Short term expense of the citizens. Nurturing local business is a long term benefit strategy.
Protectionism is how every nation on the planet developed. Why are Americans driving South Korean/Japanese cars and not the other way around? Because the south koreans and the japanese imposed large tariffs on car imports and the US did not. Their car companies had free range on their own turf. Which gave them time and money to develop.
Silicon valley is not giving the outside world any chance of competing.
The US practices a huge amount of protectionism as well.
The reason that the Americans are driving Japanese cars is that they were built in the US (which happens because of the protectionism). Ford doesn't build cars in Japan. The end result is good for most people (consumers get more choice, jobs are still in the country).
You're forgetting the bailouts for the American auto industry and the ghost town known as Detroit. Protectionism stagnates technological development because of the artificially stymied competition.
Once the major players from hyper-competitive markets inevitably enter the protected market, then they outperform the resident industry there. Protectionism props up non-competitive markets, which is disruptive for citizens when they fall down.
The auto industry might not be the best place for where you want to apply protectionism. But one pretty good usage is when the local industry is in its infancy.
It's pretty well accepted that the IMF forcing so many African countries to drop agriculture-related tariffs has been among the biggest failures of modern economics.
Yes and those japanese companies developed in their home turf and became strong enough to compete in the world market. The japanese government nurtured their industry. When it comes to internet based businesses this is not done. The end result is silicon valley dominating everyone else because that's where it all started and where the most money right now is.
>Why are Americans driving South Korean/Japanese cars and not the other way around?
They care about consumer freedom, that's why. What you are implying is that competition can never work and that people with a head start should be regulated away.
It screws the consumer and there is no proof it works best in the long run. France is super protectionist but they aren't doing so well. In many cases, it just has knock on effects that make other industries uncompetitive. Can't buy the best engines, therefore we can't compete in any market that requires good engines, etc.
The US is one of the less protectionist countries in the world.
The fact is that we live in a kafkan place where everybody seems to think that letting consumers choose what they want to buy hurts them, that delivering goods make a country rich, but receiving payment makes it poorer, and that a government picking winners on every market is the best way to ensure competition.
You'll certainly see several protectionist policies at the US, what is extremely annoying, because they claim to be a completely open country. But the US is still one of the less protectionist ones.
By what metric are you claiming the US is less protectionist than most other nations? We have a lot of farm subsidies and tariffs and limitations in imports, and I have never heard any claim that the US somehow does significantly less than other nations.
Interesting, that kind of data is much easier to get than I expected.
From the Word Bank data, there were 40 countries with lower median tariffs than the US, 4 tied with it, 71 with higher tariffs, and 98 without data in 2013.
Between the countries with lower tariffs there are extremely rich ones, fiscal paradises, EU countries (that have zero tariffs between themselves), and 4 poor ones.
Between the countries with higher tariffs there are basically the poor countries, and Australia. I don't think I've seen any other rich country there.
So, yes, the US is within the countries with lower tariffs. But also yes, every other country that you'll think of has probably lower tariffs than you.
>Protectionism is how every nation on the planet developed
You must be joking. Countries with open markets develop way faster than protectionist countries. If mercantilism is so good then why are the Asian Tigers doing so well and communist countries doing so bad?
What does communism have to do with anything? Protectionism is exactly how the Asian Tigers developed their economies. You don't have to take it from me, read it from a prominent South Korean economist: http://www.amazon.com/Things-They-Dont-About-Capitalism/dp/1...
Some countries have no problem banning the best technology so that the best local technology can win, even if it's worse, and even if the best technology did nothing wrong. It's easy enough to make up excuses for that after the fact.
It would be nice if at least one such country could just blatantly state their motives up front to be judged on their merits: "We're choosing to prohibit a non-local company to encourage local replacements."
And what exactly is wrong with that? As long as the price / performance is not totally off, I'd always rather pay a bit more for a slightly worse service if I know VAT money will stay in my city, tax will be paid in my state, salaries would be paid in the same job market where I am, and the profit would be invested in my neighborhood.
There are local monopolies everywhere, even in the USA. And they are protected by the local (city, county, state, federal) legislation that favors local business. Just try coming out of nowhere and starting new water supply business somewhere in Texas (constructed example, but point stays).
As long as the price / performance is not totally off, I'd always rather pay a bit more for a slightly worse service if I know VAT money will stay in my city, tax will be paid in my state, salaries would be paid in the same job market where I am, and the profit would be invested in my neighborhood.
