a bit...I don't see hell breaking out just 'yet'. May just be my opinion, but I think the international trade 'overdrive' of recent years has caused job losses in the US. If we lost too many jobs, well that would not be good. So since our economy is in a squeeze, we need to create jobs in order to restrengthen ourselves. I won't deny this may be putting other nations in bit of a bind. Nations who have had many of those jobs for the US. However, I should think it won't be permanent. (This comes full circle to what I was hoping to bring up about sustain-ism but I'll hold off until later.)

 

Murph, buddy, I think you are conflating pride and spoils with preference and a certain necessity to keep local economy running. Why do you believe U.S. localized business firms are necessarily under-performing? What exactly are you referencing here? Like agriculture...there is demand for local product.

 

Generally, some firms are performing the same as they always have. Maybe when compared to others they appear weak? (Others being those who can and do take advantage of the uneven economic playfield to gain a foothold.)

 

However, if you are talking about the banking debacle, I am more inclined to agree with you if you are asserting that something stinks, here...I have my opinions, and do think there is something here that smells bad about it.

 

Could you tell me *just* where you are coming from? I am not sure I completely understand...

[Darth InSidious]

http://en.wikipedia.org/wiki/Corn_Laws

http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act

[mur'phon]

May just be my opinion, but I think the international trade 'overdrive' of recent years has caused job losses in the US. If we lost too many jobs, well that would not be good. So since our economy is in a squeeze, we need to create jobs in order to restrengthen ourselves.

 

There is a catch with such thinking though, if you for instance increase tarrifs on something (product A) because what is produced localy is more expensive, it means people buying said something will have less money to spend on other things (products B). The purchase of products B, in adition to providing a higher standard of living, provides work for those involved in providing said products. See the problem? By trying to save some jobs, you are preventing the creation of others, while simultainously decreasing peoples standard of living. In adition, you are favoring uncompetetive parts of the economy to the detriement of the competetive parts. Not a good deal in my mind.

 

I won't deny this may be putting other nations in bit of a bind.

 

Change other nations with just about the entire world (including the US), and we agree:D

 

And what do you think the rest of the world will do if the US go protectionist?

Hint: an eye for an eye

 

Why do you believe U.S. localized business firms are necessarily under-performing?

 

I don't however, those in need of protectionist meassures certainly do, (or at least they think they do) otherwise there would be little point in them.

 

Like agriculture...there is demand for local product.

 

Yes, and I have no issues with local products as long as they compete on the same terms as foreign ones.

 

However, if you are talking about the banking debacle, I am more inclined to agree with you if you are asserting that something stinks, here...I have my opinions, and do think there is something here that smells bad about it.

 

While there sure as hell is somehting that stinks with banking, or more precisely, those who use it to buy things they don't understand, I actually support bank bailouts in times of crisis. Sure it leaves a foul taste, but without credit flowing way too many good firms will die needlessly, and a recovery will be that much harder.

[Q]

The only forms of protectionism that I'd advocate would be tariffs on the cheap goods from China and other nations that use near-slave labor and the outlawing of outsourcing labor to said nations by our corporations here in the US. No one should be allowed to benefit from slave labor anywhere in the modern world.

[mur'phon]

The only forms of protectionism that I'd advocate would be tariffs on the cheap goods from China and other nations that use near-slave labor

 

Could you please clarify what you mean by near-slave labor? Because while I agree that conditions in chineese industry is terrible, the wages are usually much higher than in alternative "jobs" the workers could otherwise take.

 

and the outlawing of outsourcing labor to said nations by our corporations here in the US.

 

I'm not sure if you mean that we should outlaw outsourcing to countries which has slave labor (I.E every country in the world), or merely outlawing the use of slave labor by US companies.

 

No one should be allowed to benefit from slave labor anywhere in the modern world.

 

Agreed

[Darth Avlectus]

I have since taken a further look into your sentiment; the worry of US going protectionist...I guess I'll modify my previous statement but in essence I still do not believe it has "come to that" yet.

http://www.usatoday.com/money/world/2009-03-15-china-worries-treasuries_N.htm

 

You are not the only one to worry about it, to be sure. However, seeing as how mainly china has financed us thus far, I believe the US will think very carefully before making any move one way or another...

