The only way to protect wages in the face of competition that works for 1/10 to 1/3 the rate is to institute protectionist policies. That has also been unpopular because there's money to be made in offshoring as well. Americans are getting the worst at both ends, and only experiencing short-term benefits of having cheaper goods.
Some people don't like protectionism because in the long term it's worse for both countries. You have a short term benefit of protecting a handful of jobs in exchange for vastly more expensive goods for everyone as well as more expensive inputs to your other products undercutting other local industries. Protectionism is popular because the benifits for the few are visible while the downsides are diffuse but add up. And in the end your business ends up going out of business anyway like the Soviet factories
> Some people don't like protectionism because in the long term it's worse for both countries.
I keep seeing these statements on here and they're utterly misleading. Protectionism is a spectrum. It is practiced by every single country. It's a very bold assumption to make that if every country would completely eliminate everything resembling it, this would benefit everyone. The opposite is very likely. There are numerous cases of protectionist policies where the country instituting them very clearly benefited from them, even in the long run. I have spent more than a decade in two countries, each having been on a different part of the protectionist spectrum since many decades ago. It is clear as day that the more protectionist one has, throughout, continuing to this day, seen very large benefits from this policy, larger than the benefits from the less protectionist country.
We really need to stop propagating this myth among the educated in the West, it's just as harmful as "trickle-down economics" used to be before it became common knowledge that it's a fairy tale.
A reduction in the space of possible allocations of resources isn’t good. It is good for any particular set of parties insofar as it hurts some other set of parties more than themselves. This is neither complicated nor controversial.
>A reduction in the space of possible allocations of resources isn’t good.
I would personally like to eliminate allocations of resources that put me out of business and wreck the country.
>It is good for any particular set of parties insofar as it hurts some other set of parties more than themselves.
There's a huge misunderstanding in here somewhere. Most people don't think of their own welfare in terms of a negative outcome for anyone else. It's not necessarily a zero sum game. People can coexist and duplicate effort, and that sometimes makes sense. An individual or nation should strive for some reasonable level of self-sufficiency, because you can't always rely on other people to treat you well or take care of you.
> I would personally like to eliminate allocations of resources that put me out of business
So would travel agents, real estate agents and car dealerships.
Just because a change in allocation of resources or production would end businesses / jobs doesn't necessarily make it a bad thing.
I'm not arguing whether this specific policy is good or bad, but mainly that the argument don't do it because "it would cost jobs somewhere" doesn't mean something is a bad policy. Just about every change in the economy costs jobs somewhere. The question is: Does it create more jobs (or higher standard of living) in other places to make up for it?
>So would travel agents, real estate agents and car dealerships.
Yes, but these people also provide good services. I think car dealerships might be the best bad example out of these because car manufacturers don't deal directly with customers. However, I think the fact is that the manufacturers who set it up like this don't want to deal with customers, and they establish dealerships that agree to a certain quality of service that the manufacturer wants associated with their name. Car dealers are explicitly authorized to negotiate prices with customers, which can go either above or below MSRP. If the manufacturer was selling directly to you, you'd probably be stuck with ONE price which might not be the best one. All three of the cases I quoted here can be viewed as a form of optional delegation that usually benefits the producer, the consumer, or both.
If it can be proven that there is a better way to allocate resources (especially on a micro scale), that way should not be categorically banned. But at the international scale especially, you need to be careful.
>Just because a change in allocation of resources or production would end businesses / jobs doesn't necessarily make it a bad thing.
Yes a handful of unimportant ones here and there doesn't have to be so bad. But if strategically important businesses and jobs are eliminated in an allegedly sovereign region, that is usually a bad thing (proportional to the size of the region). If too many of the less important jobs in a region are eliminated or challenged, that puts stress on the people which is also a bad thing.
>I'm not arguing whether this specific policy is good or bad, but mainly that the argument don't do it because "it would cost jobs somewhere" doesn't mean something is a bad policy. Just about every change in the economy costs jobs somewhere. The question is: Does it create more jobs (or higher standard of living) in other places to make up for it?
