One comment on free-trade, protectionism, and outsourcing of jobs

[xiphias]

"Protective tarriffs" have a legitimate role. It's not to prop up an industry which is non-competitive, because that won't work in the long run. It's to buy time and reduce pain while you figure out what to do next.

If someone else, somewhere else in the world can do a job better, cheaper, and faster, that job will go to that person eventually. But I think a government can decide to put up a protective tarriff for a year or so -- probably not much longer than that -- to give people in the area that are losing the jobs a chance to figure out something else.

They're an inherently temporary band-aid. But I think that temporary band-aids have a legitimate role in policy. As long as you recognize that that is all that they are.

Globalization will happen. Outsourcing of jobs will happen. It's not possible, or even desirable, to stop it. But it is possible and desirable to slow it down a little so that people can react and come up with other plans.

Comments

[supergee.livejournal.com]

I think it was Mencken who said there is nothing so permanent as a temporary government policy.

[badmagic.livejournal.com]

There is nothing so permanent as that which is temporary. Tariffs, once applied, will never be removed without considerable political effort, no matter how temporary they are supposed to be.

[xiphias.livejournal.com]

I know. But sunset clauses do, occasionally, have SOME effect.

[firecat]

I've worked in the corporate world on and off for over 20 years.

Corporations outsource and centralize, outsource and centralize in something like a 5 year cycle. It's like breathing.

I think the same thing will happen with offshoring.

[mrmorse.livejournal.com]

I agree that the government has a role in minimizing the pain of outsourcing while the employees figure out what to do next. I'm not sure protective tariffs are the way to go, however. I'd like to see taxes restructured so that the people who make money off of outsourcing pay for government spending to minimize the harms of the displacement effects of outsourcing.

But then, I'm a left wing commie whacko, so what do I know?

[papersky.livejournal.com]

I think it's the other way around -- tariffs can benefit new industries that aren't yet profitable but will be if allowed to sell at an advantage. So if you've just started making widgets, your only advantage in selling widgets in Boston is lack of transport costs, because NY widgets are cheaper to produce because of economies of scale, and slicker as well. But if Boston put up a tariff against importing the NY widgets, people would buy yours because they were cheaper, and you'd get better at carving them with practice, and with selling lots you'd start getting economies of scale and be able to start exporting them to other non-widget equipped cities like Philadelphia, at which point Boston doesn't need a tariff any more, and maybe Philadelphia puts up one against yours.

They'd work fine if they were for five years unrenweable -- and because they're for new industries instead of established ones, there's none of the kind of lobbying old-boy network pull there.

This is how cities expanded their economies in the classical world, and in the medieval world, and it's how the US bootstrapped itself into competition with Europe.

Oh, and what the government should do for ailing industries is set up a decent social safety net (including free medical care) so that unemployment and retraining isn't the end of the world, and perhaps give people tax breaks on starting new enterprises, or even give banks tax breaks on providing low interest loans to new enterprises -- and watch out for occasions where new industries need tariffs to help them get a foothold.