Protectionism vs. Free Trade -

[Hellbound Hellhound]

Just what is the optimal approach for country to take towards trade policy?

Does it depend upon the country? Are there complex geopolitical factors to consider? Do trade deficits matter? Is economic self-sufficiency even worth striving for? Does globalization make corporations less accountable? Are imports and exports of equal economic value to a country? Are there ethical questions to consider before trading freely with certain countries? Do potential opportunity costs make protectionism unthinkable as an economic policy? Can a country really maintain it's political and democratic independence if it allows itself to become reliant upon foreign powers for essential goods?

I have my own views on the subject, but I want to hear what other people have to say first.

Please discuss.

 

[Coconut Gun]

Whatever the fuck Trump is doing.

 

[ColtWalker1847]

Economic self-sufficiency has another name. Autarky. It has never worked and is normally a desperation move to keep certain political forces in place. Those that have tried have rapidly fell behind. Look at North Korea if you want an example.

However it's a good idea to have your own protected industry in certain strategic areas like aerospace, energy, food, ship building, mining, etc. Because in a war-time scenario you could find yourself fresh out of friends and need to build that stuff in-house.

But crap consumer goods? Not really. Throwing up restrictions just make goods cost more and get other countries to retaliate with their own tariffs. They lose their market. You lose yours. Everybody pays more. Everybody loses.

Another thing to remember is IP. If you don't play ball somebody is going to rip you off and sell your idea to other markets. It's a big world. You then get undercut by a guy who has little R&D overhead. It is best for everyone to play nice and to work out a deal with him. Royalty checks ain't a bad way to live.

Also, we ain't MAGA by bringing back $10/hr assembler jobs. Fucking stop it.

 

[ICametoLurk]

Leopold II of Belgium had best trade policy.

Ship out bullets, get rubber.

 

[AnOminous]

I think protectionism is a general evil. There are occasions when it is necessary, usually involving unfair trade practices by other countries, but it's not in itself a good thing. Taken very far, it starts trade wars that can end up nuking the global economy in ways that take decades (or a world war) to fix.

Most of the cases where protectionism is "good" are edge cases, like countries where nearly the entire GDP derives from one or a few resources, and if you lose that industry, you're toast, especially when some foreign country (like China) is attempting to flood your market with underpriced subsidized product specifically to tank your local producers so that they go out of business and they can take over.

Protectionism can also also sometimes be an effective tool to force negotiation on other issues, and although I don't fully agree with how Trump went about this, it appears that he was actually using those steel tariffs as a club to get cooperation from China on knocking off some of their scummier trade practices with regard to us and force them to buy more shit from us, so since he doesn't seem to be starting a trade war, this is actually a reasonably good use of such tactics.

There's a game theory aspect in that free trade is optimal and produces the best results for all parties if all parties are doing it, but if everyone is doing it and you have a defaulter, the defaulter enjoys greater profits at the expense of other players. However, if everyone defaults, it is disastrous for everyone.

 

[millais]

Leopold II of Belgium had best trade policy.

Ship out bullets, get rubber.

Colonial mercantilism of the Early Modern Era (1500-1800) like in the Americas, India, Far East, and East Indies was pretty profitable, but the African and South Pacific colonial enterprises of the latter half of 19th century were abysmal economic failures for everyone except Perfidious Albion. I think a big part of why the board of directors and Belgian government was able to take away the Free State from Leopold II was the growing insolvency of the venture.

 

[Mr. Pickles]

Free Trade doesn't exist, once someone finds a way to get a monopoly, human instinct will protect it at all cost

 

[Toucan]

If your national industries are worth a shit they wouldn't need protectionism in the first place.

 

[Gym Leader Elesa]

Protectionism is the only legitimate economic philosophy.

 

[Joan Nyan]

Protectionism for its own sake is entirely ridiculous. It just means your country's people get to buy less stuff with their money. You know what a "favorable" balance of trade is? Work your asses off to make stuff for other countries, and get nothing for it but some paper that you can't spend. You'll have lots of green pieces of paper and small metal disks, but nothing to do with it but bathe in it like Scrooge McDuck. This is the exact opposite of what anybody actually wants: a bunch of nice stuff that you don't have to work very much for.

Protectionism is a potentially-necessary evil for things like steel so you can keep building tanks if there's a war and you're cut off from your trading partners. Though for that purpose, direct subsidization works too so I'm not sure which is better.

Tariffs can also simply be a source of government funding, like a sales tax that applies specifically to foreign goods. This was common until recently and I'm not sure it's any worse than income tax or property tax. This doesn't really count as protectionism though.

Economic sanctions meant to punish other countries take the same form as protectionist policies, and can be a good idea towards that goal, but also don't really count.

 

[Samson Pumpkin Jr.]

I think protectionism is a general evil. There are occasions when it is necessary, usually involving unfair trade practices by other countries, but it's not in itself a good thing. Taken very far, it starts trade wars that can end up nuking the global economy in ways that take decades (or a world war) to fix.

And why should countries be dependent on one another if any trade war could provoke an actual war? If what you're saying is true it would mean a protectionist world would be a more peaceful world because there'd be no opportunity for trade wars that escalate into real wars. And I agree that foreign trade policy isn't good or evil in itself.