I think this question only makes sense if you're talking about a relatively closed, cohesive system like a sovereign country. "Higher standard of living" is not the only metric that needs to be optimized (at least as it is commonly defined). We need to have a resilient country to the extent that we can. That might mean paying extra costs to support our native businesses, or accepting somewhat worse products in some cases. For example, you personally could cut or reduce most of your insurance and stop saving for retirement. That would put more money in your pocket every month that you could use to buy cool stuff. That might be interpreted as a higher standard of living. But is it wise? This is not far from what we have done on a national scale, driven by globalist policies and profiteering.
>...However, I think the fact is that the manufacturers who set it up like this don't want to deal with customers, and they establish dealerships that agree to a certain quality of service that the manufacturer wants associated with their name.
No, this was not what the manufacturers wanted. States set up franchise laws to prevent car makers from directly selling their cars and they generally are not viewed as benefiting the producer or consumer:
>...Economists have characterized these regulations as a form of rent-seeking that extracts rents from manufacturers of cars, increases costs for consumers, and limits entry of new car dealerships while raising profits for incumbent car dealers.[2] Research shows that as a result of these laws, retail prices for cars are higher than they otherwise would be.[2] [3]
>No, this was not what the manufacturers wanted. States set up franchise laws to prevent car makers from directly selling their cars and they generally are not viewed as benefiting the producer or consumer
It might be like that, or it might not. Maybe the car manufacturers take a public view that's different from their private view. Why would a state demand extra hurdles that cost its residents more money? Could it have anything to do with creating barriers to entry for other manufacturers to sell their cars in that state, basically making it difficult to buy a car that isn't part of an established brand?
I think manufacturers actually vary their opinions sometimes. If they are new without many resources, they might prefer to sell direct to customer. If they are mature, it could be looked at two ways. On one hand there is a lot of work to do in order to sell and support the vehicles that can't be done in a centralized fashion. They can afford to do the work themselves by setting up a bunch of dealerships all over the country. But it is questionable whether the manufacturer can actually do it cheaper than the individual dealers. As for this:
>Research shows that as a result of these laws, retail prices for cars are higher than they otherwise would be.
There are three points I have for you to consider. For one, is it possible for people to get service from dealerships that provides value that is hard to appreciate? For example, they can fix issues quickly without shipping the car off, develop relationships with customers to help them fill their needs, do trade-ins (how would that work when dealing with a manufacturer directly?), or any number of other things that we know they do for customers. Secondly, how is this research conducted if car dealerships are mandated by law? Finally, if the manufacturer takes on the dealership role, it has to bear basically the same costs as the independent dealer. So where is the actual savings going to come from? Do you think you can negotiate with a factory outlet to get a better price?
Here's another thing you might want to consider. I know it's going to sound crazy, but in some cases people are served better by allowing prices to fluctuate. How? Well, the people more willing to buy a particular car (with a supply constraint) are willing to pay more, and that is only feasible if the seller has scope to negotiate. If there is no scope to change prices then the cars just go out with equal priority, possibly depriving someone of their dream car while someone else who appreciates it less is the one who got it first. The individual sellers on the other hand have varying supplies of cars from the manufacturer. There are similar benefits to the individual dealers in having that flexibility, although that doesn't matter in the question of whether or not independent dealers should exist.
>...Maybe the car manufacturers take a public view that's different from their private view.
Maybe without the government forcing the manufacturers to go through 3rd party dealerships, they would still use them, but how about removing the laws and see?
>... Why would a state demand extra hurdles that cost its residents more money?
As the wikipedia article points out, this is really a textbook case of rent seeking. This is not what I would consider a controversial opinion.
Rather than hypothesize reasons why the current system is good, maybe first read through the 2 links referenced in the wikipedia article:
>Maybe without the government forcing the manufacturers to go through 3rd party dealerships, they would still use them, but how about removing the laws and see?
I actually read a pretty good reason not to remove these laws a while ago (and it is tangential to the argument about pricing that I made a while ago): It is impossible for independent resellers to compete with the manufacturer. This actually happened with Teslas: when Tesla dramatically lowered its prices to get more money, it effectively destroyed the used market and took money out of the pockets of anyone else who had used (or even basically new) inventory.
This kind of thing happens with other products too. For example, you usually can't buy a book from a publisher for less than the list price, because they don't want to undercut their distributors who are incurring significant costs to stock the books for them. (I think Amazon also requires companies that sell on Amazon to not undercut them by selling for cheaper elsewhere, despite the fact that their fees are high in some cases and they can even sell stuff for a loss.) I think the equivalent courtesy for car dealers would be that the manufacturer would be forced to pick a price and stick to it, at least at the wholesale level. That way, any independent dealer who does buy inventory can be assured that they won't face huge losses if the prices are cut upstream.
