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On the Fallacies of Protectionism

Arguments for protectionism - the act of governments to protect X industry or X people through policy from some evil or "unfair" disadvantage - tend to suffer, seemingly universally, from a common source of neglect - failing to consider the long-term consequences of such policies. Henry Hazlitt thought this phenomena important enough to bring it up on the first page of his great work, Economics in One Lesson:

a... factor that spawns new economic fallacies every day... is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.

Let's consider an example. It has been argued that protectionism may be warranted on the part of other countries in order to protect their citizens from the prying eyes of PRISM. Quoting:

Suppose I am an Icelander. Does my right as an individual to purchase services from top companies like American ISPs trump my countries' [sic] interest in having ISPs operating outside the control and legal reach of American secret courts and NSA wiretaps?

What measures can a small European government like Iceland's legitimately take in order to ensure it has its own ISPs, supposing that the pure market outcome deems them unprofitable or inferior to American ISPs?

In the first paragraph, the term "my countries' [sic] interest" is used. What does this term mean? A country is nothing more than a politically organized group of individuals living within some imaginary geographical boundary - key word individuals. Presuming that said country has a democratically elected government - as authoritarian varieties practice tyranny regardless - a portion of the people exist that voted against the current elected officials. So, it turns out that "my countries' [sic] interest" is actually the current government's interest.

Thus, the first paragraph could rightfully be translated as:

Should a group of people elected by a majority of Icelanders be able to impose their political and economic will on a sizable minority of Icelanders who voted against the current government?

This is why Thomas Jefferson reportedly said:

"A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine."

To move on to the policy matter, let's address the question posed in the second paragraph. It essentially asks, "What measures can be taken by the government to ensure PRISM cannot be used against Icelanders?" I think you will find that the "measures" required to achieve this goal through government policy are quite tyrannical.

The first measure that may be taken could possibly be subsidizing domestic ISPs. The subsidization must be paid for by the people through taxation. However, there is no guarantee that the people will use these subsidized services. So, the people would be paying for near complete waste. Further, subsidization encourages inefficiency and dependence on the part of those receiving assistance. Icelanders would likely find themselves saddled in perpetuity with inferior services at a high price while they would still probably use more efficient competitors. This solution would not work. So, we must consider another option.

Since subsidization would almost certainly fail, in order to achieve their goal, the government would have to employ more draconian measures. To completely "protect" the people from PRISM, the Icelandic government would have to restrict internet users from accessing sites that are known to be compromised. This would place the government on a very slippery slope, as the government would then be able to argue for further censorship of the internet in the name of protecting the people. Eventually, there would be a PRISM program "under every bed."

Censoring the internet still wouldn't solve the problem, however. Even if users aren't accessing compromised sites, their packets may still pass through affected servers. So, this sacrifice of liberty for safety would be all for nil.

One measure the government could take to mitigate the problem would be to inform the people of how they are being spied upon and recommend alternatives without resorting to protectionist policies. For instance, the government could recommend that the people use StartPage.com or IxQuick.com rather than Google.

I would also like to take this opportunity to address another argument posed in the article that I referenced. Quoting:

...if country A has certain standards it applies in the law in regard to pollution, waste disposal, or labor conditions, then isn't it appropriate to limit free trade to those countries and companies which also adhere to the same standards of behavior? Those who operate outside said standards can obviously make the same product at a lower cost, all else being equal, and so profit at the expense of those others who adhere to the common standards.

History has shown that as countries develop, the standards mentioned in this paragraph also improve. Contrary to popular dogma, outrage by the people reduces the prevalence of pollution while governments tend to cover it up. The recent, massive spew of oil into the Gulf of Mexico is a good example. There were a few proverbial slaps on the wrist, but the perpetrators never truly paid for the true damages that occurred and will continue to be realized. If the government thought that the people would be complacent about it, they would allow toxic waste to be dumped in your backyard. Mitigation of pollution comes with economic development.

Improvement of working conditions also comes with economic development. For instance, children in other countries work because, in many places, the family could not survive otherwise. As the economy has declined here in the US, many more households require two incomes to sustain the quality of life that once was possible with one income. How would the standard of living change if the US passed "women labor laws"? Of course this is silly, but the already poor standard of living would decrease even more with the passage of child labor laws in severely underdeveloped countries.

Considering these things, do you suppose limiting trade with underdeveloped countries would hasten or prolong pollution and relatively poor working conditions? Answer: Protectionism fails on this account as well.