Most of the cases where protectionism is "good" are edge cases, like countries where nearly the entire GDP derives from one or a few resources, and if you lose that industry, you're toast, especially when some foreign country (like China) is attempting to flood your market with underpriced subsidized product specifically to tank your local producers so that they go out of business and they can take over.

Protectionism is good in all cases except when the country doesn't have that resource, like if Luxembourg put tariffs on oil it would be extremely stupid. Comparative advantage can develop from protecting your industry. For example Japan had no car industry after WW2 but they put tariffs on US cars and for a while the Japanese cars were generally more shit, but they developed a comparative advantage over the US through their protectionism.

There's a game theory aspect in that free trade is optimal and produces the best results for all parties if all parties are doing it, but if everyone is doing it and you have a defaulter, the defaulter enjoys greater profits at the expense of other players. However, if everyone defaults, it is disastrous for everyone

If everyone defaults then the world would enter a better age. There's no reason to be involved with the politics of other countries because they produce all your steel or all your cars. Countries go into bidding wars over the steel of another country when it could've been completely avoided if that country made their own steel. You make it and now it's yours, simple as.

Free trade doesn't "benefit all parties" because that assumes that all industry is replaced by another and more profitable industry. For example if the US exported its plastic making industry to Italy because in Italy making plastic is 10% more efficient or cheaper then the industry that comes after plastic needs to make up 90% to BREAK EVEN, not even to bring in a benefit for the US but just to break even. What usually happens to those unemployed by that industry moving is that they move into other sectors like "trash can making" and it lowers the wages for all "trash can makers." And this whole scenario doesn't even go into the costs of making the new industry, like if the US replaced plastic making with berry farming then they would need to do everything necessary to establish modern farming which costs money. And this also doesn't take into account if no industry replaces the one that left, which does happen often.

You free trade advocates have been duped by greedy capitalists. Brown people will breed until there is no more resources left on earth to feed them. And what are we going to do? keep exporting our industries to Africa because wages are lower there? wages become higher when there is less labour compared to capital, and what those filthy capitalists are doing is shrinking the ration of capital to labour to line their wallets.

 

[Overly Serious]

Free Trade is good. Foreign Ownership is bad.

 

[wtfNeedSignUp]

Just a balance of the two. Excessive Free Trade absolutely destroys your economy (unless it's high education based) because there will be always a country that will manage to make everything cheaper by ignoring human rights and idiots who'll ignore the lesser quality for the cheaper price. Not to mention it makes your country a hostage of whoever supplies it food and oil.
Excessive Protectionism invites extreme corruption and tanks the economy by having it dependent on the inbred official/mob family that got in charge of production and would rather everybody die than lose an ounce of control.
The best course of action is deciding which areas get government protection (food sources, decent local production) and which don't.

 

[AnimeGirlConnoisseur]

I'm rather conflicted. With free trade people get their goods cheaper and countries can focus on what they are good at rather than wasting resources trying to produce everything. On the other hand free trade can create social problems with a country by taking away low-skilled manufacturing jobs and putting them in poorer countries. It also creates a situation where a foreign country that you trade with has sway in your internal affairs. Maybe there is a happy medium between the two.

 

[Getting tard comed]

Free trade is only a positive for the poorer country. It boosts their economic situation while hurting the richer country in the long and short term. And that's if you are looking purely from a govermentental economic POV. It is worse if you look at it from the actual people who are citizens of the richer country. Worse still if you factor in things like national security, ect. And the worst part of all is all the arguments for free trade apply for open borders and unlimited immigration.(which tbf you can be for that though I'm not sure why)

Ultimately the only thing free trade is good for is increasing corporations and goverments revenue and residents of poorer countries lives. It's a negative for the residents of the richer country. Theres an asymmetric trade going on that I dont believe is worth it.

The biggest thing about free trade today(pre easy/fast modes of travel) is labor mobility. This has been affecting the US for decades now with people moving away from their hometowns and families and communities for "better" jobs(which often pay more). This combined with free trade moving jobs out of the country has devastated the midwest. More importantly (to me) it has negatively affected American communities. Thankfully younger generations aren't moving for work as often (imo) so much that economists are complaining about it. Note that truly free trade taken to it's logical conclusion would take the national labor mobility seen in the US and make it a global phenomena. Leading to families not just separated by states but end up across the world for economic efficiency.

In short unless you have a purely economic viewpoint that ignores humanity entirely free trade is never the answer, particularly for richer nations. Although there is an argument that even it benefits poorer countries in the short term same thing will happen to them as their financial status increases.

 

[Crankenstein]

It needs to be a mix of the two because neither one actually works entirely on their own long term. Some times call for more hardened measures, some times call for looser measures. The same can be said for different sectors, the medical sector needs much more regulation and attention than the fashion industry.

edit : I'm retarded and read the title wrong. But the point remains the same for the most part. Some sectors need more protection such as food and medicine as opposed to entertainment (assuming it isn't propagandized).

 

[Rand /pol/]

Free trade is only a positive for the poorer country

Yeah because rich countries don't benefit from cheap goods, and poor countries benefit from sweatshops.

 

[MrJokerRager]

Yeah because rich countries don't benefit from cheap goods, and poor countries benefit from sweatshops.

It's either the sweatshop or diving in the gutter without protective gear to find minerals to harvest mercury. Or begging on the street.