Finally I guess there is the question: do we really need the independent dealers, if the risk is all about the manufacturer cutting prices? We do, because these dealers make the market more efficient. That competition means you can shop for the best price or time window when buying or selling, without using Craigslist or classified ads. Dramatic decreases in price also affect owners and finance companies (in case of default). If the manufacturer can just decide "Hey we need to pump out a Porsche for everyone in the world" then they won't be worth what the original buyers paid, and they might walk away from the loan to buy a new one for half the price.
>... It is impossible for independent resellers to compete with the manufacturer.
Yes, those who manipulate the legislature to do rent seeking, might lose those profits when the law is removed. That is actually a feature, not a problem.
>...We do, because these dealers make the market more efficient.
Again, independent economists and the Dept of Justice don't agree with you.
>Yes, those who manipulate the legislature to do rent seeking, might lose those profits when the law is removed. That is actually a feature, not a problem.
As I said, independent dealers provide liquidity to the auto market. When there is only one buyer or seller in any other case, we call it price gouging or price fixing. Additionally, the "extra profits" or savings (in some cases) actually do contribute to maximum satisfaction of consumers. For example, if the only dealers were run by manufacturers then they could unilaterally decide that cars over 5 years old will never be repurchased, dooming those deals to private transactions with zero warranty, or else second-tier used-only retailers.
>Again, independent economists and the Dept of Justice don't agree with you.
Again, appeals to authority do nothing for me. You can probably find at least someone in the DOJ to adopt any opinion you like in any case.
>...When there is only one buyer or seller in any other case, we call it price gouging or price fixing.
Having one buyer or seller of a product or service is neither called "price gouging" or "price fixing".
>...Additionally, the "extra profits" or savings (in some cases) actually do contribute to maximum satisfaction of consumers.
There is really no evidence of that. (The basic concept of rent seeking is covered in any econ101 micro textbook.)
>...For example, if the only dealers were run by manufacturers then they could unilaterally decide that cars over 5 years old will never be repurchased, dooming those deals to private transactions with zero warranty, or else second-tier used-only retailers.
What a strange idea.
>...Again, appeals to authority do nothing for me.
>Having one buyer or seller of a product or service is neither called "price gouging" or "price fixing".
If you want to be technical, yes. But the two go hand in hand. We have laws to promote competition and the law requiring manufacturers to not sell directly to consumers is one of them. Even if this is technically rent-seeking, it isn't very bad.
>What a strange idea.
It may sound strange but manufacturers have a tendency toward planned obsolescence. They make things to wear out in obnoxious and expensive ways, and restrict access to parts, so far as the law will allow. Nevertheless resale value is important for cars, independent dealers improve market efficiency and the liquidity of cars, etc. I believe manufacturers would abuse their position as exclusive dealers of their products. Tesla sure has.
To the second half: If some other party seeks to hurt you, it is in your best interest to prevent them from doing so. Especially if the cost is less than the harm they would inflict. Presuming peaceful coexistence, then it is not in anyone's interest to limit anything beyond the basic idea of 'my freedom ends where your begins'.
>Presuming peaceful coexistence, then it is not in anyone's interest to limit anything beyond the basic idea of 'my freedom ends where your begins'.
Let me put it another way. Your comment suggests some kind of state of maximum efficiency in which the best producer can be charged with production in a monopolistic fashion, and that would limit the amount of resource usage and toil for everyone. In an ideal world with zero possibility of conflict or other externalities like tsunamis, volcanoes, extreme weather, disease, etc., along with perfect foresight of each monopolist, that makes sense. However, we do have possibilities of disruption that make redundancy beneficial. A monopolistic structure can also grow stagnant. With more competitors you have more chances for good ideas to break through. There is a cost but it is essential to maintain some competition and redundancy across geographic and cultural bounds even if it is not the absolute mathematical minimum resource solution. This redundant effort also helps the labor market by giving people something meaningful to do that might otherwise be unmarketable.
My idea of instituting duplicate effort requires support from a lot of people, because it's not free of cost. But I think it's the right way to manage society.