In conclusion, there are always fallacies that underlie the arguments for protectionism which one can discover by considering the entire picture rather than maintaining a laser beam focus on short-term goals. After all, getting rid of poverty altogether by handing out printed money to everyone sounds good on the surface, but libertarians are all to aware of the consequences associated with that measure. Protectionism will always fail to meet its intended mark.



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Bilateral trade agreements

Bilateral trade agreements with every country is the answer. The goal is an equal balance of payments, as an imbalance leads to a destruction of industry. Protecting the entire group of Americans and Protecting America's Jobs is Job #1.

o snaps michaelwiseguy comes

o snaps michaelwiseguy comes out of left field with a third position on trade, bound to shake things up. ever since i heard u on treubig show i always respect your formidable store of knowledge even if we disagree.

A nation that failed due to

A nation that failed due to economic self destruction and lack of math skills is not desirable. Even Ron Paul advocates bilateral trade agreements only.

Quoting Ron Paul:

We don’t need government agreements to have free trade. We merely need to lower or eliminate taxes on the American people, without regard to what other nations do. Remember, tariffs are simply taxes on consumers. Americans have always bought goods from abroad; the only question is how much our government taxes us for doing so. As economist Henry Hazlitt explained, tariffs simply protect politically-favored special interests at the expense of consumers, while lowering wages across the economy as a whole. Hazlitt, Ludwig von Mises, Friedrich Hayek, Murray Rothbard, and countless other economists have demolished every fallacy concerning tariffs, proving conclusively that unilateral elimination of tariffs benefits the American people. We don’t need CAFTA or any other international agreement to reap the economic benefits promised by CAFTA supporters, we only need to change our own harmful economic and tax policies. Let the rest of the world hurt their citizens with tariffs; if we simply reduce tariffs and taxes at home, we will attract capital and see our economy flourish.

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Cyril's picture

In conclusion, there are always fallacies that underlie

In conclusion, there are always fallacies that underlie the arguments for protectionism which one can discover by considering the entire picture rather than maintaining a laser beam focus on short-term goals. After all, getting rid of poverty altogether by handing out printed money to everyone sounds good on the surface, but libertarians are all to aware of the consequences associated with that measure. Protectionism will always fail to meet its intended mark.

Yes, indeed: "fallacies", they sure are.

A good portion of them humourously debunked, say, "a while ago":

Petition From the Manufacturers of Candles, Lanterns... and Generally of Everything Connected with Lighting

http://www.dailypaul.com/274359/frederic-bastiats-petition-f...

Too bad so few paid attention at the time, and up until today.

Yeah, today's "age of the iPhone" (just so to speak) or not.

Believe it or not, I question more and more seriously we human beings to be actually capable of maintaining our long term memory functioning on serious matters, with lessons the price of which has TOO OFTEN been paid WITH BLOOD. A HELL OF A LOT OF BLOOD, by now.

Seriously.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

i read hazlitt and other

i read hazlitt and other economists' and economic-popularizers' arguments against protectionism years ago, when i devoured most of the corpus of austrian economics, from menger to post hayekian austrians of the various splinter schools.

the basic comparative advantage argument in favor of division of labor, within and beyond borders, is of course valid, and is true as far as it goes.

however, economic efficiency does not inherently trump other considerations, value judgments or political ends. there is a political side to reality as well as an economic one, and you can't use economic arguments of efficiency to say x political goal is wrong. economics does not determine the validity of political ends or ultimate values, as a cursory reading of mises would tell you.

whether people in iceland, or panama, or argentina feel it is a good idea to use the power inherent in government to help foster independent domestic industries, as an alternative to market dominant firms that are headquarted in the US, is a political decision. it can't be refuted by arguments of economic efficiency.

arguments of economic efficiency will never convince japan that it does not need its own aircraft industry, or that it needs to import lots of cheap labor and lose its national identity. economic efficiency is not inherently a higher value than other final goals or ends.

there has never been anywhere 100% freedom of trade because, as good an argument it is economically, political considerations of a higher order often trump purely economic ones, no matter how true the economic axiom might be within its limited domain.

