Is protectionism really all that bad???

population

I actually do not quite understand all the political hysteria about protectionism. For example Gordon Brown is constantly on about preventing the world from retreating into protectionism. And Biffo mentioned it in his speech while pushing for Lisbon.

Lets assume all the looney violent Nationalism does not accompany it like it did in the 30's, is it really as bad a development as they are saying???

It occurs to me that protectionism is only a bad thing if there is a level playing field in terms of wages conditions etc. ie ideally an Irish chap and Estonian chap get paid the same and are picked for the job based on their merits. But with the liberalisation of trade the last two decades with an ever larger EU, it just seems to me that all it has allowed is for large companies to have absolutely no boundaries in the search for cheaper and cheaper wages, leading to the tearing up of said playing field and creating a gross imbalance with the workers in both places being screwed.

Maybe this is a time to build up some cottage Irish industries y'know. I am not wholesale against international trade but surely given everything that has happened, to use an old footy chestnut that we should implement a policy of 'what we have we hold'??? I know we are holding a piece of siht right now, but I am talking hypothetically. If we built up some industry and some revenues and looked inward and focussed on getting Ireland right first.

I am no economist and no expert so I am looking for people to fill me in on what I am missing

astrofool

Because it's self defeating and inefficient in the long run, holds back innovation, and development in the industries being protected, and they end up costing ridiculous amounts to subsidise to keep them going.

anonymous_joe

It's horrendous! It's absolutely appallingly shockingly unwise.

deadhead13

If the US head down that road it will be "bad" for us.

Yes

Sand

When you restrict trade you prevent trade with people who are *good* at making a product efficiently so as to force your own people to buy a similar product from people who are *worse* at producing it. This usually ends up leading to retaliatory trade bans on your producers.

So your consumers end up worse off because they lose choice and are forced to buy ****ty substitues they wouldnt otherwise buy.

Your producers end up worse off because they lose export markets to foreign protectionism. They also end up wasting their time trying to efficiently build stuff that theyre just not good at instead of focusing on their strengths.

Taxpayer ends up worse off because they end up paying for an industry to exist and makework, rather than taxing a successful, self sufficient industry.

The industry workers probably think theyre doing well, but see consumers and taxpayer. They tend to be both. So even they do worse.

All in all, its just bad. Irish "cottage" industries are probably far less efficient than other foreign competitors, so a loss. If theyre not, then theyll thrive anyhow. We lost competiveness in this market around 2001, and the property bubble covered up the cracks for a while. Competitiveness is what we need, and how we will be well placed to thrive in the global recovery from the credit crisis.

nesf

Thread moved from Politics. You'll get better answers here.

Diarmuid

population wrote: »

I am no economist and no expert so I am looking for people to fill me in on what I am missing

Just look at all the stuff you have / use. computers, tv, cars, gadets, phones, most of your food, etc, now add 30% or more to the price of those things and what do you think?

Flamed Diving

astrofool wrote: »

Because it's self defeating and inefficient in the long run, holds back innovation, and development in the industries being protected, and they end up costing ridiculous amounts to subsidise to keep them going.

Tell that to South Korea.

Capt'n Midnight

we've been through enough trade wars at this stage haven't we

One form of protectionism we should look at is making sure that health and safety for foreign workers isn't compromised. if you've read Fast Food Nation you'll remember that US slaughter house workers had to do fewer hours with less throughput when preparing food for the EU market. All we need to do is extend that to all CE goods, you can't put that label on something unless the workers have the same health and safety rights as we have.

population

Sand wrote: »

When you restrict trade you prevent trade with people who are *good* at making a product efficiently so as to force your own people to buy a similar product from people who are *worse* at producing it. This usually ends up leading to retaliatory trade bans on your producers.

So your consumers end up worse off because they lose choice and are forced to buy ****ty substitues they wouldnt otherwise buy.

Your producers end up worse off because they lose export markets to foreign protectionism. They also end up wasting their time trying to efficiently build stuff that theyre just not good at instead of focusing on their strengths.