> Your comment suggests some kind of state of maximum efficiency in which the best producer can be charged with production in a monopolistic fashion
Only in a risk-free/non-probabilistic world.
To be clear, 'my freedom ends where your begins' is a way to simplify and summarize an approach to the theory of rights. The point of bringing it up in this context was to point out that there is an equilibrium between opportunity spaces of different actors. In other words, as long as we share the universe, we can't do expect to do literally anything (to other actors or their property in particular) without reprecussions, because any justification for it would be inconsistent.
> Some people don't like protectionism because in the long term it's worse for both countries.
That is a good argument from a purely economic perspective, but the ability of a country to manufacture things on their own is a long-term benefit to the country from a security and sovereignty perspective. It's hard to prevail in a war if a potential enemy is making all your stuff for you.
China understands this very well, which is why they spend an enormous amount of effort and resources building up domestic alternatives to manufactured products they still rely on non-Chinese sources for. Comac may or may not become globally competitive with Boeing or Airbus, but that's not really the point of the venture. China wants domestic aircraft expertise and capacity because it's critical to have and they don't want to be reliant on the US or Europe for it.
It's hard to prevail in any war in a post-nuclear age. Profiting from a war with China is a total fantasy, it would be the end of both countries, even if we had as little trade with them as with the Soviet Union.
The reason we are not manufacturing everything ourselves is that our incumbents refuse to allow anything to replace them, whether that is a more efficient company or a more able manager. They have the sway within the US to get what they want, and so things like patents and approval processes (which China does not have to the same degree, because for all of their flaws the government is more powerful there than the established manufacturers), will stop anyone from improving on GM within Michigan. The competition comes from within a country they can't determine the policy of.
Germany is suffering from a similar ailment. They are stagnating because for fifty years successive administrations have equated success with success of their majors.
>It's hard to prevail in any war in a post-nuclear age.
Another cold war is possible, and someone could prevail eventually.
>The reason we are not manufacturing everything ourselves is that our incumbents refuse to allow anything to replace them, whether that is a more efficient company or a more able manager.
That is not true in general. We have laws specifically to promote competition. I'm not aware of anything like that in China, although I haven't looked. I can tell you that it's common knowledge in China that doing certain kinds of business requires a bribe or connections.
>They have the sway within the US to get what they want, and so things like patents and approval processes (which China does not have to the same degree, because for all of their flaws the government is more powerful there than the established manufacturers), will stop anyone from improving on GM within Michigan.
First, the Chinese government owns or has a stake in many companies there. I think you're even required to have certain CCP officials inside your company if it's big enough. Second, China does have patents and IP laws. They also have pervasive state surveillance, so your ideas can be stolen by the government. I often wonder if WE have that too, but at least total privacy is legal here. Americans can stop the state from spying on them in most cases, at least as far as we know.
>The competition comes from within a country they can't determine the policy of.
I think you're mistaken about this too, because many party members are rich and involved in business. They CAN determine policies. There was a huge crash in the Chinese stock market a couple of years ago as one party faction fought with another one. That was totally anti-competitive, yet it happened, and Western investors got screwed. I heard it was the result of a fight between Hu Jintao (the previous president of China) and Xi Jinping. I think the campaign against Hu was touted as a way to fight corruption. By the way, Mr. Hu has only been seen in public like once since he was dragged out of a national party meeting in 2022.
>Germany is suffering from a similar ailment. They are stagnating because for fifty years successive administrations have equated success with success of their majors.
Germany is currently stagnating because of the toll the Ukraine war is taking on them, along with other commitments they've made such as shutting down all their nuclear power plants. They too have high labor costs and so on, like the rest of the West, but they were doing relatively well until recently.
>Germany is currently stagnating because of the toll the Ukraine war is taking on them,
The war is not inflicting any tolls on Germany. It was all self inflicted. It was pure stupidity not to be prepared to Russian aggression in Ukraine, and it was pure stupidity to respond while unprepared instead of brokering some Realpolitik peace.
Their fuel costs are skyrocketing, which is affecting everything there.
>It was pure stupidity not to be prepared to Russian aggression in Ukraine, and it was pure stupidity to respond while unprepared instead of brokering some Realpolitik peace.