1. states won't trade with other states with which they're in direct physical war.
2. states won't permit trade with companies known to be foreign intelligence assets or known to finance or act as fronts or arms of terrorist or criminal organizations (at least, those on the other side).

those are two examples of restriction of trade that have existed everywhere, even in very liberal or libertarian countries.

the principle is easy to establish that there are some cases where trade should be restricted. the question is how to delimit those situations.

countries with immature industries that want to become industrial powers have always used protection in order to foster their young industries. this is true england, america, democratic germany and japan post ww2, and modern capitalist china.

mercantilist strategies of fostering domestic industry win the argument because they work. history trumps theory. the classical liberalism of america or england did not prevent protection of industry for national interests when they were becoming industrial powers. china is not stupid. they have access to all the economic literature that claims uinlimited free trade is always best. they simply disagree, and so become an economic powerhouse by using the actual proven methods.

it's easy to call it wrong from the comfort of an industrially advanced country that is the world's top power. from the other perspective, it is obvious that certain political policies promote the advancement of a nations domestic industries more than others.

none of this contradicts fundamental truths of economics about comparative advantage of division of labor. it is just confirmation of what we already knew. political ends, as final ends or subjective value judgements, can trump economic efficiency as a primary goal.

mises was clear that economics does not determine ends, but just analyzes the means of reaching ends. economics can never determine whether or not having x or y national industry is of higher value than having unlimited free trade. that is a moral or value judgement every person has to make for themselves.

the market guarantees no outcome or ends. the market can be perfectly happy with tyrannical governments or free peoples. with lackey, de-clawed journalism or aggressive investigative journalism. with private prisons and draconian laws or very few laws and prisons. with garbage culture or higher culture. with centralized control of industry and concentration of wealth, or their opposites.

the market is never 100% free, since it is the product of the legal arrangements in the political structure. to the extent it is free, its freedom does not guarantee any particular political or social outcome, positive or negative.

what the proper goals of society and politics are is an open debate, and ultimately up to individuals to decide. if liberty is a goal or value, it is up to individuals to determine how much liberty is desirable versus other competing factors, such as order and security. how high a place liberty holds has to be determined by each individual.

some people will come to the moral conclusion or the final value judgement that no use of any coercion by anyone, anywhere, for any purpose can ever be moral. i find that to be unrealistic and accordingly will never influence more than a tiny minority of unrealistic dreamers.

whatever our beliefs, we don't have the right of verbal imperialism -- to impose our narrow personal beliefs as the only definitions of broader political phenomenon, like 'liberalism' or 'libertarianism.' you don't get to say 'my beliefs are libertarian' and excommunicate others, for example mises, hayek, or friedman, who did not share this belief.

people like hayek and friedman and mises were not anarchists. they accepted a social order based on the coercive power of law. whatever arguments they made for free trade were practical and utilitarian. if they had moral beliefs, they were outside of their economic claims.

my post merely raised particular situations in which, on principle, the favoring of some industries key to a nations political independence might be in the interests of its citizens. nations exist, national identity exists. as long as this state of things persists, nations will often not have regard for the interests of other nations' citizens, and so people will continue to use states and government to protect their collective interests against other similarly organized gangs. such is life...

your utopian moral notion that nations should not exist on moral grounds, is a valid opinion. but it does not impact the practical reality of the moment. if you ever achieve a world that actually reflects your moral demands of humanity, then the world will be able to abandon all use of physical force under any circumstances. law will be unnecessary, everyone will be in inherently good and altruistic.

while the real world persists, realistic people will have varied and nuanced positions on issues like national borders, immigration, trade, military policy, the value of social welfare programs, etc.

I only used arguments of economic efficiency

to refute your statement that countries should not trade with underdeveloped countries which don't have equivalent environmental regulations or working conditions.

The quote from Hazlitt was used to hint at more broad fallacies of the same sort as those of the economic kind. That's why I subsequently went on to demonstrate how PRISM is not a good argument for protectionism - which seemed to be your motive for your post titled, "Is PRISM an argument for Protectionism?" In that part - the meat of my post - I used no arguments based on economics.

You wasted much of your long-winded reply bemoaning arguments based on economic efficiency as to avoid confronting that your (in your own words) "Concrete Example" was riddled with shortsightedness.

Further, arguments of economic efficiency are much more broadly valid that arguments for protectionism. You gave two very very narrow examples. One was that nations at war don't trade with each other. Even in that case, war is the one of the most aggressive types of protectionism - especially offensive war. Thus, economics can be used to argue against war as well - ie the broken window fallacy. The second example you gave is conditional and not absolutely true. States may or may not trade with such organizations - even perhaps due to economic efficiency. This realization narrows your argument even further.

