cab21 Posted August 16, 2015 Share Posted August 16, 2015 is protectionism needed to help infant industries grow? some economics say that some countries used protectionism to grow certain industries, then once those industries have grown, have then advocated free trade, since those industries have grown enough to win at free trade. http://www.paecon.net/PAEtexts/Chang1.htm this artical says that advocates for infant industry protectionism included Friedrich List, and Alexander Hamilton. it would be interesting to get a truth about infantile industries economics if there is not already something that covers the subject. Link to comment Share on other sites More sharing options...
J-William Posted August 16, 2015 Share Posted August 16, 2015 Seems fairly backward to me... A current example is the Chinese protectionism of domestic internet companies. The Chinese government uses the great firewall to block off potential threats to single party rule... It has also been argued that they use it to benefit domestic internet companies. To decide that protecting infant industries has been beneficial it should be enough if a Chinese internet company has been able to expand it's international competitiveness after the Chinese government blocked competitors. Merely being able to monopolize the domestic market is not enough to prove a good outcome. Google and it's various parts have been blocked for years. Baidu was the Chinese leader at the time and still is, to my knowledge it has not expanded appreciably outside china. Tudou was a leading YouTube competitor when YouTube was blocked, it has since lost market dominance... But it's successors have little overseas presence. Some of the domestic social networks had better features than Facebook or Twitter... I think I'm beginning to see a pattern here. Contrast that with Alibaba, a company who competes with eBay, Amazon and many others in online commerce and b2b. Alibabas competitors have never been blocked in china and yet Alibaba has become one of the most valuable and important companies on a global level. A single country can't "prove" the case, but I think it throws a lot of doubt on the idea. Link to comment Share on other sites More sharing options...
ProfessionalTeabagger Posted August 16, 2015 Share Posted August 16, 2015 IOW, is a coercive state necessary? Link to comment Share on other sites More sharing options...
Somewhere Posted August 16, 2015 Share Posted August 16, 2015 It's a case of concentrated, visible benefits offset by equal but dispersed, less visible harm. Clearly if a country puts up trade barriers like that then they may provide a benefit to a particular industry (or to particular firms within an industry) but at the same time by definition they're providing a financially equal disbenefit to consumers and to other industries within the country, who have to make do with domestically-produced goods that are less than world-class or are priced above world prices. All Ha-Joon Chang's article shows is that growth of the economy as a whole is still possible in the presence of protectionism, not that protectionism is a good thing. Link to comment Share on other sites More sharing options...
green banana Posted August 16, 2015 Share Posted August 16, 2015 Free trade is beneficial when both parties have a comparative advantage over each other in different fields. This can also include the seniorage of issueing a global accepted currency which is what we see since the introduction of the Petrodollar. Link to comment Share on other sites More sharing options...
jughead Posted August 16, 2015 Share Posted August 16, 2015 Even if it could be shown empirically that protecting infant industries can sometimes lead to growth and development, it is too much open to abuse. Every industry in existence will make the argument that they are deserving of protection. Politicians will have another goodie to dole out to their friends and supporters. And not least importantly, restricting the ability of consumers and businesses to purchase goods and services from any supplier from anywhere in the world can never be justified on ethical grounds. Link to comment Share on other sites More sharing options...
cab21 Posted August 17, 2015 Author Share Posted August 17, 2015 could a community choose to do support local companies to protect infant industries in theory without a government? right now it seems like protectionism trades off local jobs for higher local consumer prices. Link to comment Share on other sites More sharing options...
jughead Posted August 18, 2015 Share Posted August 18, 2015 Individuals can choose to pay too much for goods and services as they see fit to satisfy whatever ends they have in mind such as supporting companies that espouse values that they share or local businesses. "Communities" are merely aggregations of individuals thus it is meaningless to ascribe properties such as goals and desires to them. Link to comment Share on other sites More sharing options...
Nathan Metric Posted August 20, 2015 Share Posted August 20, 2015 This is one of the things I disagree with Trump on. See I work in a metallurgical business and sometimes the cheapest industrial equipment comes from China. If for example, we wanted to buy another induction furnace for $30.000 a 33% import tax would force us to pay practically another $10,000 dollars on top of that. That is ALOT of money. Protectionism designed to create industrial/manufacturing jobs can easily destroy present industrial/manufacturing jobs. Negating its own purpose. Protectionism is a way for politicians to pretend they are creating jobs in order to avoid having to deal with the real issue of the economy: why is domestic industry uncompetitive in the first place? Link to comment Share on other sites More sharing options...
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