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View Full Version : Free market or protectionist?



Skandi
02-04-2009, 01:17 AM
http://news.bbc.co.uk/1/hi/uk/7862255.stm
http://news.bbc.co.uk/1/hi/uk_politics/7863879.stm

Looking at the various sides in the oil strikes, it seems me that there are two dominate positions. Those who oppose the European market and the free market policy (allowing an Italian company to take on the contract) and those calling for a protectionist policy in safe guarding 'British jobs for British people'.

Am I right?

The views of the government seem inconsistent. Brown has already stated his support for keeping international trade flowing (at Davos for instance) and but there are rumours that the UK government maybe trying to challenge the EU laws on freedom of movement for labour etc. His statement 'British jobs for British people' seems like a popular rhetorical flourish, with protectionist overtones, that has come back to haunt the PM.

So is he thinking along the right lines or are we all still screwed?

Which position would you take?

Edit; couldn't think where this would belong please move it if you think it goes somewhere else!

Loki
02-04-2009, 02:02 AM
Edit; couldn't think where this would belong please move it if you think it goes somewhere else!

Business & Finance for economic matters I think. :) Come to think of it our forum categories need revision.

Good topic Thrymheim, worthy of discussion. I'm braindead @ 3am so I'll leave it to others to respond.

Psychonaut
02-04-2009, 02:16 AM
My preference for economic protectionism was actually the one issue that pushed me from the Libertarian party to the Constitution party.

Ĉmeric
02-04-2009, 02:35 AM
I'm in favor of free markets but within national borders. The globalism & free trade that now passes for the "free market" is a disaster. But there are limits to protectionism. It is one thing to protect workers & companies from competition in countries that allow unsafe working conditions, slave labor wages & dumping. The type of free trade envison by Adam Smith in "The Wealth of Nations" was that individual nations would pursue & excel in goods they were best suited for. The current system made possible by modern transportation systems & multinational corporations means that it is now a race for the cheapest labor.

Take the trade situation between China & America. Essentially manufacturing in the US has been outsourced to China. What we have is not really trade because the US is sending very little to China in exchange for Chinese goods. What is actually going on is that Americans are exchanging their capital for Chinese goods. This is a situation that cannot go on forever.

Protecting American workers from German automakers, who make roughly the same wages & may have better benefits, makes no sense. Japanese automakers are a different story. In spite of the fact that Volkswagen, BMW & Mercedes Benz have all been in the US longer then the Japanese automakers & they never did the kind of damage to the US auto industry that the Japanese did. Some of the damage done to Detroit was self-inflected by the Big Three or the unions & some was done by US Government regulations. But the Japanese generally have a policy of not importing unless absolutely necessary & of buying Japanese. For example the Japanese will import logs but not milled lumber. They will import animal hides but not leather. Iron ore but not steel. And on & on. Regardless of official trade policies, Japan Inc. practices protectionism. And we can expect more of the same from China Ltd. This was not the kind of situation envision by Adam Smith. The world has changed over the last 200-years & we must change our concept of free trade to include a vision of fair trade.

SwordoftheVistula
02-04-2009, 05:22 AM
I'm for the free movement of goods, but not the free movement of labor. The problem with moving people across national borders is that they settle in and eventually displace the native people. Even if they are kept under strict control, such as black farm laborers in southern Africa and the southeastern US, eventually they break free of this and wreak havoc. Even movements across national borders aren't a problem if the peoples are similar, for example from Latvia to the US, US to Australia, etc.

I wouldn't mind trade restrictions designed to counteract other countries trade restrictions (such as a tariff that matches a subsidy another country grants) as much as I do ones designed to prop up underperforming domestic industries (example: strict US import restrictions on sugar)

chap
02-05-2009, 08:26 AM
Trade restrictions in the long run will make us all poorer.

We are all typing these posts on a European-centric forum, on machines designed and manufactured by East Asians. IMHO were we forced to buy and use European-made PCs & laptops, we would be less satisfied by their price, quality and performance.

Skandi
02-05-2009, 05:00 PM
I suspect that the performance would be the same and I don't see that east asian quality is any better either but I do agree that the price would be astronomical.

stormlord
02-06-2009, 11:12 PM
Free trade - as long as it really is fair trade, not one sided we do fair trade while other countries don't. The UK specifically is very fair with regards to allowing other countries' companies to buy our companies, but often they don't reciprocate. P & O was bought buy the Dubai government, Corus (British Steel) was taken over by an Indian company a tenth of its size, backed by nationalistic Indian finance, despite the fact that anti-foreigner laws in India would make it impossible for Corus to buy an Indian company. Chinese sovereign wealth funds are picking British companies off daily, yet British companies can't own more than 49% of any Chinese one....

The point is free trade is not so fun when you're the only country playing fair.

Maelstrom
02-07-2009, 12:23 AM
Trade restrictions in the long run will make us all poorer.

We are all typing these posts on a European-centric forum, on machines designed and manufactured by East Asians. IMHO were we forced to buy and use European-made PCs & laptops, we would be less satisfied by their price, quality and performance.


