Message from @Mr. Nessel
Discord ID: 685956522676584501
“The wanting of what may be lost”
I am beginning to like the idea of protectionism
for certain countries
small countries where its cheaper to buy everything from other countries
export whatever you can but dont import anything you dont really need
unless you have the luxury of being high in exports, produce your own food
Protectionism is good
^
I don't think a country like Singapore could be protectionist
The policies only really work if you have a large enough domestic market/demand to creat a manufacturing base
It is always a trade off. You trade some money or access to better products for a more independent economy.
Division of labor works across borders but if you are too specialized a little virus boy and a few closed ports can kill you. All the money you made by not being protective isn't going to help you in that case.
I see protectionism as insurance if we look purely at the material side.
The larger you domestic market is the smaller are the consequences of protectionism. This is why china can pull off a level of protection that most smaller countries could not.
I actually disagree with the division of labour applying to national economies
There's economies of scale yes but that runs into diminishing returns (and the few cents you save in part are due to just using cheaper labour or less regulated markets)
If you have a large market like the EU or America you are very much capable of not importing manufactured products without much of a downside
But it's nor like free trade has relied on specialization in that sense to jsutify itself
Smith and Ricardo were relying on comparative and absolute advantage in production
Somehow magically some countries are just better at producing something
It's really retarded when you think about it
Because in what way is the output of steel going to be impacted by which country it is made in
In a geographic sense
These sorts of advantages are limited to the primary sector
Abundance of ore, fertility of land and climate, how plentifull fish is (ignore aquaculture)
The problem isn't just the product itself but also the supply chain and the ecosystem. Companies that do similar stuff settle in the same area (Silicon valley, shenzen...). It is not only absolute advantage but also relative. If you can outsource lesser, simpler work to developing countries you can focus more on higher tech.
And yes the larger the market the smaller the benefits of importing or the penalties for protection.
If protectionism made us richer why don't we boycott our moms and do laundry ourselves.
Relative advantage is covered by Ricardo but it still presumes some countries are just magically better at things
I agree with the point about outsourcing less productive industries mostly because those lesser industries usually produce intermediate goods
I wouldn't want to make all the steel here because using expensive steel would fuck with other industries that are more important
To the point that a car might be too expensive for export for example
I mostly follow ISI when it comes to protectionism
Import substitution industrialization
They aren't magically better. If you specialize you get better. You only have 24hours a day so if you focus all that time on one task you will be better at that task than if you divide your energy into multiple task.
But is that actually what we see play out in reality
Who on a technical level is better at producing stuff
China or the West
China only dominates because it can churn out the same stuff inefficiently but less costly
Not because it's specialized
Yeah carpenters are better carpenters than electricians.
That is a different question, yes there are differences in productivity in humans.
If it is up to specialization you only need to shelter your own market to allow for domestic expertise to accumulate
There's no reason why a nation which misses an opportunity to have a textile industry because of technology needs to be permanently out