Reply to: Protectionism - why not?

[The Lone Gunman]

I want to disagree that we should have kept manufacturing. Manufactured goods have to be competitive on a global market, therefore to the extent they use labour as an input you would be expecting British workers to compete with people who are willing to work for a pound a month. (Or something like that.)

On the other hand, cleaners, gardeners, child-minders, teachers, nurses, doctors, hairdressers, prostitutes etc. only have to compete with the price of labour in their own part of Britain, so can earn far more.

The answer is not to re-introduce manufacturing, but to reduce the barriers that prevent more people working in service industries.

None of the jobs you mention actualy create wealth, they are all services to persons with wealth.
The problem is that manufacturing has pretty much gone so there is no wealth generation there. The service sector has some wealth generation businesses but more and more of those are being offshored too.
There are very few industries these days that can not be done just as easily in India as here except those which are customer facing, but who will be the customer if the wealth generators are out of work?

[IR35 Avoider]

I want to disagree that we should have kept manufacturing. Manufactured goods have to be competitive on a global market, therefore to the extent they use labour as an input you would be expecting British workers to compete with people who are willing to work for a pound a month. (Or something like that.)

On the other hand, cleaners, gardeners, child-minders, teachers, nurses, doctors, hairdressers, prostitutes etc. only have to compete with the price of labour in their own part of Britain, so can earn far more.

The answer is not to re-introduce manufacturing, but to reduce the barriers that prevent more people working in service industries.

Ideally I would like to see targeted benefits and the tax personal allowance eliminated for almost everyone, and replaced with a tiny benefit that you get regardless of what you do with your life.

There would be no disincentive to work, because you don't lose any benefit by working.

This would also replace the incentive the current benefits system gives families to split up with an incentive for people to live together, as living together would make no difference to the benefits received but create huge savings in living costs.

[expat]

Anyone remember the Prisoner's Dilemma?

1. Nobody does protectionism: good for everybody.
2. We do protectionism but nobody else does: great for us, not as good as no. 1 for everybody else.
3. Everybody does protectionism: not as good as no. 1 for everybody. Way less good than no. 2 for us; better than no. 2 for the others.

So we'd like to do no.1 but only if everybody does. But we don't trust them so we go for no.2 instead. So does everybody else. Result: everybody gets no.3, the worst result.

[Gonzo]

How is handing China effective control of the US economy via huge debt a good thing for the US economy?

That is a slightly different issue. If the USA wants to borrow from the future to fund its current standard of living then that is their look-out.

There were plenty of farm-labouring jobs to go around in the UK before machines were introduced to make food production more efficient and cheaper - a lot of people did not like it at the time but there can't be many people in the UK now who would want to go back to that way of life.

I don't see globalisation as being any different from that.

[xoggoth]

I wouldn't say unqualified protectionism. It makes some sense to concentrate on our strengths and buy from abroad those goods/services they do best.

What we should be doing is having proper negotiated trade agreements on a country by country basis not global treaties. Unfortunately, globalism has become a religion and we go along with measures when there is no benefit to us. How is handing China effective control of the US economy via huge debt a good thing for the US economy? Developing/third world countries insist on their own controls to protect their citizens from exploitation, the global trade agreements are not reciprocal.

In the short term it may appear to benefit us to take advantage of cheap Labour in India or China say but unfortunately they are very bright. When we use their labour we are handing them the expertise to take our whole industries. We used Indians a lot in aircraft. I will give it twenty years max before they are rivalling the likes of Boeing or British Aerospace with their own factories.

[Bagpuss]

The factories and coal miners will get complacent and lazy (typical British working-class traits)

Whereas your productivity largely revolves around posting on CUK I fail to see how that is adding to the wealth of this country.

[Peoplesoft bloke]

Cobblers. Some might, but only a small minority. It has done an immense amount of damage, especially now at a time of recession. In any case many workers are still paid less than the minimum wage by virtue of being 'self-employed'. Thus, these people, mainly immigrant workers, have been putting indigenous folk out of work. It's been a disaster !!

Where is the official Tory policy to repeal it then you thick Tory automaton?

