> > On Jun 27, 2007, at 3:05 PM, M. Adam Davis wrote: > > On 6/25/07, Vitaliy wrote: >> Xiaofan Chen wrote: >>> Certain protection of certain industry is inevitable. Even for >>> those so >>> called >>> "free trade" countries, there ought to have some kind of protection. >> >> I've never heard a rational, logical explanation why the above >> statement is >> true. > > 1. The government is charged by the public to maintain and improve the > economy of the country. The US constitution does not give the government this job. A deluded public may think the government can manage the economy. Most economists disagree. ( See the book by Bryan Caplan , " The Myth of the Rational Voter " ) > 2. The economy is affected significantly by certain sectors. Auto > manufacturing, for instance, steel, and many decades ago textiles were > *very* important to the US economy. Right now the internet (which > revolves around computers and programmers) is very important. > > So a situation arises: > Steel becomes vastly cheaper overseas (reasons are complex, but let's > ignore that for now). Now we have a choice - we can either allow tens > of thousands of American workers lose their jobs, allow hundreds of > millions of dollars leave America to be sown into another country's > economy, and allow all the side effects to occur (trickle down, > trickle up, etc.). These are sectors that if hit hard enough will > significantly shake the economy. Cheaper steel helps the economy ( See Caplan book ) Workers lose jobs and other citizens benefit. An improving economy requires workers to upgrade their skills. Money is not lost to other countries. Voters equate jobs as prosperity when usually the opposite is true. Because of an expanding economy more people have more leisure time. Why do so many two wage-earner families exist ? Simply because people want more stuff than they were satisfied with in the earlier 1900s. > > Or we can ask the government to place extra burden on > products/materials/etc in such a manner that it gives us time to work > through the problem - lay off workers slowly, invest in more efficient > equipment, etc. The marketplace handles this faster and more effectively than the government. > > Ideally this is a short period of time to allow things to equalize > slowly, but various lobbies, unions, political interests allow these > to tarry far longer than originally intended. Lobbies, and political interests exist because of the government. The government creates problems that it is slow to fix or never fixes. Unions are largely a child of the government as well. > > This ignores many of the 'fake' economies set up by other governments. > If a country decides to build a steel factory using gov't funds, and > then "sell" it to a private company for far less than the equipment > cost, then of course the steel is going to cost less than here, even > after shipping. It may seem short sighted to do that, and assuming a > level playing field the gov't will bankrupt itself doing that, but by > performing such transactions in a careful manner one can sap much more > money from another country and sow it into your own economy than would > otherwise happen, and the returns can be greater than the expenses. Price supports by governments to prop up industries cost the taxpayers, harms the taxpayers and cripples the ability of the marketplace to move to more effective products and services. A level playing field is not necessary for companies to be successful. Japan tried the protectionist game at a higher level than the USA and is suffering for it now. > > So, whether it's good or not in general, or in any given situation, I > don't know. But I hope you can see that there is at least one logical > argument for considering such a step. When the sector that's hit is > large enough, then it's important to moderate the impact, and this is > one tool all governments use to do so. You can see that I believe moderating the impact is generally creates more suffering than letting it happen. Bryan Caplan agrees with me or I with him. Of course, this is one man's opinion. Donald Wittman is the author of The Myth of Democratic Failure: why political institutions are efficient. He disagrees with me. Cedric > > -Adam -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Moving in southeast Michigan? Buy my house: http://ubasics.com/house/ Interested in electronics? Check out the projects at http://ubasics.com Building your own house? Check out http://ubasics.com/home/ -- http://www.piclist.com PIC/SX FAQ & list archive View/change your membership options at http://mailman.mit.edu/mailman/listinfo/piclist -- http://www.piclist.com PIC/SX FAQ & list archive View/change your membership options at http://mailman.mit.edu/mailman/listinfo/piclist