I agree about this. They should have never been unprepared, and they should have settled it by now with a reasonable deal. The war started because of NATO screwing around in Ukraine's politics and trying to set up NATO on Russia's border. Of course Russia also did political things in Ukraine, but it makes more sense for them to be involved with their neighbor than for countries much farther away to do it.
Russia has shown no issue settling it in a rational way, ie getting the F*%# out of Ukraine in exchange for dropping sanctions. Its not like capturing a few parts of Ukraine does them any good.
Russia were the ones who started this whole ridiculous way. Neither NATO nor the US nor the EU was as you claim screwing around in Ukrainian politics the way you claim. The one doing the screwing around was Russia much of this was illegal (bribes, corruption, etc) and was generally malicous. NATO was already on Russia's borders and its not like they were building huge bases or putting nukes there much less making diabolical plans to invade Russia. Instead they were banding over backwards to appease Russia.
Hell neither the EU nor NATO cared that much about Ukraine, not nearly as much as they should have.
Poland Finland and the Baltics are right in the neighborhood and have a much more rational interest in making sure Russia doesn't conquer Ukraine, cause they might be next. And NATO and the EU have an interest in making sure Russia gives up on its aggression otherwise its eastern members won't be safe. Ukraine is also a future member of both. Also crucially Ukraine has a bigger interest in Ukraine then Russia does
> The war started because of NATO screwing around in Ukraine's politics and trying to set up NATO on Russia's border.
That sounds like an attempt to rewrite history. Ukraine's prospect of becoming a member of NATO was completely buried since 2008, and the intention to join NATO was resurrected only after Russia invaded Ukraine in 2014. To this day, the interest of other members to accept Ukraine into NATO remains lukewarm and no meaningful progress has been made in this direction.
The war started because Russia couldn't stomach that Ukraine was on the verge of signing a major trade deal with the EU that would've opened up the EU market for Ukraine, and Russia, facing its vaning influence over Ukraine, decided to invade and subjugate Ukrainians through violence, as it had nothing else to offer.
> The Minsk Accords were not a good-faith effort to avoid war, but a stalling tactic.
Merkel was trying to mke her past actions sound more noble. The truth is that it was far closer to appeasement. The Minsk agreements were not in good faith not just because Russia repeatedly broke both of them (while pretending not to be a party to them of that the so called republics were not Russian puppets) but also because they also broke earlier agreements to respect Ukraine's independence and borders by invading in 2014.
> You can even go back to the 90s and promises that NATO made that it would not expand to eastern Europe if you really want to get deep on the causes of this war.
The story about broken NATO promises was invented as an excuse for the war, the same way Hitler had no shortage of excuses for invading Poland. Many top officials of the USSR were still alive when Russia first invaded Ukraine in 2014. Gorbachev, the minister of foreign affairs Shevardnadze, and the minister of defense Yazov all denied the story. In an interview to German ZDF channel, Gorbachev directly called it a myth: https://x.com/Jesuitchild/status/1749887239226617873 Their successors, like Kozyrev, the first post-USSR minister of foreign affairs of Russian Federation, have also called this story a total fabrication. Gorbachev summed it up with: "Had we had an agreement, we would've written it down."
> At least some NATO members (and Zelenskyy himself) want Ukraine to join NATO to this day. This is hardly lukewarm.
This is exactly what I call lukewarm. Even more than 10 years after Russia invaded Ukraine, Ukraine has still not received even an official invitation to begin ascension negotiations, let alone reached any key milestones of the process. Despite Ukrainians openly begging for it, NATO membership remains a distant dream.
> They want influence over their neighbor, it is true. Why does the EU want to influence Russia's neighbor?
It doesn't. The initiative for more open trade with the EU comes from Ukraine, because judging by the way rest of Eastern Europe opened up trade with the EU, Ukrainians could expect to see their standard of living rise very sharply in a very short time. In a decade, open trade with the EU could easily double or triple the income for most people in Ukraine. How would you feel about getting paid three times as much for the same job?
> How would you feel about Russia making trade deals with Mexico, sponsoring pro-Russia politicians, and selling advanced military gear to them? How would you feel if Mexico was attacking us with cruise missiles supplied and operated by Russia?