As well, your examples do not necessarily hold when contrasted with history. From Rothbard's Anatomy of the State:

Parts of international law were originally purely private, growing out of the need of merchants and traders everywhere to protect their property and adjudicate disputes. Examples are admiralty law and the law merchant. But even the governmental rules emerged voluntarily and were not imposed by any international super-State. The object of the “laws of war” was to limit inter-State destruction to the State apparatus itself, thereby preserving the innocent “civilian” public from the slaughter and devastation of war. The object of the development of neutrals’ rights was to preserve private civilian international commerce, even with “enemy” countries, from seizure by one of the warring parties.

[emphasis added]

Moving on. From your response:

countries with immature industries that want to become industrial powers have always used protection in order to foster their young industries. this is true england, america, democratic germany and japan post ww2, and modern capitalist china.

Protectionism in the US was began by Abraham Lincoln. Protectionist tariffs to protect northern manufacturers from cheaper European goods spurred the Civil War. It worked out really well - only ~600,000 Americans died. Your words, "history trumps theory."

Another statement of yours:

economics can never determine whether or not having x or y national industry is of higher value than having unlimited free trade. that is a moral or value judgement every person has to make for themselves.

[emphasis added]

Finally, you agree with me. How can "every person" make that judgement for themselves without acting through the market. As I have pointed out before, even democratically elected governments don't represent everyone - only the people that voted for them. Thus, the government acting is not equivalent to "every person" making the judgement for themselves.

Addressing the blather that follows, I agree that the market cannot be anthropomorphized. The market has no feelings. However, the market still punishes poor economic decisions. Hence the collapse of the USSR or the housing bubble collapse of 2008 or the Roman monetary debacle perpetrated by Diocletian or ... It just happens to turn out that socialism (and other types of governments based on socialistic policies) do get punished by the market eventually.

we don't have the right of verbal imperialism

I'm checking my list of inalienable rights... just a minute... just a minute... Yep! There it is the freedom of speech - to say whatever I please.

your utopian moral notion that nations should not exist on moral grounds, is a valid opinion. but it does not impact the practical reality of the moment. if you ever achieve a world that actually reflects your moral demands of humanity, then the world will be able to abandon all use of physical force under any circumstances. law will be unnecessary, everyone will be in inherently good and altruistic.

My opinion is certainly impacting the practical reality of the moment under the condition that it has influence. Assuming such influence, those people that have their minds changed will put us that much closer to actually reducing the size of government. If slavery still existed (in the traditional sense), I would be for abrupt, absolute abolition. However, some people of that time thought that abolition should have been gradual. If advocating absolute abolition of the government results in some amount of government rollback, I would be tickled pink.

Further, I do not believe in altruism. True altruism is impossible - that is, to put every other human above oneself. Everyone acts for personal satisfaction. Good parents support their children because it gives them personal satisfaction to see them do good. If the parents gained no satisfaction when the kids did good, they would care less.

The reason I support anarchism is not because I think man is perfectible. I support it because I realize that man is not perfectible. To the contrary, man is corruptible and should never be trusted with a monopoly on force over an entire people.

while the real world persists, realistic people will have varied and nuanced positions on issues like national borders, immigration, trade, military policy, the value of social welfare programs, etc.

I have opinions on all those things as well. You are being unrealistic to think otherwise.

protectionism in the US began

protectionism in the US began with lincoln?

Tariffs were the largest (approaching 95% at times) source of federal revenue until the Federal income tax began after 1913. For well over a century the federal government was largely financed by tariffs averaging about 20% on foreign imports. There are no tariffs for imports or shipments from other states. ...... The goal of using higher tariffs to promote industrialization was urged by the first Secretary of the Treasury, Alexander Hamilton, and after him the Whig Party. They generally failed because Jeffersonian and Jacksonian Democrats said the tariff should be only high enough to pay the government's bills. The Republicans, however, made high tariffs the centerpiece of their economic policy beginning in 1861, and as late as 1930. Since 1930 tariffs have not been a major political issue.

Tariffs were the main source of all Federal revenue from 1790 to 1914. At the end of the American Civil War in 1865 about 63% of Federal income was generated by the excise taxes, which exceeded the 25.4% generated by tariffs. In 1915 during World War I tariffs generated only 30.1% of revenues. Since 1935 tariff income has continued to be a declining percentage of Federal tax income.

Import tariffs...

were used to cover the cost of customs and the operation of the federal government. The tariffs were not intended for protectionist purposes. As well, the cost of government was very small in those days because the government stayed mostly true to its original mandate of existing to secure the rights of the inhabitants.

Here is a chart the plots the budget as a percentage of GDP as a function of time. I couldn't find one that went back pre-1900. But, as you can see, the government operated on less than 10% of GDP at the turn of the previous century.

