How would free trade with a protectionist country work?
ex)
Japan. if Japan wouldn't let US TV makers sell in their country unless they licensced their technology to a japanese company, and had tariffs on top of that.
but we allowed free trade with japanese companies. would that result in a japanese dominated industry?
not putting tarriffs on goods from countries that put tarriffs on those exact same goods in their countries? would the free market be able to work that out?
Make a pros and cons chart. What pros do retaliatory tariffs bring about?
"What pros do retaliatory tariffs bring about?"
they could possibly help to bring an end to the protectionists country's tarriffs.
...they could possibly help to bring an end to the protectionists country's tarriffs.
This is an empirical question. Have tariffs, in the past helped end other country's tariffs, or have they just escalated trade wars?
"This is an empirical question. Have tariffs, in the past helped end other country's tariffs, or have they just escalated trade wars?"
Wouldn't the free country's industries that compete with protectionists countries' industries be hurt?
Would they not, likely go out of business?
How do you sell that to an american audience?
Is that industry's loss worth hurting a country's (your country's) consumers by depriving them of better quality products? Is that industry's loss worth risking further losses in other industries by engaging in a trade war?
Like I said, you'd be better off just making a pros and cons list and figuring out the answer yourself.
Let us ask the q another way. If Japan decided to GIVE AWAY FOR FREE its TV sets to people in the US, which would certainly result in a Japanese dominated industry, would that be good or bad for the US? All the money spent nowadays on TV sets would be available to buy something else. Obviously, 350 million Americans would be that much richer. Of course, the ones to suffer would be the TV makers in the US, at least for a while. Those people, who are a very small number compared to the total population of the US, would have to find new jobs.
So we have a situation with people having more money to spend, and workers and factories who have stopped making TVs and will be available [after a short while] to make what that extra spening money is going to demand. Sounds good, no?
Now if the US buyer doesn't get those Japanese TVs for free, but gets them for cheaper than what he get buying Amerian TVs, the exact same analysis applies. Say an American TV costs $500, and a Japanese one $450. In the first scenario of free TVs, every American got $500 wealthier. In the second, they only got $50 dollars wealthier. But $50 is nothing to sneeze at, and the principles are exactly the same in both cases.
Rothbard spells it all out right here: http://mises.org/rothbard/protectionism.asp
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