If this was preceded by the US treating Mexico the same way Russia has treated Ukraine, then I'd passionately support the Mexican-Russian alliance. If the US poisoned Mexican politicians, claimed that the Mexican people are a made up ethnicity, demanded Mexico to give up Baja California and Sonora, brainwashed Americans every day with genocidal propaganda directed against Mexicans calling for their extermination, and eventually invaded Mexico, razed entire cities from the earth, killed hundreds of thousands of Mexicans, forced millions of them to become refugees, kidnapped children, stole cultural artifacts, and polluted vast areas of Mexico for centuries with unexploded munitions, could you blame Mexico for seeking closer relations with whoever offers them support in withstanding the onslaught?
This is Ukraine's president. The photos were taken a few months apart, before and after Russians poisoned him. The US treats Mexico better than this and that's why the Mexican-Russian alliance remains a far-fetched fiction and not anything remotely plausible.
You can even go back to the 90s and promises that NATO made that it would not expand to eastern Europe
And I encourage you to do so, because if you look at the actual event protocol it simply doesn't support what you're saying.
The bottom line is that whatever was said verbally at the time was understood by all participants to be part of the brainstorming process in the course of negotiations of what would eventually become the 2+4 Agreement. And simply put, this particular proposal did not make it into the agreement. As one notable observer put it: "It was tough, everyone knew that only what is written in black and white in the contract counts."
That's why Gorbachev insists (in an interview you can easily find) that even though he felt that NATO expansion was against the "spirit" of the negotiations, there were no statements about NATO expansion that rose to the level of a "promise". We also have Shevardnadze's equally stringent denial (per the sibling commenter), and strong counterweighing factors, such as Russia's greenlighting of the first round of ascensions (PL, CZ, HU) in the 1997 CFE Treaty, which by itself renders the "broken promise" theory unequivocally moot. And some notable language in the NATO-Russia Founding Act signed in the same year as well.
The war was at least partly instigated by our refusal to promise to keep Ukraine neutral and out of NATO.
That's a severe misreading of the article you cite in association with this statement. Simply put, that's not the language of the article, and that's not an implication it makes.
How would you feel about Russia making trade deals with Mexico, sponsoring pro-Russia politicians,
So far so good. Whatever one may feel about Mexico taking that direction -- it is after all a sovereign state. And while such circumstances would certainly be a matter of concern to the US, the idea that they amount to something in response to which the US would need to launch a full-scale invasion of Mexico (or that such a move could possibly be beneficial the US in any way) would, of course, be seen as batshit insane.
... and selling advanced military gear to them?, ... How would you feel if Mexico was attacking us with cruise missiles supplied and operated by Russia?
If this happened only after the US launched an invasion of Mexico as plainly stupid and unprovoked as Putin's invasion of Ukraine -- all rational observers would agree that Mexico would of course have a perfect right to defend itself -- indeed, "by any means necessary".
Including the procurement of advanced military gear of virtually any conventional description, from whichever source it could find.
How are so many people finding these stale comments to mess with me?
>I recommend you stop.
I consider this brigading as well. I am within my rights to call it like I see it. If some anonymous internet guy is actually offended that another anonymous internet guy is accusing him of a relatively minor thing deep in the bowels of a stale comment section, so be it. Grow up.
If we go into it saying we're only pretending to annihilate civilization they won't match our military spending, and if we don't, we're still being insane.
When you say "economic perspective" I believe you mean a financial or poorly monetary one. Any econ course would teach you that economics is really based around preference and opportunity cost, which is inclusive of the non-monetary attributes you bring up to dismiss the "purely economic perspective".
Thus your argument, if framed in economics, is that countries are choosing a worse option, considering their alternatives. This is a valid argument to make, but it's not consistent with your introduction.
> Some people don't like protectionism because in the long term it's worse for both countries. You have a short term benefit of protecting a handful of jobs in exchange for vastly more expensive goods for everyone as well as more expensive inputs to your other products undercutting other local industries
Expensive goods only result from half-assed protectionism. When governments go the whole nine yards, such as with China's PV and EV industries, or the US with agricultural subsidies, it results in very cheap products and inputs to other products. Corn syrup is an ingredient to a lot of American food items because it's a cheap sweetener due to all the subsidies as the government decided, many decades ago, that American farmers should be shielded from competition. Some decisions make sense in the realm of national strategy and geopolitics, and not pure economics. The US would be very different if it had started to import the bulk of it's corn from Ukraine in the late 1990s
>When governments go the whole nine yards, such as with China's PV and EV industries, or the US with agricultural subsidies, it results in very cheap products and inputs to other products.