"Mr Letwin replied that he had been responsible for changing Conservative policy on the minimum wage “because we were wrong about it. It turned out not to price people out of jobs the way we thought it would. The reason we were sceptical about it is because we thought it would price people out of jobs"

[BrilloPad]

As small amount of protectionism is not only a good thing but also a sensible one

Its okay if just us doing it and everyone else has free trade.....

[MrMark]

Time to defect to the pub thread methinks

[PM-Junkie]

And those that do buy then, will in turn put up their prices.

Now if this is done for a few items, the economy can absorb it. Do it across the economy and the result is rampant inflation and everyone is worse off.

Oh bugger - it looks like cyberdork agrees with me...therefore I am clearly completely wrong.

My apologies MrMark, I am clearly wrong. Now I'll just have to figure out how

[centurian]

No it doesn't !! It puts up the price of prawns in shops to a level where people will buy them far less, thus safeguarding few jobs.

And those that do buy then, will in turn put up their prices.

Now if this is done for a few items, the economy can absorb it. Do it across the economy and the result is rampant inflation and everyone is worse off.

[Cyberman]

Import duties would have prevented this. You see - Protecting our industry keeps prawn processors here in work AND protects the planet!

No it doesn't !! It puts up the price of prawns in shops to a level where people will buy them far less, thus safeguarding few jobs.

[Cyberman]

Even the Tories advocate the minimum wage now after having opposed it - like the hypocrites they are. That has knack all to do with my point which was that it's a mad system which makes it "cheaper" to send stuff halfway round the world.

Cobblers. Some might, but only a small minority. It has done an immense amount of damage, especially now at a time of recession. In any case many workers are still paid less than the minimum wage by virtue of being 'self-employed'. Thus, these people, mainly immigrant workers, have been putting indigenous folk out of work. It's been a disaster !!

[centurian]

30% steel tariffs were imposed by the US in an attempt to save jobs in the steel industry. However within 12 months, American companies that buy steel were jumping up and down because they were suffering from higher costs. Carmakers in particular were really peed off at the tariffs, because they came at a time of crisis for the industry when it could ill afford to pay extra for homemade steel. It's just one of the reasons they are in so much trouble now.

Yes, there were many reasons why US carmakers are struggling, but increased materials costs was certainly one of them.

The tariffs imposed by Bush saved about 5,000 jobs in the very short and cost about 20,000+ jobs in the medium to long term. Oh, and those 5,000 jobs that were 'saved' probably went anyway in the medium term when the tarrifs were removed because the US steel industry did bugger all to reform because they were hiding behind the tariffs.

The trouble is that the benefits of tariffs are visible. The costs are not so evident, hence why there is so much pressure to use them.


I don't like offshoring anymore than the next person, but if we made everything in the UK, the cost of everything would go up so much and the rampant inflation would make Robert Mugage's eye's water.

The main reason we are so 'rich' is because of globalisation. Even the lifetime chavs on benefits are 'rich' - compared to standard life 50-100 years ago.

[PM-Junkie]

You always know when PM-Junkie loses the argument (does he ever win?) when he resorts to personal abuse instead of trying to prove his point. How come Japan was successful for many years, yet had strong protectionist policies ? (they didn't just put a bit of duty on manufactured imports, they made it nearly impossible legally to own a British car in Japan. Crazy really - who'd want to ?)

AS for simply stating "Protectionism causes more unemployment" (without any proof), we can simply say "Lack of Protectionism causes more unemployment" (see current economic position of UK). Those people working in the prawn processing plant in Scotland would still have jobs if import duties were in place.

Do try to read the whole thread. I gave a SPECIFIC example, and cited my sources, of where recent protectionist measures in one industry caused increased unemployment in another. Japan is a completely different subject - their economic success over the 80's and early 90's had very little to do with protectionism - but I won't try to explain it to you because I doubt you would understand if you didn't understand my earlier post.

I wasn't aware it was an argument...thanks for letting me know. Just about everyone who has even the smallest clue about economics knows protectionism causes more problems than it solves. Since citing a recent example, and sources, doesn't constitute "proof" in your book you might like to read up on the subject and come back when you know what you're talking about.