By the way, why didn't you provide a link from where you copy and pasted your response from? How many other times have you copy and pasted a response without proper credit to the source?

Anyway, notice your sentence:

The Republicans, however, made high tariffs the centerpiece of their economic policy beginning in 1861.

Lincoln was the first third party president - a Republican. He was elected in 1860. Subsequently Republicans moved to use tariffs as protection for US industries - as indicated by your copy and paste.

Here is the link to credit your source:

https://en.wikipedia.org/wiki/Tariffs_in_United_States_history

i'm insulted by your

i'm insulted by your insinuation that i copy and paste others' work without crediting the source. i've been contributing original posts on DP for over a year, almost none of which even link to others work let alone cite it without credit. if you notice, mid post, there's a long elpisis ........ indicating a break in the quote. all of it is capitalized, unlike all of my posts within the comment section.... i did forget to add the wiki link, but i don't think that justifies implying i copy and paste form others and don't credit them. i take pride in all of my posts being original content and never just posting links and quotes like so much of the content, so that kind of insults me.

i don't like the personal tone this discussion has taken lately, and i shall bow out for now. paece and such.

I asked a question based upon an accurate observation...

I would have asked the same question of one of my students had I made the same type of observation.

Ya but its kind of a dirty

Ya but its kind of a dirty tactic to say "How often do you quote others without crediting them" and I just find it personally off putting. It is insulting to me because I don't post anything that's not my own thoughts and writing, and the only links I ever post is if I'm directly promoting another DP members work. All of my posts are original content.

I just prefer not to continue a discussion that's having that kind of tone, and which few if any people are actually reading.

You didn't provide a link...

while the comment represented the text as your own - since no credit was given. Based on that observation, the question was fair.

In reality, it seems rather clear to me that you are upset that your argument was mistaken and don't wish to comment any further on the actual topic because you realize you were wrong. That's not my problem, however. The text of our discussion speaks for itself. The result of the debate was fairly conclusive. You can see that just as well as I can.

nopes.the point at issue was

nopes.

the point at issue was whether protectionism in america began with lincoln. more on that below.

bear in mind, i have not advocated protectionism at all in this series of discussions. i merely raised the issue of the possibility that some unique areas of high political importance might have implications beyond economics, and so there are cases where the political interest of protecting a national industry outweighs the economic benefit that springs from specialization through broadening division of labor.

obviously, our military hardware companies for example, or the top 20 primary dealers (financial firms/fed members) can't be under the legal and surveillance apparatus of another country. it doesn't matter what our political goals are per se - as long as we have independent nations that can potentially act against each others' interest, no independent country will allow certain essential industries to disappear or fall under foreign control.

any country with pretensions of independence needs to have independent industries in media, telecommunications, military hardware, among others. the point is more easy to see from the point of view of a small country, where potentially all of the communications go over servers and networks subject to unlimited surveillance by a foreign power with potentially hostile aims. but no matter how the point is couched, it seems not to impact your thinking, because of the ideological blinders. that's okay, we can let that be.

but back to the facts at dispute in terms of the history of protectionism in the US, which you seem to believe began with lincoln and the republicans.

the following passages are from bruce bartlett, a beltway libertarian economist writing for Cato, in favor of free trade and in critique of p j buchanans 1998 book on trade (The Great Betrayal).

The First Wave of Protectionism

...in 1816 Congress adopted an explicitly protectionist tariff, with a 25 percent rate on most textiles and rates as high as 30 percent on various manufactured goods. In 1824, protection was extended to goods manufactured from wool, iron, hemp, lead, and glass. Tariff rates on other products were raised as well.

That first wave of protectionism peaked in 1828...rates rose to nearly 49 percent. As early as 1832 Congress began to scale back tariffs with further reductions enacted the following year. In 1842, tariffs were again raised; but by 1846 they were moving downward, and further lowered in 1857. Following the 1857 act, tariffs averaged 20 percent.5

Following the Civil War, some tariff liberalization occurred, mainly assuming the form of exempting items from duties...
http://www.cato.org/publications/commentary/truth-about-trad...

end quote

note that the article, whether well argued or not, is entirely opposed to any arguments in favor of any protection.

as a side note, the above information is a reminder of how unreliable a source wikipedia can be, despite its convenience. like yourself, the wiki author was unaware of the pre lincoln protectionist tariffs. mmaybe yall reads the same blogs.

but come now, lets shake hands and agree that between the two of us we outnumber our readers in these lengthy comment tunnels. if we dont call a quits at some point we can do this forever.

salve

Now, we've come full circle...