We have subsidies for solar and other stuff but the competition is absurdly stiff. What the US government actually needs to do is limit imports. If you want to subsidize that stuff, the money can come from tariffs.
>The US would be very different if it had started to import the bulk of it's corn from Ukraine in the late 1990s
Yes, it would be worse. Food is very important strategically and economically, and subject to occasional disruptions. You don't want to have people starve because of one or more regions has a low yield. There is zero benefit to letting our land go fallow to save the meager cost of government agriculture programs to help farmers survive bad years. We don't import corn because we grow all we need. It is native to North America after all.
It depends. We can say that China’s industrial policies are a kind of protectionism as well in that they are willing to pay for extra cost for domestic “national red supply chain independence” rather than relying on the “comparatively advantageous” western vendors. And they did get excellent results. Note that industrial independence is exactly the opposite of free trade and that has been a long sought national goal by China.
Regarding tariffs on China exports, the relatively fortunate position for the US is that the biggest components in consumer inflation index such as food, housing and energy are all either largely domestic produced or not dominated by China, which gives more room for the US to react. But the tariff could still harm the gross margin of the international enterprises and even SMBs, who are facing the immediate pressure of adjustment during the trade war.
China has a high amount of protectionism. You can't sell in China without approval, and no foreign-controlled business is granted access. You have to set up a minimum 51% Chinese-owned subsidiary and possibly jump through other hoops to get access. This along with all the outsourcing has been used to steal IP and put foreign competitors out of business.
Many of the claims you're making here are outdated, or just outright false.
For example, the 51% requirement does not apply in most industries any more. It was a transitional measure as China opened up its economy to foreign investment, to prevent foreign companies from instantly taking over or outcompeting every Chinese company. But that measure has been rolled back over the years, and now only applies in particular industries. Tesla 100% owns its operations in China, as do more and more foreign companies.
Many people in the US and Europe are operating with a mental picture of China that is decades out of date, or which is even just wrong.
> I would like to know where you saw this. Not to be a jerk but I've never heard this and I'm more informed than most.
You just mentioned an example yourself: automobiles. This isn't specialized knowledge. You can read about China's JV policy, and how the list of affected industries has shrunk over time.
> They can mandate Tesla to export 100% of the cars at any time if they feel it threatens the local industry.
Anyone could theoretically do anything in the future. They haven't. In fact, they've been extremely welcoming to Tesla.
>You can read about China's JV policy, and how the list of affected industries has shrunk over time.
Yes but I don't read Chinese. Like I said I have read about this stuff and never found another example besides Tesla. You said something about "particular industries" which implies there must be far more examples of exceptions to the JV rule. I haven't been able to find them. I thought you might have a good source since you're the one claiming that there are more exceptions.
>Anyone could theoretically do anything in the future. They haven't. In fact, they've been extremely welcoming to Tesla.
They have a history of welcoming outside companies until they get a domestic equivalent. For example this has happened to tech companies.
The key term here is the "negative list," which defines which sectors have restrictions on foreign investment.[0] The negative list has been shrinking over time.
I don't know the details of each company, but I think many major US corporations, including Apple, Walmart and Nike, have wholly owned subsidiaries in China.
> They have a history of welcoming outside companies until they get a domestic equivalent.
I don't know if any example of this, though I know this is something Noah Smith always claims (and I have a dim view on his knowledge of China). The closest thing to this is what happened to Google and Facebook, but they were really just blocked because the government wanted them to censor information, and they apparently weren't playing ball. But in terms of the Chinese government chasing a foreign company out just because there's a Chinese equivalent, I've never actually heard of a specific example.
There have been successive relaxations of the restrictions over the years, going back more than 30 years.
China's economy used to be completely closed to foreign investment. They didn't open up overnight. It's been a long, gradual process. The JV requirements were meant to prevent foreign firms from instantly wiping out every Chinese company in every sector. But as the Chinese economy becomes more advanced and competitive, the government worries less and less about foreign companies swooping in and taking everything over.
What the heck? When did this sort of economically irresponsible thinking become so mainstream?