 

The situation is USA needs to pay for the debt in some way. 2 of these ways that are/have been happening to my knowledge is that we've been borrowing or printing money. Both worry the financiers, and if they get too worried they'll liquidate the assets which will screw us all over if USA really is as tied in to the rest of the world as you have hinted at in the past (to me).

 

There is a catch with such thinking though' date=' if you for instance increase tarrifs on something (product A) because what is produced localy is more expensive, it means people buying said something will have less money to spend on other things (products B). The purchase of products B, in adition to providing a higher standard of living, provides work for those involved in providing said products. See the problem? [/quote'] That fact had not escaped me. I ask you, though, with what extra money?

USA's economy is in bad shape just like everyone else's. We are in a trend of more people and less jobs which doesn't look to be going anywhere soon.

 

...I can't really say a whole lot about it from limited experience, but are you talking about crushing unions??? There have been supposedly trends of unions 'rewarding mediocrity' in their performance. I also hear they retaliate in ways to naysayers--even seen a friend's car ruined for it.

 

I have more, but it is just mere speculation... Lots of which might not even be appropriate *here*...perhaps in private...

 

By trying to save some jobs, you are preventing the creation of others, while simultainously decreasing peoples standard of living. In adition, you are favoring uncompetetive parts of the economy to the detriement of the competetive parts. Not a good deal in my mind.

 

Then what would you have me do? I am just making ends meet.

 

If stable core jobs are outsourced or partially eaten away by "cheap labor" (which resists changing for a variety of reasons) wile jobs are declining...then what? Sure we are creating jobs, but losing them at the same time or they are at least being cut back and loaded down. I'm not sure exactly just what you think America is doing, but we certainly aren't "hoarding" if we don't have to.

 

With what I said before about the 'state' w.r.t. financial situation, I daresay sponging the government for welfare to live isn't exactly viable either...

 

Change other nations with just about the entire world (including the US), and we agree:D

 

And what do you think the rest of the world will do if the US go protectionist?

Hint: an eye for an eye

Sorry to sound like broken records, but that fact had not escaped me. Still, I don't think with USA's main financier warning us otherwise, that we will go protectionist. I really don't.

 

 

I don't however, those in need of protectionist meassures certainly do, (or at least they think they do) otherwise there would be little point in them.

You sounded kind of like you did. But whatever.

 

And who would that be, exactly??? Only think they do? Care to explain?

 

Yes, and I have no issues with local products as long as they compete on the same terms as foreign ones.

As far as agriculture, yeah it's competitive.

 

@ general idea: That's a good principle. That's a great principle. In fact I totally agree with you, in all seriousness about it. I like it.

 

However, in practice, how does a firm compete? Not that I don't already have my ideas. What I am getting at is the monopoly/oligopoly phenomenon has eventually ended up taking 'competition' out of the market.

 

Also, there are denominators; factors which make the play field uneven.

Standard of living (which with illegals I queston if this hasn't become a double standard utopia--it bothers the **** outta me)

Federal minimum wages

Quality Control

Safety

Cost of living

Environment

Workplace standards (IE exploitation and slavery are no-nos as they should be)

 

While there sure as hell is somehting that stinks with banking, or more precisely, those who use it to buy things they don't understand,

TYVM!

 

I actually support bank bailouts in times of crisis. Sure it leaves a foul taste, but without credit flowing way too many good firms will die needlessly, and a recovery will be that much harder.

 

It's hard to say really if more good blood than bad would be spilled.

 

While that's in the grey area I am inclined to agree with you--or even if it is in the okay. With more bad I would disagree.

 

Credit flowing is the key there I think--which again begs the question about the line of credit: can we really just keep borrowing like this? Or keep printing money?

 

I can see your worries embodied into a sort of "walls closing in on all sides" dilemma. Not just in the direction of protectionism.

 

Someone did suggest price freezing, do you care to elaborate on its upsides/downsides?

[mur'phon]

Some of the quotes are from the free trade thread in Kavars, but since they are all from the same poster, I reply to them here.

 

I still do not believe it has "come to that" yet.

 

Depends on what you mean by "that", if "that" is a protectionist spiral, then I'm inclined to agree (though if a spiral takes off, history will likely remember this time as the begining of it).