I enjoyed the article you cited.

Here's the content from the ellipsis in your second paragraph:

That first wave of protectionism peaked in 1828 with the so-called Tariff of Abominations.

Seems like the people "represented" by the democratically elected government weren't too fond of the protectionism.

Continuing on with the article you cited, some other notable passages are:

It is more accurate to say that the country grew in spite of import restrictions.

[...]

Economist Frank Taussig, in a thorough examination of those tariffs, found that they did nothing to promote domestic industry. “Little, if anything, was gained by the protection which the United States maintained” in the first part of the 19th century, he concluded. That finding considerably questioned the validity of the infant industry argument. “The intrinsic soundness of the argument for protection to young industries therefore may not be touched by the conclusions drawn from the history of its trial in the United States, which shows only that the intentional protection of the tariffs of 1816, 1824, and 1828 had little effect,” Taussig said.

Thus, the early experience of the United States confirms the weakness of the idea that protection can aid infant industries. In practice, so-called infant industries never grow competitive behind trade barriers, but, instead, remain perpetually underdeveloped, thus requiring protection to be extended indefinitely. As Gottfried von Haberler put it:

"Nearly every industrial tariff was first imposed as an infant-industry tariff under the promise that in a few years, when the industry had grown sufficiently to face foreign competition, it would be removed. But, in fact, this moment never arrives. The interested parties are never willing to have the duty removed. Thus temporary infant-industry duties are transformed into permanent duties to preserve the industries they protect."

So much for tariffs helping infant industries, huh?

Even though I was mistaken that Lincoln's protectionism was the first to grace the US (see how easy that was), my argument against protectionism has been confirmed and bolstered at every turn of this discussion. In order to support your argument, now, you would likely have to turn to some very statist sources rife with fallacy.

The hole has gotten rather deep. I'm not surprised that you wish to bail at this point. After all, admitting error often wounds one's pride. Personally, I am always open to admitting when I realize that I am wrong. It's a more honorable path, in my humble opinion.

However, I will shake your hand, as I understand your current dilemma.

hehe yes, it was a decent

hehe yes, it was a decent article though not perfect.

in any case, i never argued that protectionism is economically beneficial. my whole post was about how, on a political basis, nations might choose to take protective measures even if they conflict with economic efficiency.

maximum efficiency may well be realized with unlimited division of labor between all sentient creatures. that does not guarantee that

1) the interests of every nation, class or individual is automatically served by the removal of all trade and labor barriers.

the total output can be higher while nation A standard of living falls visa vi nation B, or the middle class income in nation A falls visa vi those in highly cognitive demanding fields in nation A or B.

the entire global market can become more productive of goods without everyone sharing in the benefits equally, or necessarily benefiting at all.

china has a goal of industrializing, so they've used the modern equivalent of the tariff by holding down the yuan. in floating FX (exchange rate), currency policy is equivalent of what tariffs were on fixed exchange rates. their trade surpluses and capital accumulation are a political goal, even if it doesn't maximize universal global efficiency, it serves their specific goal.

another example. low cognitive demand (blue collar work)in country A gets lower pay in a system in which it competes globally against impoverished near subsistence labor. universal global output goes up, yes, many products are cheaper, and those specializing in cognitively demanding work in country A might benefit much more due to their somewhat more insulated position in the new schematics.

the distribution of wealth can change drastically, with the upper quintile income/networth going up exponentially while the bottom three quintiles stagnate or fall in real terms, despite everyone being richer in the sense of more productive output, falling prices.

some might actually be hurt in by the effects of globalization.

the only thing free trade claims is that it maximizes universal global output of production. it says nothing about the distribution of benefits between nations, groups or classes. or most importantly, what their political consequences will be.

in the real world, the self interest of nations, groups, and classes, and individuals is what drive politics.

but even on a global universal level, positive outcomes in production don't necessarily lead to positive outcomes politically. economics is objective, you can measure output. political ends are subjective, they are the value judgments and decisions of individuals and populations collectively.

the distribution of political influence and the political arrangements deeply reflect the distribution of income and wealth. the security of income through labor conditions, the security to act and speak politically, sufficient leisure time to read and think.

vast differences between wealth and status (and power over politics) between classes can have major impact on the formation of political and cultural consensus and the continuance of liberties.

the liberties the middle class demanded during the past centuries were based on their economic influence. it rose to a point that allowed them to challenge their imposed political limitations.

libertarian political ends are not necessarily served by the outcome of globalization of labor and trade, even if they make economic sense. it could easily serve elitist or authoritarian political ends to have tremendous concentration of wealth.