Nobody prevents you from buying local right now, so that's a red herring. If you want to force others to do the same, you should pay their increase as well. Are you prepared to do that?
> Nobody prevents you from buying local right now, so that's a red herring. If you want to force others to do the same, you should pay their increase as well. Are you prepared to do that?
That's what governments and elections are for. People vote, government make it more complicated for foreign companies to compete on the local market. People pay a bit more for for a bit worse service, and tax rate for everyone gets lower because of reduced unemployment benefits and increased tax income. Everyone locally gets it a bit better.
I'm not saying that one or the other option is clearly better. There are many ways in which "fully open", "fully closed" and "somewhere in between" policies can fail or succeed. It's always matter of balance, but favouring local companies is not bad per se.
When I go to vote, I vote for the government and policies that will make my life and life of the members of my community better, not the government that would make the world better in total by making it a bit worse for us. It doesn't work that way.
Forcing others who disagree with you to go along, yes. That's a very big hammer, and should not be applied lightly. (I'm not saying it should never be applied at all; there are fundamental aspects of society that only seem to work with that pressure applied.)
> People pay a bit more for for a bit worse service, and tax rate for everyone gets lower because of reduced unemployment benefits and increased tax income. Everyone locally gets it a bit better.
"a bit worse" is downplaying it quite a bit; sometimes the result is quite a lot worse. And when you're talking about services with network effects, sometimes the result is "fundamentally not the same service at all". If you're stopping people from participating in the same Internet as everyone else, you could just as easily be slowing your own local economy and breaking opportunities for them to create the next service that'll actually be the best for everyone. And unless you're prepared to make your country completely self-sufficient with no reliance on the outside world, "increased tax income" isn't going to help you when it turns out the services people actually want aren't made in your country and never can be.
As an alternative to dragging others down, if you really want to spend a pile of money boosting your local economy, and you want to do that via government, how about supporting local businesses as they improve, and encouraging them to compete with services provided elsewhere? "Keep up" is always better than "wait up".
Everyone wants the benefits of protectionism on their own turf without paying the price of everyone else being protectionist and that at a minimum requires pretending you're not being protectionist.
"All" the research and development was done abroad, not in Australia. The products were created abroad, so you can't expect the full added value to reside in Australia...
The thing with taxes like VAT is that they are supposed to apply fully to the end product, no matter where it was made. This is made to prevent tax evasion schemes.
There is no competition, it's just monopolies. It's been shown over and over that the first-mover advantage on the web is almost insurmountable because of the network effects.
Which is why Google was the first search engine ever, and before that people just banged rocks together in the general vicinity of phone lines, because any prior search engine would have had an insurmountable first-mover advantage that Google could not possibly have overcome?
While I agree with the general point you are making - the Internet as a whole had not reached a general populace tipping point until after Google was a major player in search.
I think we, as technologically included people, tend to overestimate how old the internet is to most people outside of maybe early email usage.
Also the implosion of companies (like Yahoo) is a factor here. If Yahoo hadn't been really stupid they would still be dominant - and it would have been hard to stop them.
Of course people can overtake when the leader throws the lead... but it's luck and also hard.
MySpace was at it's largest in 2005 - at that point Google was nearly 40% of online search traffic. It had been a major player for a while - hell it had already had a huge IPO by that point.
I think you forget just how FAST Google blew up. In 1999 they were basically nothing - by 2004 they were the largest search company on the internet.
Facebook wasn't even a thing until 2004 - after the Google IPO. So no, Myspace vs Facebook didn't happen after that.
Also Google Video was just plain crap. It's like comparing Google+ to Facebook, it was never going to last.
No, I don't. It really was amazing and a no-brainer to switch. That said Yahoo could have still stayed ahead - they nearly bought Google after all.
Remember though that accurate results is a clear market winning feature - we've seen that the average user quite simply doesn't care about privacy that much.
While I agree with the sentiment, I would argue that the network effects now are significantly stronger than they were 10-15 years ago. Back then, the internet was still a novelty for many (those who had the internet, anyway). This was before broadband was commonplace, before smartphones, before Facebook and the iPhone were a thing.
The network effect becomes even stronger now, as the Internet crosses the chasm. Grandma won't switch from Facebook soon, unlike her teen techie granddaughter.
