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  • Originally posted by Surrey View Post
    In may feel 'right' to match another country's subsidy with a tariff but it is the wrong thing to do.

    If someone is selling you goods or services at below cost then that is their loss not yours. You gain by getting the goods at a cheaper price than you would have paid to make he goods yourself.

    https://www.aei.org/publication/quot...n-and-tariffs/


    Trade is not a zero sum game.
    Not always a loss.

    Have you looked into the purchase power/living standards the typical wage and benefits of a production worker in the People's Republic and Workers Paradise of China (PRC) provides?

    Especialyl when compared to equivalent work/production in the "Developed Nations"?

    When quality appears equal and the PRC 'pancake flipper' is $2 and the USA (or UK ) unit costs $4, which do you think most consumers will buy?

    Labor Costs are a part of product cost$ and lowering this part of the equation can have an impact upon a market, especially for an "importer", or domestic producer allowed to make advantage of foreign based plants/operations.

    There Ain't No Such Thing, As A Free Lunch
    TANSTAAFL
    TANSTAAFL = There Ain't No Such Thing As A Free Lunch

    Comment


    • Originally posted by Daemon of Decay View Post
      Forgive me if I'm wrong, but I feel like there is an interceding factor there, such as the financial risks involved for anyone wishing to compete. Since any competitor would have to source and expend capital to even begin competing, there is a risk to them and their finances in even attempting to compete.

      More important though is the state angle: if my motivation isn't profit then losses may be acceptable to obtain a desired outcome. If said monopoly industry is state owned, then the government may use taxpayer funds to subsidize those losses to ensure they maintain power in that industry. It might be at an overall loss, but they might justify it many different ways (national security, domestic stability, etc.).

      That isn't to say such policies will work always and forever. Arguably, such policies are destined to fail if they're continuously used because of how you have to keep hurting yourself during the process.
      The financial risks are part of the costs. The position that if someone else is prepared to sell you stuff for cheaper than it cost you to make it you should buy still stands. It is free money. Enables you to spend the saving on something else.

      On state subsidies, the U.K.subsidised steel, ship building, railways etc. from ww2 until 1979. We all know what the results of that were and the UK economy leaped forward with the coming of Maggie and her liberal economic policies.
      "To be free is better than to be unfree - always."

      Comment


      • Originally posted by G David Bock View Post
        Not always a loss.

        Have you looked into the purchase power/living standards the typical wage and benefits of a production worker in the People's Republic and Workers Paradise of China (PRC) provides?

        Especialyl when compared to equivalent work/production in the "Developed Nations"?

        When quality appears equal and the PRC 'pancake flipper' is $2 and the USA (or UK ) unit costs $4, which do you think most consumers will buy?

        Labor Costs are a part of product cost$ and lowering this part of the equation can have an impact upon a market, especially for an "importer", or domestic producer allowed to make advantage of foreign based plants/operations.

        There Ain't No Such Thing, As A Free Lunch
        TANSTAAFL
        And?

        If China can make the same for less I buy Chinese as would any economically rational person. Subsidising (and a tarrif is a form of subsidy) inefficient local producers just costs the country as a whole. You end up with poor quality but expensive goods while the rest of the world moves on as happened to the UK before the coming of Maggie.
        "To be free is better than to be unfree - always."

        Comment


        • Originally posted by Surrey View Post
          And?

          If China can make the same for less I buy Chinese as would any economically rational person. Subsidising (and a tarrif is a form of subsidy) inefficient local producers just costs the country as a whole. You end up with poor quality but expensive goods while the rest of the world moves on as happened to the UK before the coming of Maggie.
          Or you have "leveled the playing field" which is a common meme/theme of our(U$A) Left/Regressives.

          The flip side here is that the PRC is paying a heavy price in regional environmental degredation (which does cross borders~the globe in consequences and could be 'cause belie' of War ... ) as well as lagging in human Rights.

          Depends if one wants to support their industries/businesses and culture against foreign competition that employs an edge/advatange/wild card in the economic exchange. On the global scale, "environmental costs" are a factor that should be borne equally by all. Why should USA worry about global "Carbon Footprints" when PRChina has a larger one they don't have to pay for??? !!!
          TANSTAAFL = There Ain't No Such Thing As A Free Lunch

          Comment


          • Originally posted by Surrey View Post
            (...)
            On state subsidies, the U.K.subsidised steel, ship building, railways etc. from ww2 until 1979. We all know what the results of that were and the UK economy leaped forward with the coming of Maggie and her liberal economic policies.
            That's the common narrative from economists and politicians.

            Talking to British voters however they seem to have experienced 4 decades of decline since the 70s not progress, to the point they now seem to want to abolish that policy.

            Why was it "the great leap forward" - forgive the expression - was not recognized as such by your citizens ?

