Exploring The Ideas Of Milton Friedman
- Thread starter benwm
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"all robust economies have come from protectionist policies"
I'm not sure where to start, but let's begin with the above statement.
I am also trading right now so apologies if my responses are kinda slow.. Not so great at trading and thinking at the same time...
But it seems a contradiction to say an economy is 'robust' if it needs to be protected? Surely when an economy is robust, by definition you would have some kind of comparative advantage, so there is no need to protect unless you get involved in some tit-for-tat protectionist game with the competition.
I do accept that you might need to protect an industry in its early stages, some form of government support might be necessary.
I'm not sure where to start, but let's begin with the above statement.
I am also trading right now so apologies if my responses are kinda slow.. Not so great at trading and thinking at the same time...
But it seems a contradiction to say an economy is 'robust' if it needs to be protected? Surely when an economy is robust, by definition you would have some kind of comparative advantage, so there is no need to protect unless you get involved in some tit-for-tat protectionist game with the competition.
I do accept that you might need to protect an industry in its early stages, some form of government support might be necessary.
Just another random observation..The example you gave of Africa as a free market...
hmmm - well, you've taken a pretty corrupt "free market" as your careful chosen example, I'm pretty sure it's not the best place for an entrepreneur without some government connections to get ahead, to say the least..
I don't think the Eurozone protectionist measures which you seem so fond of have helped Africa either..
As a simplistic but real example, when I visited South Africa a couple of years back I was surprised to find that South Africa produced fantastic olives. I never knew this because I was never able to purchase African olives in the UK. I would like to buy some, however the farmer told me that Greek olives were heavily protected due to the Eurozone common market rules and it effectively shut out African olive exports to the Eurozone.
So if I am denied a cheaper, better tasting African grown olive, and must purchase a Greek olive instead, I am worse off and the African farmer loses out. Lose-lose, except for the lazy Greek olive producer.
hmmm - well, you've taken a pretty corrupt "free market" as your careful chosen example, I'm pretty sure it's not the best place for an entrepreneur without some government connections to get ahead, to say the least..
I don't think the Eurozone protectionist measures which you seem so fond of have helped Africa either..
As a simplistic but real example, when I visited South Africa a couple of years back I was surprised to find that South Africa produced fantastic olives. I never knew this because I was never able to purchase African olives in the UK. I would like to buy some, however the farmer told me that Greek olives were heavily protected due to the Eurozone common market rules and it effectively shut out African olive exports to the Eurozone.
So if I am denied a cheaper, better tasting African grown olive, and must purchase a Greek olive instead, I am worse off and the African farmer loses out. Lose-lose, except for the lazy Greek olive producer.
looking back, maybe to describe you as "emotional" was wrong, I should give you the benefit of the doubt. You're on the left of the political spectrum it seems (that's ME extrapolating, i guess!), and this thread is NOT supposed to be about politics, even though with economics it seems hard to separate the two.
but let's try...I encourage all sides to contribute to this thread, Nazis and Fascists too...
Protectionism is of course a reality when you have separate nation states, but I think if you argue too strongly for protectionist measures, you have to willing to accept other countries doing the same to you.
When I hear Americans argue for more protection, I wonder what the response would be if the Saudi's cut the US out of its oil exports.
You can't really have it both ways.
but let's try...I encourage all sides to contribute to this thread, Nazis and Fascists too...
Protectionism is of course a reality when you have separate nation states, but I think if you argue too strongly for protectionist measures, you have to willing to accept other countries doing the same to you.
When I hear Americans argue for more protection, I wonder what the response would be if the Saudi's cut the US out of its oil exports.
You can't really have it both ways.
Quote from benwm:
"all robust economies have come from protectionist policies"
I'm not sure where to start, but let's begin with the above statement.
I am also trading right now so apologies if my responses are kinda slow.. Not so great at trading and thinking at the same time...
But it seems a contradiction to say an economy is 'robust' if it needs to be protected? Surely when an economy is robust, by definition you would have some kind of comparative advantage, so there is no need to protect unless you get involved in some tit-for-tat protectionist game with the competition.
I do accept that you might need to protect an industry in its early stages, some form of government support might be necessary.
It may seem like a contradiction, but the historical evidence can not be displaced by theories or opinions. Remember comparative advantage is based on one moment in time, who's to say that somebody else can't innovate or do it better if given a chance. Those who have that temporary advantage will sell at below cost to destroy competition and discourage capitol investment. Comparative advantage implies that the better and cheaper products will natural rise to the top. History has recorded through political power, underhanded dealings, and corporate warfare this is not true. concentration of capitol will work to destroy more efficient smaller capitol.