I suspect that the performance would be the same and I don't see that east asian quality is any better either but I do agree that the price would be astronomical.

This might be overly simple, I might look like a numbskull... But I'll just put it out there anyway:

If every country specialises in a certain industry, every country is needed by every other to continue, right? They're all vital ingredients for that big old cake we call life. As soon as you have a double-up of 'ingredients', they'll compete against eachother fanatically for their place in that cake.

If every country specialises in something that is essential to the continuation of modern society and the consumers, and no other country offers an alternative - theoretically that country will not be attacked. They have a monopoly and a monopoly on goods is a monopoly on diplomacy.

I do not understand why we must source things from elsewhere when there are unemployed people in our own countries that would be perfectly capable of overseeing/partaking in the manufacturing of these items. eg Electronics, vehicles, weapons etc. To me it is simply mind boggling, especially if we have the resources in our own land for the fabrication of the said goods. Heck, just look at the state of Africa.... I often wonder how we are any different in that regard.

In my opinion a protectionist policy protects the freedom of individuals. If you want another option, sourced from elsewhere, expect to pay an astronomical price due to tariffs.

Well before my time, I know for a fact that there were fewer options available to the public as far as goods are concerned. Were people upset? No. They bought something if they needed it, because of a practical value. It didn't need to come in 1,000 different sizes and shades of grey.

In essence I think we need less consumer options. Capitalist propaganda continually bombards us, the so called consumers. We a lead to believe that we need one product as opposed to another for no particular reason other than a brand name, for example.

Bearing this in mind, I cannot help but feel that one cannot miss having the option of a certain product, if no option has ever existed. :wink

Ĉmeric
02-07-2009, 12:46 AM
I suspect that the performance would be the same and I don't see that east asian quality is any better either but I do agree that the price would be astronomical.

Cheaper prices for goods is the main advantage for Asian manufacturers. But.... in the early 80s when I made my first trip to Japan I thought I would get a good deal on some Japanese electronics. Know what? Those video cams & VHS players/recorders cost more in Japan then in America. And that doesn't even take into account the cost of shipping the electronic goods to the US. Japan Inc, by acting as a cartel, kept out foreign competition by reserving the home market for themselves & dumping their products overseas for less then they cost at home. If American companies had behaved that way they would have been breaking the law. Free trade requires reprocity by all parties. The Asians do not practice free trade, they want our capital they do not care to do business with us unless they absolutely want to. The people who negotiate the US trade deals are either idiots who think the Asians will fellow the benevolent example we set in regards to trade or more likely they are corrupt & are accepting bribes from foreign governments & corporations.

As for foreign trade, we shouldn't assume that Asians will respond the same as Europeans (& transplanted Europeans) to the concept of free trade. There is a different mindset, culture & hundreds of years of history. They see it as an opportunity to enrich themselves at the expense of the West, especially America. The Adam Smith idea of free trade would probalby work best if practiced between the Anglo-Saxon coutries & maybe a few others with similar experince such as the Netherlands.

SwordoftheVistula
02-07-2009, 08:55 AM
If American companies had behaved that way they would have been breaking the law.

And things would also cost more here. This policy doesn't seem to have worked out too well for Japan, as their economy has been stagnant for the past couple decades.

Maelstrom
02-07-2009, 11:19 AM
And things would also cost more here. This policy doesn't seem to have worked out too well for Japan, as their economy has been stagnant for the past couple decades.

Stagnant? I have always been under the impression that Japan was/is a great economic power that has only been going from strength to strength. :confused:

Sources would be very much appreciated :)

Ĉmeric
02-07-2009, 12:59 PM
Japan is a great export economy. Their domestic economy is not doing so hot, much of which has to do with protectionism. Considering their GDP & PCI, their standard of living is not that great. It is a very expensive place to live. All of those trade surpluses caused an asset bubble in the late 80s leading to what is called the "Lost Decade" (http://en.wikipedia.org/wiki/Japanese_asset_price_bubble), when asset prices & the domestic economy in Japan went into a slump. Though it is called the lost decade, it actually started around 1990 & Japan has never really come out of it.

The export driven economies of Asia are currently having a harder time at the moment with their econmies contracting at a much higher rate then the US, the result of their dependence on exports to the US.

stormlord
02-07-2009, 03:08 PM
Stagnant? I have always been under the impression that Japan was/is a great economic power that has only been going from strength to strength. :confused:

Sources would be very much appreciated :)

You want sources for the fact that Japan has a stagnant economy? Umm; every newspaper and financial journal for the last two decades. It is, and has been for literally twenty years, the textbook example of economic stagnation.

That's like asking to see sources when someone says that Germany's been reunified.:p

Skandi
02-07-2009, 03:43 PM
http://photos1.blogger.com/blogger/1724/1843/1600/japangrowth.jpg

If you look at this graph you can see that the economy there has been growing for the past few years at a comparable rate to ours, but you can also see that it wasn't very long ago that they had negative growth in the "lost decade" personally I see their growth pattern as much more sustainable than ours, as you can't keep expanding all the time.