            Note how similar feelings exist among the electorate in the US and apparently even Eastern Europe, but much less for example in Belgium, Germany, France - with others like the Netherlands somewhere in the middle.
            Last edited by Snowygerry; 31 Jan 17, 07:35.
            Lambert of Montaigu - Crusader.

            Bolgios - Mercenary Game.

            Comment


            • Originally posted by Surrey View Post
              And?

              If China can make the same for less I buy Chinese as would any economically rational person. Subsidising (and a tarrif is a form of subsidy) inefficient local producers just costs the country as a whole.
              And if they are dumping product on your market and your producers go out of business as a result that's ok too?

              BTW all the industrial powerhouses today, the USA, Germany, Japan, S. Korea, China have used protectionism to allow their businesses to flourish in the face of what were then cheaper and better foreign producers - which was often us.

              Comment


              • Originally posted by Surrey View Post
                The financial risks are part of the costs. The position that if someone else is prepared to sell you stuff for cheaper than it cost you to make it you should buy still stands. It is free money. Enables you to spend the saving on something else.

                On state subsidies, the U.K.subsidised steel, ship building, railways etc. from ww2 until 1979. We all know what the results of that were and the UK economy leaped forward with the coming of Maggie and her liberal economic policies.
                What you mention though is part of the other issue: if there are other goals than just profit on products.

                For example, if your goal isn't a high profit margin but keeping people employed for political reasons, then the price paid may be worth it.

                Part of the issue inherent to these issues is the political and economic reality behind such moves. For example, let us consider two nations, both of which depend upon one trade good, such as steel.

                Nation A, the bigger nation with a centralize economy, uses the previous strategies to undercut the production in Nation B, which is dominated by private industries.

                Nation B's industries might just thank Nation A for producing such cheap steel and just buy as much as they could, since hey, it's cheaper than having to produce it themselves. But since they suddenly have no need to produce steel themselves, all those previous steelworkers are suddenly unemployed. Even those companies have to do a lot of work as they are suddenly possessing a lot of capital tied up in uneconomical steel production. Transitioning is slow going, and the new jobs created by these opportunities are not able to match the previous jobs in the labor intensive production of steel - not to mention all the older workers whose only experience is steel production and thus have few skills to offer a changing economy.

                Eventually, however, Nation A returns prices on the steel to previous levels - or it pushes the prices even higher as it is the only major producer of steel left. However, due to the economic damages caused in Nation B, Nation B is not able to counter quickly, its mothballed or dismantled steel industry unable to get restarted again and its new businesses dependent upon artificially cheap steel imported from Nation A - something compounded because Nation B's government is unstable as the many recently unemployed citizens take out their anger on the standing government.

                Until Nation B can return to a state of normalcy and resume previous production levels, Nation A uses its new profits to offset the losses it undertook selling low.

                Now, in a pure economic model, we could argue that Nation A isn't doing much for itself: the losses it undertook selling low enough to drive out competition aren't necessarily offset by profits made later selling higher.

                However, once you include that complex beast Humanity into the mix, it becomes mixed. What if Nation A's goal in undercutting Nation B's economy was not to ensure it made more money, but to destabilize Nation B on the domestic front so the could proceed with making territorial demands on Nation C, who was an ally of Nation B? What if Nation A sees Nation B's hawkish government as a threat and wants to use the chaos caused to influence Nation B's politics and guide a more pro-Nation A candidate into office?

                This is a whole bunch of hypotheticals, I know, and good on you if you've read through this much of my BS to get this far. I think my main point is that economics can be used for other goals rather than pure economic gain. It may be self-defeating in the long run, but as is human nature, few people think that far ahead.

                Comment


                • Originally posted by Gooner View Post
                  And if they are dumping product on your market and your producers go out of business as a result that's ok too?

                  BTW all the industrial powerhouses today, the USA, Germany, Japan, S. Korea, China have used protectionism to allow their businesses to flourish in the face of what were then cheaper and better foreign producers - which was often us.
                  Yes, so that rescources could be put onto something else more productive. Again if someone sells you something cheaper than you can make it yourself then you would be mad not to buy. Unless you have fond memories of British Leyland f course....

                  We also once operated protectionism too, but one million dead Irish persuaded us otherwise.
                  "To be free is better than to be unfree - always."

                  Comment


                  • Originally posted by Snowygerry View Post
                    That's the common narrative from economists and politicians.

                    Talking to British voters however they seem to have experienced 4 decades of decline since the 70s not progress, to the point they now seem to want to abolish that policy.

                    Why was it "the great leap forward" - forgive the expression - was not recognized as such by your citizens ?

                    Note how similar feelings exist among the electorate in the US and apparently even Eastern Europe, but much less for example in Belgium, Germany, France - with others like the Netherlands somewhere in the middle.
                    That's another facet of it all that is often ignored.

                    It's not whats true, its what the people believe to be true.

                    A recent example is the economic gains during Obama's tenure are routinely downplayed in the American public because they don't feel like things have improved as much as they may be told they have.

