In another forum I frequent there was a thread created by a gentleman who is highly in favor of protectionism. Now in this forum (like all forums) the same topics come up from time to time with the same people going back and forth about who is right and who is wrong. For the most part the individuals who argue in favor of protectionism in these threads make the same economic arguments which are pretty easy to debunk but there is one individual who I've had a hard to time responding to because he seems to take a different approach based on history. Since I'm not that well versed in history I was hoping maybe some of you guys that are could help me out a little bit. To enable you guys to help me out I will just post what my response was to the OP and his (the guy im having a hard time responding to) reponse to me. Any help is greatly appreciated so thanks in advance.
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ME: And both theory and history have proven that it does lower competition and start trade wars between nations. The irony in all this is that you support protectionism because you hate big business and you want to keep jobs in American yet the first people in favor of protectionism are those big businesses who are in the export trade. Your not killing big business and encouraging "fairness" when you tax big businesses to death. All you are achieving by taxing to death those companies in the import trade is diverting resources and granting special privileges to inefficient companies in the export trade which not only hurts small businesses in America but most of all it hurts American consumers which is all of us. You may be well intentioned but your policies would lead to disaster for any nation implementing them.
HIM: This is simply not true. An intellectual such as yourself must have sifted through history quite desperately seeking some confirmation for your ideals. Provide us with some real examples of states operating free markets as a means for development and growth. The growth and development of modern states has been centered in government protection of industry which spurs industrialization. It happened with the Asian tiger export economies, it's happening with China now and it is what happened with the USA and Germany pre-WW1. The history of development lays in protectionist policies, though not so severe as to create "trade wars". China would not place huge trade barriers on the high end products they receive from the USA or Europe simply because the West began to level the playing field which would cause marginal decreases in their trade surplus. Plus it's in our power to do, unlike making the Chinese allow their currency to adjust to market determined values as you should advocate. Now I understand that protection is the story of historic development does not necessarily lead to it being the solution to creating jobs in the post-developed world. It just seems like a required path because service jobs are stretched thin and can only supplement production jobs. What I mean is, the US can only instate so many service jobs without expanding the employed in the labor field through industry. Given the lack of rising employment it seems we are at that peak. The thing is, many conservatives and libertarians on this board suggest deflating government as the be all solution to recovery. However this will not create jobs, specifically in the short term. Sure cutting the deficit is one important part of the solution, but raising revenue is the other part. Over taxation is a problem you all point out which is valid but a certain amount of revenue even with trimmed expenses is necessary to avoid government collapse at the anarchy that would ensue. Meaning some level of taxation near its current level is needed. So the only other step to raising revenue which helps cut the deficit and helps pay back debt over time to manageble levels of interest, is to help create jobs. Protecting and spurring domestic industry is the solution. It may harm importers and cause slightly higher consumer prices but it can create far more jobs then any other option and these jobs will increase government revenue without raising taxes until boom times.
hmm I'm quite busy and tired at the moment but if no one helps you PM me.
Again this insistence that the number of people employeed is an indication of wealth when the exact opposite is true. If we could supply all of our wants without working then why bother working? But our wants can not be universally satisifed so entrepeneurs go forth and try to satisfy these wants for a price. If those people are digging ditches and filling them up then no wealth gets created. That is a fact. This is Keynesian crap that superpowered government bureaucrats understand which products are allowed to be supplied by foreigners and which are not. The only way to increase the percentage of people employeed in the long run
My view is that the Great Depression got really bad when that clown Hoover passed the Smoot Hawley Tariff thus shutting down the entire trading system in the world. And guess what, employment did not recover to its pre-1929 levels. The superhero Roosevelt could have gotten rid if this in time to save years of economic destitution and failed and instead passed government provided employment.
The growth and development of modern states has been centered in government protection of industry which spurs industrialization. It happened with the Asian tiger export economies, it's happening with China now and it is what happened with the USA and Germany pre-WW1. The history of development lays in protectionist policies, though not so severe as to create "trade wars".
China would not place huge trade barriers on the high end products they receive from the USA or Europe simply because the West began to level the playing field which would cause marginal decreases in their trade surplus. Plus it's in our power to do, unlike making the Chinese allow their currency to adjust to market determined values as you should advocate.
Now I understand that protection is the story of historic development does not necessarily lead to it being the solution to creating jobs in the post-developed world. It just seems like a required path because service jobs are stretched thin and can only supplement production jobs. What I mean is, the US can only instate so many service jobs without expanding the employed in the labor field through industry. Given the lack of rising employment it seems we are at that peak.
The thing is, many conservatives and libertarians on this board suggest deflating government as the be all solution to recovery. However this will not create jobs, specifically in the short term
Sure cutting the deficit is one important part of the solution, but raising revenue is the other part.
Over taxation is a problem you all point out which is valid but a certain amount of revenue even with trimmed expenses is necessary to avoid government collapse at the anarchy that would ensue.
Meaning some level of taxation near its current level is needed.
So the only other step to raising revenue which helps cut the deficit and helps pay back debt over time to manageble levels of interest, is to help create jobs
Protecting and spurring domestic industry is the solution.
but it can create far more jobs then any other option
and these jobs will increase government revenue without raising taxes until boom times.Actually, a tariff is kind of like a tax. And EVEN IF you think these tariffs can break even economically, the opportunity cost is too high. There's all this other non-duplicative, competitive stuff you could have done in the meantime. Your friend basically just doesn't understand the price system.
and these jobs will increase government revenue without raising taxes until boom times.