The benefits of protectionism are what are short-term, but they leave both us and China materially poorer in the long term. Life today is better than it was in the 1950s — and a large part of that is knowing our comparative advantage and leaning into it, not trying to restore long-dead industries by political fiat and throwing trillions in good resources after bad initiatives.
If we want to help workers who are struggling - then tax more and redistribute more. Don’t throw a wrench into mutually beneficial trade (and completely sabotage our critical climate goals while we are at it, it makes no sense that we treat BYD the way we do).
>What the heck? When did this sort of economically irresponsible thinking become so mainstream?
It's not "irresponsible" to deny the existence of some utopia where everyone's interests align. It's not worth competing with virtual slave labor. A perpetual race to the bottom is not what we should be striving for. With our current standard of living, or even half of it, we don't make anything that is going to be economical to export in the long run.
>The benefits of protectionism are what are short-term, but they leave both us and China materially poorer in the long term.
You're not entirely wrong. There is a cost to duplicating effort. What is the cost of not being independent? Your country's sovereignty and maybe your life. Let us take care of ourselves as best we can and import only a small amount of stuff.
>Life today is better than it was in the 1950s — and a large part of that is knowing our comparative advantage and leaning into it, not trying to restore long-dead industries by political fiat and throwing trillions in good resources after bad initiatives.
I think many would argue that life is worse today than it was in the 50s. Sure we have more consumer goods, but housing is unaffordable and many people are working well beneath their capacity at meaningless make-work jobs in the service industry. The "long-dead industries" you speak of are alive and well, just not HERE. Not because others are necessarily doing those things better either. It is all about labor costs and regulations in conjunction with international competition.
>If we want to help workers who are struggling - then tax more and redistribute more.
First of all, many aren't working at all because there are no good jobs for them. Second of all, what exactly are we going to tax if everything is offshored consistent with the current trend? What are we going to buy our imports with, the land under our feet (which is finite and also our home)? Increasingly worthless paper, promises to drop bombs or not drop bombs somewhere, etc.?
>If we want to help workers who are struggling - then tax more and redistribute more. Don’t throw a wrench into mutually beneficial trade (and completely sabotage our critical climate goals while we are at it, it makes no sense that we treat BYD the way we do).
Oh yes, nothing more critical to cutting pollution than shipping giant logs to China to be turned into toothpicks. Give me a break. It makes total sense that we treat BYD the way we do. It is unfair competition that would destroy one of the few industries we have left, and China isn't exactly eager to buy cars from us (nevermind that they cost too much for the Chinese anyway). We might all be better off if every country produced what it could. It may lead to new discoveries in design and production methods. And if international trade was not an issue, countries could freely copy each other's IP for domestic use. That last part might be too optimistic but monopolies create stagnation.
> You're not entirely wrong. There is a cost to duplicating effort. What is the cost of not being independent? Your country's sovereignty and maybe your life. Let us take care of ourselves as best we can and import only a small amount of stuff.
At what scale does that become true?
Certainly an individual is not better off importing as little as possible? This would mean not working any traditional job, not buying tools, not buying food, but crafting a comfortable life on one's own starting naked and with bare hands. Certainly it doesn't make sense to apply such a policy to the individual.
Should cities then be the scale at which this cutover happens? If a natural resource does not appear in its geography the citizenry must do without? Every city farms all of its own food, has factories for all told and merchandise its citizens wish for? Cars, industrial equipment, forestry, mining, clothing, food, technology, all made within the city limits? There is not even enough room for all of this.
A US state? A small country? What is the cutover point at which one is not impoverished by such a policy?
Or perhaps you believe I take too extreme a position on protectionism and think some trade is good at any scale. The same threshold must exist:
If it improves our well being to trade a little, what is the threshold at which more trade stops making us better off? Where is the inflection point at which a bit more trade hurts us? Can you point us to a country with an optional amount of trade? Or could you compare two countries based on their amount of trade and tell us which is better?
If you prefer a different framing: hopefully we can agree that isolationism at the level of North Korea is a negative for its citizenry, independent of the dictatorial regime they live under. It seems that you believe the US trades too much. So we can imagine a curve of some sort on a graph with the US on the left end and North Korea on the right. The slope moving from US starts off positive. The slope moving from North Korea starts negative. Somewhere between the two, there must be a maximum. How would one calculate it?