Taxpayer ends up worse off because they end up paying for an industry to exist and makework, rather than taxing a successful, self sufficient industry.


The industry workers probably think theyre doing well, but see consumers and taxpayer. They tend to be both. So even they do worse.

All in all, its just bad. Irish "cottage" industries are probably far less efficient than other foreign competitors, so a loss. If theyre not, then theyll thrive anyhow. We lost competiveness in this market around 2001, and the property bubble covered up the cracks for a while. Competitiveness is what we need, and how we will be well placed to thrive in the global recovery from the credit crisis.

Good post and I get what you are saying on a bunch of stuff but in terms of losing our competitiveness, the only thing that gets suggested to remedy that is an assault on wages. Doesnt this not just play further into the hands of corporations who already view wages as a hassle rather than a normal
facet of doing business???

mumhaabu

I firmly believe Ireland is economically destroyed. Today I was in the German city of Hannover at CeBIT the computer and technology exhibit. There was several thousand exhibits from all around the World and not one single Irish one that I saw, I was speaking to a German in the Intel stand and said how "are they made in Ireland?" oh no, Ireland only manufactures the older technology and spare parts.

For a country that prized itself as a knowledge economy, and a global leader of IT and Software it was shocking. We are a leader at nothing and have nothing to our name, except the general view of Alocholism and fighting. Our economy was false and based on selling houses not exporting. Until we build up manufacturing to the globalised world we are going nowhere. A service economy is not an economy, we need something that brings in money from outside Ireland and protectionism sure is hell isn't going to do that for us. A prober right wing government and education sector might eventually though.

Flamed Diving

mumhaabu wrote: »

I firmly believe Ireland is economically destroyed. Today I was in the German city of Hannover at CeBIT the computer and technology exhibit. There was several thousand exhibits from all around the World and not one single Irish one that I saw, I was speaking to a German in the Intel stand and said how "are they made in Ireland?" oh no, Ireland only manufactures the older technology and spare parts.

For a country that prized itself as a knowledge economy, and a global leader of IT and Software it was shocking. We are a leader at nothing and have nothing to our name, except the general view of Alocholism and fighting. Our economy was false and based on selling houses not exporting. Until we build up manufacturing to the globalised world we are going nowhere. A service economy is not an economy, we need something that brings in money from outside Ireland and protectionism sure is hell isn't going to do that for us. A prober right wing government and education sector might eventually though.

Except for the fact that exports grew by 14% per annum during the 1990's.

But sure never mind that.

astrofool

Flamed Diving wrote: »

Tell that to South Korea.

Tell what to South Korea? That having access to world markets has allowed the Korean electronics firms to rival Japan's, who were caught deadfoot? That if we had rampant protectionism, they would probably be a third world country?

ardmacha

Except for the fact that exports grew by 14% per annum during the 1990's.

A lot of the comment seems to ignore the fact that Ireland had a large real increase in living standards from 1994-2001 based on real increases in the economy. Since then we have had increases in living standards not warranted by increases in the real economy.

A prober right wing government and education sector might eventually though.

The education system remained willing to deliver, but the mammies and daddies of Ireland were encouraging their little Seans to get a "safe" job as a lawyer conveying houses or the like instead of wasting time on all that IT stuff that "disappeared" in 2000.

nesf

population wrote: »

Good post and I get what you are saying on a bunch of stuff but in terms of losing our competitiveness, the only thing that gets suggested to remedy that is an assault on wages.

I wouldn't agree with your language (i.e. "assault") but essentially the remedy is an assault on wages and prices as you would put it. You want to decrease nominal prices while attempting to keep living standards roughly at the same level. Lower wages mean that shops can charge lower prices and still keep the same profit percentages etc.

Flamed Diving

astrofool wrote: »

Tell what to South Korea? That having access to world markets has allowed the Korean electronics firms to rival Japan's, who were caught deadfoot? That if we had rampant protectionism, they would probably be a third world country?