I used protectionists as a blanket term for the political economy of pre WWI Germany and U.S. While tariffs are a part of this the center of the idealog is that wealth comes from innovation which in turns come from education. Now days the majority of higher learning is in financial, legal and political subjects ( think ivy league) which does not produce wealth just teaches how to transfer it.
Big leaps in technology was made as the result of WWII. This is a good indication that enormous supported research is better than slimly supported private R&D. Don't confuse this for as a doctrine for communism or socialism, just recognize that innovation and technology is what makes are life better (wealth). Private capitol will only invest in R&D if it is profitable in the short run and the odds of the investment paying off is high.
Take the energy markets serous money needs to be poured in to find a solution. France and other nations poured billions into cold fusion this has very low odds of producing anything, but in the long run only one or two new things will provide us with energy in the future this is far to important to the future of civilization to capitol, that determines the projects by it's own gain.
and yes you are correct about protection only for developing ind. America had to trust bust big companies that grew up under protectionist policies. because their economic and political power was dominating the direction of the country
yes you are correct about the corruption. but this is a byproduct of deregulation it lets the opportunists run wild.This goes along with the notion classical economists that people will always maximize their utility. But instead of using this as an argument against deregulation they assume that this will benefit the rest of the nation.
during the Egypt uprising the U.S. threaten to pull it's grain shipments from Egypt. This is a common tactic of the US, countries would be better off developing their internal food supplies so the US(the biggest grain exporter) can't bully them into things that are against the counties best interests. Getting a 5% percent discount on grapes is a small short term gain compared to being dependent on other nations for food.Letting another nation have leverage on you is common in todays neo liberal world
Also why is the Greek lazy he produces the same olive as the African.
You also have to consider that the money spent on that Greek olive stays in your local economy and gets recycled in other transactions. If it goes to Africa you will probably never see it again. To assume that the short term gain you get from the olive will provide long term gain is the mistake the US is making with china.
Does the euro zone have a better standard of living then Africa? Do you know what the % of poverty in neo liberal countries is compared to more protectionist countries
This is most certainly true. I can see where you are coming from here. If we could invest the same amounts during peacetime, could we not get the same productivity gains and technological advances?
However, I think here we need to look at the key role that human nature plays in the efficacy of R&D expenditure. Put simply, perhaps it is the arrival of war that focuses the mind more than anything else, even more than the pursuit of profit.
Similarly, I would argue it was the 'desperation' to recover that lead to Japan and Germany's recovery after WW2 (with some Marshall aid thrown in of course). More open global markets compared to the protectionist years 1929-1939 helped both Germany and Japan.
But is it not the case that a wartime situation is the ONLY time when the government is forced to focuses its mind to the same extent as a private enterprise, since it is only then that it's very survival as an entity is at stake?
To put it simply, government R&D during times of stress (i.e.war) will always be way more productive than times of peace, because human nature is what it is.
haha - I thought Africa more closely resembled a corrupt, centrally planned economy, the best jobs are working for government because of all the foreign aid going to government, & you choose it as the example of a free market...this discussion could go on forever..!
cmon man - if you keep harping on about "Africa" I will have to start talking about North Korea or every single centrally planned European economy from 1945-1990.
that would probably be a waste of everyone's time
What they do both have in common is African produce is shut out of Europe because of European tariffs, and North Korea and Eastern Europe economies were intentionally cut off from other nations.
the single best thing we could do for African poverty is for the West to open up its markets to Africa...speaking from a UK perspective, if we could import African goods without having to pay 20% value added tax and import duties a whole raft of new industries would emerge...personally speaking, I am not seeing a great deal of benefits to the UK from cutting ourselves off from the rest of the world
I'm not sure what I've got myself into here
Perhaps time to throw in the towel...not because I think I'm being defeated in the debate...but because we're leaning a little off topic and I can see this is going to be a time consuming endeavour..
Where does it end, finding a common solution to the world's economic problems?!
Maybe I should explore Friedman's ideas in a quiet, dark place, all by myself
Perhaps time to throw in the towel...not because I think I'm being defeated in the debate...but because we're leaning a little off topic and I can see this is going to be a time consuming endeavour..
Where does it end, finding a common solution to the world's economic problems?!
Maybe I should explore Friedman's ideas in a quiet, dark place, all by myself
That doesn't include the direct and indirect costs of transport. The Greek farmer is going to bear his share of transport costs as they will fall under local taxation - the SA farmer will not be picking up his share of transport costs because (for example) oil spills are covered under "bailout"-like policies.
It's not a simple problem...