2) economic efficiency of total output is not necessarily a higher value than political considerations, such as privacy (in the prism example), or national autonomy (China's mercantilist industrialization by suppressing the Yuan). politics trumps economics.

if you're been engaging in an economic argument you've been debating a straw man.

Not only is protectionism not economically beneficial...

it is economically harmful and therefore socially harmful as well.

my whole post was about how, on a political basis, nations might choose to take protective measures even if they conflict with economic efficiency.

They may take them. That's obvious. Nations have and continue to employ protectionism. It is pointless to point out that "nations might choose to take protective measures even if they conflict with economic efficiency" without making an argument for or against the potential effectiveness of such measures. Everyone knows nations practice protectionism. If that was your true intention - to point out an obvious fact - you could have simply written that one sentence.

maximum efficiency may well be realized with unlimited division of labor between all sentient creatures. that does not guarantee that

1) the interests of every nation, class or individual is automatically served by the removal of all trade and labor barriers.

Exactly. A free market guarantees no winners or losers. Equal opportunity does not guarantee equality of outcomes.

china has a goal of industrializing, so they've used the modern equivalent of the tariff by holding down the yuan. in floating FX (exchange rate), currency policy is equivalent of what tariffs were on fixed exchange rates. their trade surpluses and capital accumulation are a political goal, even if it doesn't maximize universal global efficiency, it serves their specific goal.

Qualify the statement, "it serves their specific goal [of industrializing]." It very well could be the case - and probably is - that China is benefiting from increased trade while protectionism is likely retarding their growth to some degree. With that realization, in order to validate your argument, you need to show a direct cause and effect relationship.

another example. low cognitive demand (blue collar work)in country A gets lower pay in a system in which it competes globally against impoverished near subsistence labor. universal global output goes up, yes, many products are cheaper, and those specializing in cognitively demanding work in country A might benefit much more due to their somewhat more insulated position in the new schematics.

In a free market, this is not a problem. Demand increases for more highly skilled labor. In addition, there would be a reallocation of unskilled labor to other labor intensive industries. Your argument is similar to the traditional argument against technological progress - that is, "machines take away jobs." In that case, we should get rid of heavy equipment and dig ditches with spoons. In reality - as in the above case - new demand is created for workers to build, service, and operate the heavy equipment - ie a re-allocation of labor. The argument you present has been shown to be fallacious many times over in the past.

the distribution of wealth can change drastically, with the upper quintile income/networth going up exponentially while the bottom three quintiles stagnate or fall in real terms, despite everyone being richer in the sense of more productive output, falling prices.

History shows that free markets foster an environment where middle classes burgeon. Modern banking cartels also act to concentrate the wealth towards the top. However, banking cartels cannot survive without an alliance with government. True free trade and the abolition of central banking would result in the creation of the largest middle class the world has ever seen.

some might actually be hurt in by the effects of globalization.

Inefficient producers.

in the real world, the self interest of nations, groups, and classes, and individuals is what drive politics.

More accurately: In the real world, central banking cartels and lobbyists are what drives politics.

There - all fixed.

the liberties the middle class demanded during the past centuries were based on their economic influence. it rose to a point that allowed them to challenge their imposed political limitations.

What about slave rebellions? What about the fall of the USSR? Did the USSR fall because the people there gained a sufficient amount of economic influence to challenge the "imposed political limitations"? Your statement is incorrect. As well, the middle class - here in the US - gained more economic viability because of the lack of "imposed political limitations" - not the other way around.

libertarian political ends are not necessarily served by the outcome of globalization of labor and trade, even if they make economic sense. it could easily serve elitist or authoritarian political ends to have tremendous concentration of wealth.

...only if central banking schemes are allowed to continue.

2) economic efficiency of total output is not necessarily a higher value than political considerations, such as privacy (in the prism example), or national autonomy (China's mercantilist industrialization by suppressing the Yuan). politics trumps economics.

I've already demonstrated that your "concrete" "prism example" is glowing with shortsightedness. In addition, you have not shown that China's policy of mercantilism actually benefits them. Like I said, the policy likely retards their potential rate of growth.

As for "politics trumps economics," it is bogus. The crash of 2008, the fall of the USSR, the monetary policy of Diocletian, the upcoming economic collapse, ...