 

However you seem to be talking about the willingness of others to buy American debt, in which case I'll say that while it'll likely be used by China to "bully" the US into not closing it's market to China, it's extremely unlikely to cary out that threat.

 

That fact had not escaped me. I ask you, though, with what extra money?

 

The extra money being the money saved, if American shoes cost 200$ and foreign ones 75$, asuming I must have new shoes, I'll have 125$ to spend on other things if I'm given unrestricted acces to foreign products.

 

...I can't really say a whole lot about it from limited experience, but are you talking about crushing unions??? There have been supposedly trends of unions 'rewarding mediocrity' in their performance. I also hear they retaliate in ways to naysayers--even seen a friend's car ruined for it.

 

Some laws might need revising, however, I'm not going to try to prevent people from choosing to join a union.

 

have more, but it is just mere speculation... Lots of which might not even be appropriate *here*...perhaps in private...

 

Fire

 

Then what would you have me do? I am just making ends meet.

 

Most of which are out of the reach for most people educationally and otherwise...so it may have created (MUCH) higher payed jobs, however I'm scratching my head as to whether or not the effect has, in turn, served as many positively. ...last I checked, I didn't have the job of CEO for something open to me.

 

Use the oportunities free trade provides. Try starting a business exploiting for instance the fact that a niche market which is to small in the US is more than large enough if you target people all over the world. And think about how much more we are able to consume when prices go down, it has given more work to everyone from shop asistants to cosmetic surgeons.

 

If stable core jobs are outsourced or partially eaten away by "cheap labor" (which resists changing for a variety of reasons) wile jobs are declining...then what? Sure we are creating jobs, but losing them at the same time or they are at least being cut back and loaded down. I'm not sure exactly just what you think America is doing, but we certainly aren't "hoarding" if we don't have to.

 

There is demand for it and to the best I can see. Specifically for local product. What's more, we're in a downturn right now and we need solid core jobs to be created and/or kept...without work we have no money to spend and things will die.

 

You are primarly outsourcing jobs in the Primary, and to a lesser extent Secondary sectors. With more than 80% of US jobs in the tertiary sector, and with more opportunities arising in this sector from free trade (among other things), I don't see the big problem.

 

Sorry to sound like broken records, but that fact had not escaped me. Still, I don't think with USA's main financier warning us otherwise, that we will go protectionist. I really don't.

 

Well, you started off well enough with the car industry bailout, and every time I see "buy American" in a bill I'm reminded of just how little is neccesary before we sett off the spiral.

 

From my point of view: Well, so far as I have seen, local farmers I have known have been able to compete.

 

Yet how many are only able to survive due to the extreme subsidies farmers recieve? I have nothing against those able to survive without subsidies, which is why I'm against the subsidies, to prevent those who depend on them from wasting taxpayer money and distorting competition.

 

There has been very good reason for mistrust lately. Generally, it is related to enforcing quality control standards being more difficult to do in other nations.

 

It is, though not impossible, and you could always have harsh penalties for those breaking the rules (for instance no acces to the American market for 5 years).

 

Yes, but it (cheap goods made in for instance China) is also produced at slave labor and a very highly uneven play field, which should not be dealt in. This uneven play-field is what makes it difficult to compete.

 

While this does happen to an extent, keep in mind that for most of those working there the alternative is even worse, either they go unemployed, or they try to eeke out a living in the countryside. As their wealth increase, they demand better standards (this has allready happened to an extent, and so China is loosing out to poorer neighbors in some sectors). I'm all for treating workers well, but for those who have nothing, getting fed is most important, and then as the economy picks up, standards tend to folow, just look at for instance Japan.

 

It's hard to say really if more good blood than bad would be spilled.

 

Actually it's fairly easy to see that a lot more good blood would hav been spilled. Most financially sound companies rationally asume they can get decent acces to credit, however, a credit crunch change this, which can lead to bankruptcy in a flash.

 

Someone did suggest price freezing, do you care to elaborate on its upsides/downsides?

 

Short answer:

Upsides: obvious

Downsides: disastrous

 

If prices are fixed too high, a lot fewer people will want to buy, and so many suppliers will end up bankrupt. If prices are set too low, fewer will want to sell, and so you'll have hordes of people who can't buy the product despite being willing to pay a lot more than the fixed price.