Is protectionism inevitable?

[Egbert]

Do you think it is inevitable that the rich industrialised countries will impose tariffs and other measures to reverse the trend to offshore manufacturing and the continued transfer off other jobs to low wage countries? (I am implicitly assuming that politics prevails over economic theory).

We have seen a great many factories closed, call centres moved to India, IT and data processing jobs transferred to low wage countries and so forth. All with more to come.

Average incomes have risen in the West over the past 40 years but in real terms, median income has remained quite flat. Most of the gains in wealth and income have gone to a minority. The majority have seen no appreciable improvement in incomes and many appear worse off. The unskilled and the semi-skilled have seen a fall in their living standards, employment opportunities and job security. The poor are getting squeezed and the middle class is feeling the pressure. It appears a lot of people are getting rather nervous about their prospects thus politicians such as Marine le Pen are rising in the polls.

I am very inclined to think that protectionism, in some form, is coming. Yeah, I am aware of economic arguments and I am aware that the imposition of tariffs had a devastating effect in the 1930's.

Your thoughts?

[Spaced Cowboy]

China already has a 17% import tariff on foreign goods. They also have a 17% sales VAT. Every time I go there my friends ask me to bring loads of US goods. I get lists.

So China already has protectionism.

[ricketyclik]

Average incomes have risen in the West over the past 40 years but in real terms, median income has remained quite flat. Most of the gains in wealth and income have gone to a minority. The majority have seen no appreciable improvement in incomes and many appear worse off. The unskilled and the semi-skilled have seen a fall in their living standards, employment opportunities and job security. The poor are getting squeezed and the middle class is feeling the pressure. It appears a lot of people are getting rather nervous about their prospects thus politicians such as Marine le Pen are rising in the polls.

Your thoughts?

Although I can see the truth of what you're saying here, living standards have risen overall as buying power has increased due to the very cause - outsourcing of production to lower waged countries.

[BlackCat]

The unskilled and the semi-skilled have seen a fall in their living standards, employment opportunities and job security. The poor are getting squeezed and the middle class is feeling the pressure.
Your thoughts?

What part of the western world are you living in ? Here it has been quite the opposite.

[Egbert]

Although I can see the truth of what you're saying here, living standards have risen overall as buying power has increased due to the very cause - outsourcing of production to lower waged countries.

My point hinges on perceptions. If people feel insecure, or worse off, then rational economic arguments may fail and be replaced, perhaps by some sort of "populist politics".

[Egbert]

What part of the western world are you living in ? Here it has been quite the opposite.

Australia. I wouldn't be feeling secure if I were a factory worker.

[Barnabas]

I wouldn't worry so much If I were you, Australia has a very low population, and great mineral wealth, and agricultural wealth (for its population)

[ricketyclik]

I wouldn't worry so much If I were you, Australia has a very low population, and great mineral wealth, and agricultural wealth (for its population)

But our oppositions keep telling us how badly off we are

[Egbert]

But our oppositions keep telling us how badly off we are

A complete summary of opposition policies:

1. Economic policy: Julia is bad
2. Refugee policy: Julia is bad
3. Social inclusion policy: Julia is bad
4. Foreign policy: Julia is bad
5. Poker machine policy: Julia is bad



And a complete summary of government policies:

1. Economic policy: Tony is bad
2. Refugee policy: Tony is bad
3. Social inclusion policy: Tony is bad
4. Foreign policy: Tony is bad
5. Poker machine policy: Tony is bad

[Zevico]

Do you think it is inevitable that the rich industrialised countries will impose tariffs and other measures to reverse the trend to offshore manufacturing and the continued transfer off other jobs to low wage countries? (I am implicitly assuming that politics prevails over economic theory).

Actually you're making an express assumption because you've expressed that assumption in words.

Also the assumption itself is incoherent. What I think you're trying to say is that you think that the public at large is unconvinced of the rationale for free market economics notwithstanding the merit of that theory. This, of course, begs the question--if the public is unconvinced of that theory why did it elect representatives that decided to implement and respect it to greater and lesser degrees, up until the present day, say--in Australia? That's not to say that people's views can't change over time--they can. But the implementation of the free market system in democratic societies required the support of the public. It was the triumph of democratic "politics."

We have seen a great many factories closed, call centres moved to India, IT and data processing jobs transferred to low wage countries and so forth. All with more to come.

Mostly because Australian salaries are higher than Indian ones. Cut the salaries and you get a competitive economy again.

The majority have seen no appreciable improvement in incomes and many appear worse off.

This is an illusion. The lower and middle classes of today has appreciably improved their financial status. It's come to the point where even people in immigration detention centres have access to the internet. Improvements in quality of life, access to technology, health and medicine mean that the gap between rich and poor is the gap between owning an 52" flat screen and a 32" flat screen. Even those at the lower end of the income scale have access to the necessities, and most of the luxuries, of everyday life.

Your thoughts?

As you put it:

Yeah, I am aware of economic arguments and I am aware that the imposition of tariffs had a devastating effect in the 1930's.

The future of our prosperity depends on pointing out these and other salient facts about the source of our economic prosperity to the public.

[Zevico]

Incidentally, factory closures are attributable to excessive wages and ridiculous workplace conditions. Lower wages--probably still much better in real terms than those in India--would mean a larger manufacturing sector. But the total victory of unionism is itself a self-defeating phenomenon: for its short term self-interest unions advocate high wages for unionised workers and far too stringent conditions (like demanding the right to choose whether a company can outsource its workers or not). Having obtained that result they bewail the fact that these very manufacturers find higher profits overseas. The result is that the union loses members, jobs are lost, and the economy suffers.

[notyoueither]

Cut the salaries and you get a competitive economy again.

We're all Greek!

[ricketyclik]

Actually you're making an express assumption because you've expressed that assumption in words.

But only in the statement about the assumption being implicit. Prior to that it was implicit, not explicit.

Also the assumption itself is incoherent. What I think you're trying to say is that you think that the public at large is unconvinced of the rationale for free market economics notwithstanding the merit of that theory. This, of course, begs the question--if the public is unconvinced of that theory why did it elect representatives that decided to implement and respect it to greater and lesser degrees, up until the present day, say--in Australia? That's not to say that people's views can't change over time--they can. But the implementation of the free market system in democratic societies required the support of the public. It was the triumph of democratic "politics."

It's not incoherent at all. Both major parties have been free market since the 70's, so the public had no choice. It's only in very recent times that both parties are murmuring about protectionism.

[Egbert]

Incidentally, factory closures are attributable to excessive wages and ridiculous workplace conditions.

You sound like a bloke who enjoys wages and conditions far better than the wages and conditions of a factory worker.

[Zevico]

It's not incoherent at all. Both major parties have been free market since the 70's, so the public had no choice. It's only in very recent times that both parties are murmuring about protectionism.

Yes, but to write "politics prevails over economic theory" is not a clear way to express the idea he wants to express. That statement can have multiple meanings. We understood it but I'm not convinced that everyone reading it would. That's what I meant when I wrote that this statement was "incoherent." I should have written "unclear."

But only in the statement about the assumption being implicit. Prior to that it was implicit, not explicit.

Noted, and I appreciate the correction.