The list can go on and on. Economics is more powerful than governments - and, accordingly, politics.

you make very good points.

you make very good points.

the theory of the market is extremely smooth. if everyone could indeed be convinced that the long term interests of all are best served by no intervention whatsoever in the market, then the more narrow interests of individuals, classes and nations would find no outlet in political demands.

but nothing is so smooth in reality. human nature is such that people are not interested so much in what benefits everyone in the very long run, they are interested in what benefits themselves and their group in the short and medium term.

so the state, the political machine, will likely always be used by those with access to the means of influencing its direction.

if we accept that the state will always exist, in the sense of an apparatus of legal coercion, then we have to accept that different members of the community will try to use their power to influence the state.

businesses will do so through lobbying and manipulating public opinion.

the security/shadow state/intel apparatus will act in alliance with the rest of the financial and MIC to influence the direction of the state, using all the dirty tactics and psychological manipulation they are experts in.

working people who feel economically insecure will try to use their numbers to influence public policy for a social safety net.

the poor and inept, elderly and handicapped will want a provision of at least subsistence income so they do not starve.

parents will want provision of public education for their children and social security for their parents.

the existence of government and especially of government by the voters and elected officials implies that people will try to use the state to secure their interests at the expense of other.

i don't think argument or education will be able to change human nature sufficiently to make people only support whats best for everyone in the long term.

so then if people will inevitably act collectively to advance group interests, the next best thing is to try to have a robust middle class of individuals who see their interest in the free exercise of commercial peaceful activity, and care about their basic civil liberties.

and perhaps find some ways to roll back the influence of voters, parties, lobbyists -- roll back the democratic totalitarian state.

how to achieve these objectives realistically is the real problem. and we surely are not making much headway by convincing a small intellectual minority on the internet to believe in completely radical and utopian anarchism, which no one will buy.

May as well accept tyranny?

We can't do anything about it?

nawww, not me... maybe you. i

nawww, not me... maybe you. i think eventually when u realize u cant achieve ur utopia ull prob just cry and give up. i have the advantage of not being disappointed if reality doesn't bend to my wishes.

any liberty thats been achieved on this earth has been achieved by practical means and hard headed realists. if dreamers had any role it was in providing ready made rhetoric to grease the wheels of violent revolutions. the revolutions themselves were made possible by changes in economic and technological conditions that shifted balances of power amongst individuals and groups in society. whether they used violence or not was merely incidental.

that's why the distribution of power is what interests me, not false abstract premises based on wishes hatched in my own head.

whether you listen to all the great world religions, or the modern psychology developed from the evolutionary study of human beings, both point to a human nature that is not in accord with socialistic or anarchistic utopian schemes.

Now you have resorted to another MSM style tactic

birther, truther, utopian dreamer, conspiracy theorist, etc...

Thus far, I have dispelled everyone of your arguments. Maybe it is you that is a utopian dreamer.

By the way, it is you that has resorted to ignoring my arguments in favor of your current dribble. Maybe you are the type that cries and gives up. It's certainly not my cup of tea.

hey lets see how small we can

hey lets see how small we can make the box get. now you go.

You say anarchists can have no influence?

How much influence has Rothbard had on the libertarian movement?

tag

tag

Why are you ignoring this post BILL3?

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needy, are we? i was

needy, are we?

i was composing my above comment. (also, i work during the day)

however, i don't want to do this all night, my dear.

i liked your post. the thing i liked most about it, is that it began to make utilitarian or practical arguments on why this or that hypothetical policy would not achieve its goals.

although my post was not really arguing for a specific policy, and so my hypotheticals were merely to establish principles, it was good to see you move away from making moral demands and instead focusing on practical concerns.

it was misplaced as a response to my post, but it was progress of a sort.

Countries

That develop fastest utilize slave labor or the next closest thing.

Just the way it was and is. In this way protectionism helps in a way because it denies slave made goods a market.

Now if someone wants to go to a slave manufacturing nation and buy products there and bring them back they do so at their own peril.

No doubt protectionism helps monopolies domestically on the flip side. Because those monopolies originally started out as starvation wages entities themselves.

The human animal is very fickle so I do not foresee any changes in the near future regarding such attitudes and ideas.

donvino

You'll have to provide a concrete example

as I cannot find any.

It would stand to reason that countries that did not use slavery would be the fastest to develop - as the demand for capital goods would foster an environment that would lead to much faster improvement of productivity while the availability of slave labor would reduce the demand for capital goods.

Tractors are much more efficient (and less costly) than slaves, but would tractors be as prevalent if slavery were never abolished?

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