Behold the horrors of a protectionist economy

[Jacques de Imbelloni]

http://www.wsj.com/articles/how-lati...ism-1480089781

How Latin America Pays the Price of Protectionism(ACCORDING TO THE WALL STREET JOURNAL).

As U.S. President-elect Donald Trump contemplates tariffs and other limits on trade, he might consider the results of such protectionist measures in two economies on the other end of the hemisphere, in Argentina and Brazil.

For decades, South America’s two largest economies have tried to shield their workers from global trade, largely through high tariffs and regulations that promote domestic production over imports. The World Bank ranks Argentina and Brazil among the world’s most closed big economies.

In Brazil, locally made products are enshrined in the constitution. Gadget-loving Argentines often use the black market or go to Miami to buy iPhones, which were barred for years because Apple wouldn’t produce them in Argentina.

These protectionist policies have created tens of thousands of well-paid factory jobs and may have helped avoid factory layoffs like those that rattled Midwestern U.S. states like Michigan. But they have come at a huge cost to consumers, who now pay higher prices, and to taxpayers, who underwrite the subsidies. Taken together, these measures essentially transfer wealth from society at large to a smaller group of workers.

..
To help it thrive, the Argentine government slapped a tariff of up to 35% on imported electronics.

Now, 14,000 workers in 55 factories in this grimy industrial town and the nearby tourist paradise of Ushuaia churn out products including phones, TVs and air conditioners. Most of the components are Asian-made, imported duty free and assembled by Argentine workers, with a few local components like Argentine-made screws thrown in. Chinese, Japanese and Korean executives have moved to Tierra del Fuego to oversee the production of everything from Samsung phones to Sony TVs, officials at several factories said.

But the combination of government regulations and market forces has meant some striking eccentricities. Argentina opted to build an industrial hub 1,800 miles from the country’s biggest consumer market, Buenos Aires.
....
Consider Brazil’s auto industry, until recently one of the world’s 10 largest. Shielded for decades by high tariffs, it has devolved into a peddler of rinky-dink hatchbacks with one-liter engines that barely sell outside of the Mercosur bloc. After nearly three years of deep recession, with few export markets to support the industry, output has fallen some 45%. And for Brazilian consumers, cars are far pricier: A new Volkswagen Gol Comfortline lists in Brazil at $15,231—nearly twice as much as in Mexico, which has low tariffs and an efficient car industry.

The effects of protectionism go beyond cars. After big offshore oil finds a decade ago, Brazil’s government set “Made in Brazil” mandates for drilling vessels, refineries and shipyards. That drove up costs and fostered corruption.

Major construction firms like Odebrecht and Andrade Gutierrez formed a cartel to drive up prices for the state-run oil company Petróleo Brasileiro SA, or Petrobras, according to convictions of executives and politicians in Brazil’s courts. Since 2014, Petrobras has taken some $37 billion in charges due to corruption, overpriced assets and falling oil prices.

Still, workers say the system in Argentina has created thousands of dignified, middle-class jobs. “I was able to buy a new car and build my own house thanks to this job,” said Darío López, 36, a quality-control supervisor at Mirgor, which makes air conditioners, stereos and GPS units for car makers including Toyota.

Rubén Cherñajovsky, president of Newsan, which operates six plants in Tierra del Fuego, says Argentine companies can’t compete with labor costs at Asian firms like Foxconn Technology Group, which makes the iPhone. “If you opened imports in the extreme, we’d have a country with 35% or 40% unemployment,” he said.

But Nicolas Dujovne, a former Argentine central bank director, noted that Argentina—a big, resource-rich country with a relatively well-educated workforce—still hasn’t become an industrial country. “The losers from populism can be found everywhere,” he said. “They are the millions of jobs and hundreds of thousands of companies that were not created because of very disorderly macroeconomic policies.”

[Poise n Pen]

Basically protectionism is a necessity to some extent, but it is a sliding scale. The true goal for any country should be to become fully independent from other countries as much as possible, and to have balanced trade. Tariffs are one tool in the chest box though they can definitely be taken too far.

The true cancer is globalism where an "american" company completely operates overseas, pays no taxes, imports foreigners for the few jobs it can't send overseas. That shit is truly cancer and that is what Trump seems to want to address. Those companies either need to come back or get the fuck out completely.

[Jacques de Imbelloni]

Basically protectionism is a necessity to some extent, but it is a sliding scale. The true goal for any country should be to become fully independent from other countries as much as possible, and to have balanced trade. Tariffs are one tool in the chest box though they can definitely be taken too far.

The true cancer is globalism where an "american" company completely operates overseas, pays no taxes, imports foreigners for the few jobs it can't send overseas. That shit is truly cancer and that is what Trump seems to want to address. Those companies either need to come back or get the fuck out completely.

When an state stop worrying about economic autarky, it's a symbol that it no longer cares about their people.
The plutocrats who rule interlational comerce are trying to convince us that not even Food sovereignty is a relevant necesity.