The success of S.Korea's automotive industry would have been impossible had they allowed free and open access to their markets, for example. They used protectionism, where necessary, to foster these companies and then slowly allowed them to compete on the world market. Now they are capable of rivalling the biggest companies in the world. Protectionism isn't all bad, especially for developing nations (except when it comes to CAP...).

Capt'n Midnight

We are not big enough and isolated enough to replicate the Korean model. They have historical reasons to hate the Russians, Japanese and Chinese all have invaded their country in living memory. They were far poorer than we are now so they could be competitive, in a way that isn't open for us. We were protectionist before we joined the EU, cars used to be assembled here for tax reasons. We have to see ourselves as a low tax region of the EU.

Flamed Diving

Capt'n Midnight wrote: »

We are not big enough and isolated enough to replicate the Korean model. They have historical reasons to hate the Russians, Japanese and Chinese all have invaded their country in living memory. They were far poorer than we are now so they could be competitive, in a way that isn't open for us. We were protectionist before we joined the EU, cars used to be assembled here for tax reasons. We have to see ourselves as a low tax region of the EU.

I never once suggested we should attempt that.

population

nesf wrote: »

I wouldn't agree with your language (i.e. "assault") but essentially the remedy is an assault on wages and prices as you would put it. You want to decrease nominal prices while attempting to keep living standards roughly at the same level. Lower wages mean that shops can charge lower prices and still keep the same profit percentages etc.

What about mortgage repayments though?

I mean we are where we are in that respect with people borrowing enormous amounts etc. But if someones wages drops from say 600 to 400 net a week and they still have a 400k mortgage to service a few pence off a bar of chocolate is not going to make all the difference is it? I dont know if relativism will actually apply. I think people will lose their homes tbh.

However I suppose we are getting off the point. I am grateful for some of the points on protectionism because as I said I am no economist and any info is appreciated

nesf

population wrote: »

What about mortgage repayments though?

I mean we are where we are in that respect with people borrowing enormous amounts etc. But if someones wages drops from say 600 to 400 net a week and they still have a 400k mortgage to service a few pence off a bar of chocolate is not going to make all the difference is it? I dont know if relativism will actually apply. I think people will lose their homes tbh.

This is the biggest problem. Not everyone's debts will shrink if the cost of living shrinks. The State either needs to do a big debt forgiveness deal, change the law to make it less painful for people to default and/or people take it on the chin.

None are particularly nice or cheap options in both fiscal and social terms.

daveirl

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Capt'n Midnight

Flamed Diving wrote: »

I never once suggested we should attempt that.

Forget about cars.
I was pointing out that the last time we low labour costs and protectionism was before we joined the EU. And I think most people will agree that we did pretty well out of the EU. And you have to remember a lot of our health and safety and working time and enviromental laws come from the EU, smoking ban is about the only thing we are ahead of the curve on when it comes to health / civil liberties.

Flamed Diving

Capt'n Midnight wrote: »

Forget about cars.
I was pointing out that the last time we low labour costs and protectionism was before we joined the EU. And I think most people will agree that we did pretty well out of the EU. And you have to remember a lot of our health and safety and working time and enviromental laws come from the EU, smoking ban is about the only thing we are ahead of the curve on when it comes to health / civil liberties.

I never once suggested we should attempt that.

Boggle

Surely, while noone wants protectionism, why should companies be allowed take advantage of slave economies like china to the detriment of domestic employment?

The unions do have a point when they argue that we should not sacrifice working conditions just to compete with the likes of China so maybe, instead of protectionism, we should just define minimum working (maybe also environmentsal, etc) conditions and only allow trade with nations who sign up to those conditions.

Just a loose thought.

daveirl

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Boggle

What you mean?

Are you seriously telling me thats efficiency and not slave labour-like conditions which make China more cost effective than here??

daveirl

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nesf

Boggle wrote: »

What you mean?

Are you seriously telling me thats efficiency and not slave labour-like conditions which make China more cost effective than here??

If you take a look at China you'll see how free trade has pushed up earnings there. The middle class has grown from almost zero to a substantial part of the population and this is a greater impetus for change than any form of economic sanction.