                    Or worse, the "benefits" may be limited to the GDP and not to the welfare of the common citizen. After all, who cares if the GDP doubles or triples if you the private citizen see little to nothing of that gain?

                    There is a strong sentiment for political change in the western world built upon discontent and frustration. It cannot be ignored, even if they themselves may ignore the raw data.

                    Comment


                    • Originally posted by Daemon of Decay View Post
                      What you mention though is part of the other issue: if there are other goals than just profit on products.

                      For example, if your goal isn't a high profit margin but keeping people employed for political reasons, then the price paid may be worth it.

                      Part of the issue inherent to these issues is the political and economic reality behind such moves. For example, let us consider two nations, both of which depend upon one trade good, such as steel.

                      Nation A, the bigger nation with a centralize economy, uses the previous strategies to undercut the production in Nation B, which is dominated by private industries.

                      Nation B's industries might just thank Nation A for producing such cheap steel and just buy as much as they could, since hey, it's cheaper than having to produce it themselves. But since they suddenly have no need to produce steel themselves, all those previous steelworkers are suddenly unemployed. Even those companies have to do a lot of work as they are suddenly possessing a lot of capital tied up in uneconomical steel production. Transitioning is slow going, and the new jobs created by these opportunities are not able to match the previous jobs in the labor intensive production of steel - not to mention all the older workers whose only experience is steel production and thus have few skills to offer a changing economy.

                      Eventually, however, Nation A returns prices on the steel to previous levels - or it pushes the prices even higher as it is the only major producer of steel left. However, due to the economic damages caused in Nation B, Nation B is not able to counter quickly, its mothballed or dismantled steel industry unable to get restarted again and its new businesses dependent upon artificially cheap steel imported from Nation A - something compounded because Nation B's government is unstable as the many recently unemployed citizens take out their anger on the standing government.

                      Until Nation B can return to a state of normalcy and resume previous production levels, Nation A uses its new profits to offset the losses it undertook selling low.

                      Now, in a pure economic model, we could argue that Nation A isn't doing much for itself: the losses it undertook selling low enough to drive out competition aren't necessarily offset by profits made later selling higher.

                      However, once you include that complex beast Humanity into the mix, it becomes mixed. What if Nation A's goal in undercutting Nation B's economy was not to ensure it made more money, but to destabilize Nation B on the domestic front so the could proceed with making territorial demands on Nation C, who was an ally of Nation B? What if Nation A sees Nation B's hawkish government as a threat and wants to use the chaos caused to influence Nation B's politics and guide a more pro-Nation A candidate into office?

                      This is a whole bunch of hypotheticals, I know, and good on you if you've read through this much of my BS to get this far. I think my main point is that economics can be used for other goals rather than pure economic gain. It may be self-defeating in the long run, but as is human nature, few people think that far ahead.
                      The obvious real world example of what you are saying is the Soviet Union. A large centralised economy is never going to out compete the free countries a almost anything. They will just produce vast quantities of poor quality goods that no one wants. Not many people bought Ladas despite them being cheap.
                      Protectionism is about using force against your own people to stop them doing something that they want to do. Few will want to buy what comes out of a Soviet style country.
                      China has done so well recently because they have liberalised their markets. The Chinese have been successful because they make what those in Britain and elsewhere want.
                      "To be free is better than to be unfree - always."

                      Comment


                      • Originally posted by Daemon of Decay View Post
                        That's another facet of it all that is often ignored.

                        It's not whats true, its what the people believe to be true.

                        A recent example is the economic gains during Obama's tenure are routinely downplayed in the American public because they don't feel like things have improved as much as they may be told they have.

                        Or worse, the "benefits" may be limited to the GDP and not to the welfare of the common citizen. After all, who cares if the GDP doubles or triples if you the private citizen see little to nothing of that gain?

                        There is a strong sentiment for political change in the western world built upon discontent and frustration. It cannot be ignored, even if they themselves may ignore the raw data.
                        The special interest groups who were favoured back in the 70s, e. g the miners and steal workers along with their descendants who have not moved on will resent not being the favoured few. But compared to those who paid them their subsidies they were always few in number. However as time moves on people forget the reality and see the past with rose tinted specticals.
                        "To be free is better than to be unfree - always."

                        Comment


                        • Originally posted by Surrey View Post
                          The obvious real world example of what you are saying is the Soviet Union. A large centralised economy is never going to out compete the free countries a almost anything. They will just produce vast quantities of poor quality goods that no one wants. Not many people bought Ladas despite them being cheap.
                          Protectionism is about using force against your own people to stop them doing something that they want to do. Few will want to buy what comes out of a Soviet style country.
                          China has done so well recently because they have liberalised their markets. The Chinese have been successful because they make what those in Britain and elsewhere want.
                          I agree, but as mentioned above, it's often the perception that's more important than the reality. That is why people think tariffs and taxes work: they fear Nation A is there, poised to destroy them.

                          Comment

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