Protectionism ??
- Thread starter Humpy
- Start date
Yes it's a non-convex optimization problem and solution is somewhere in middle.
All market impact is not same.
When your trade is large do you not care about market impact? That is one kind of market impact.
Political impact is another kind. For Infosys, TCS, Carrier, Ford who have either stopped relocating factories or have decided to move jobs back to USA, political impact is market impact and just like a trader if they don't account for it, they know their losses will be bad. If hiring of vol trader has market impact and corporation didn't account for it, it's not good business.
And yes corporations did account for the market impact as you have already seen.
Whatever they are doing, it all boils down to trying to make more money. The moment policies will become so detrimental that they will have to operate at a loss, they will abandon these operations regardless of the social cost. At least that's what sane business would do. If you want to look at the result of extreme protectionism, look at the passenger cars manufactured in Russia or the agriculture in the US. Neither can remain competitive without government subsidies and you'd have to explain to me how is it a good thing for anyone aside from a small group of workers/farmers (and politicians that court their vote).
That's basically the Scandinavian model. They've got the highest standards of living but there's hindered opportunity to be exceptional like in America.
Potentially moving to a Cosmopolitanism system would be a probable direction.
https://en.wikipedia.org/wiki/Cosmopolitanism
Trump is a great businessman, but he's great not because he's smart. He's a great salesman, probably the best in history. If you think that he's intelligent than you probably an idiot, I am sorry to tell you that, but it's obvious.
You seem to be attempting to correlate globalization to decline in the wealth of the U.S. middle class. But this correlation is mainly a U.S. effect. Other countries that are also increasingly globalized have seen the wealth and size of their middle class grow tremendously or change little. It seems that while globalization and the decline of the U.S. middle class is correlated, these factors are not related as cause and effect. As a matter of fact, it would be easier to argue that globalization has made the decline of the U.S. middle class less severe than it otherwise would have been.It is in the interest of nations to adopt policies which are beneficial for them. This idea that there should be constant flow of wealth from West to poor countries, which is what globalization has essentially done, is not sustainable.
As far as capitalism goes, purest form of capitalism is actual a mafia and criminal organization. In those organization, you are not allowed to even have a life if you are not economically viable. So, unless you have succeeded in such organization don't preach capitalism for protectionism.
Sure closing the doors will increase the cost of goods and services within the country. e.g. currently I might be paying $10 for a cheap jeans, later I will have to pay $15 as there is no cheap imports anymore. But at least due to job protectionism, people will have $12 saved to think about $15 jeans.
This map comparing decline of middle class in USA vs where the globalization labor landed just shows how spurious benefits of long term labor globalization is. Middle class doesn't even have $10 to buy a jeans anymore.
