Protectionism

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Bylo Selhi
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Re: Protectionism

Post by Bylo Selhi »

ghariton wrote:So if I want to eat reasonably-priced mozzarella, I have to buy a pizza?
AltaRed wrote:There is lots of cross-border shopping in supply managed goods.
It's not all a federal protection racket. Some of the traffic even merits a police escort :roll:
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Re: Protectionism

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ghariton wrote:This is where I tear up my NDP party card.
Wow, nobody saw that coming :roll:
I had great hopes for Mulcair, but he has been captured by the party dinosaurs.
But did you see his great one-liner in QP yesterday? Almost worth a vote.

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Re: Protectionism

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parvus wrote:Aren't the quotas, in some sense, effectively being end-runned away, as pizza manufacturers, beset with high quote mozzarella prices, buy whole kits from the U.S.?
Or from the cops if you live in the Niagara region. We had one or two Regional cops smuggling large quantities of Mozzarella into Canada from Buffalo, and selling it to pizza parlours on this side of the border. Unfortunately for him/them they were caught. As an interesting side bar, one pizza parlour guy was quoted at some length in the local paper about how he bought the stuff only out of fear of the cops. Funny, I later saw that he was one of the people charged and named in the paper as having some organizing role in the scheme!
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Re: Protectionism

Post by parvus »

newguy wrote:
ghariton wrote:This is where I tear up my NDP party card.
Wow, nobody saw that coming :roll:
I've never joined the party, though I always vote for it. Perhaps one day the party will stand up against all rent-seekers, not just the ones in the corporate sector. (Well, one can hope.)

I find the rhetoric about reporting issuers "bad" (i.e., publicly traded companies) non-profits "good" tiresome (i.e., public sector enterprises, charities, governments).

There's a reason why Marx, following Adam Smith and Ricardo, singled out productive labour versus non-productive labour. Productive labour adds value in a market economy, whether by producing things or providing services that can be turned to a profit. Wherefrom comes exploitation, the confiscation of surplus value by capitalists.

By definition, non-profit work produces no surplus value and therefore there is no exploitation. (Which does not mean that there can't be excessive remuneration, or high-handed abuse of workers or the general public.)

Of course, some government services may be necessary to maintain capitalist profit, the taxation of which pays for government services. It's profit that ultimately pays the freight.

All the rest is merely rent-seeking. It adds to the bills, without paying for them. At best, it is a redistribution of a stagnant national income, upwards or downwards.

I will now depart for more radical pursuits.
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Re: Protectionism

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Christopher Ragan:
Economists see the world differently than business people and politicians. This is never more evident than in discussions about the benefits of freer trade.

snip.

Unlike many business people and politicians who seem to think that exports are “good” and imports are “bad,” economists see exports as the necessary price we pay to get our desired imports of goods and services. For years, Canada has been exporting wheat, potash and oil so that we can afford to pay for the Colombian coffee, German machine tools and French wines that we like to purchase.

snip

The bizarre view that freer international trade is really about the promotion of exports – and not about the benefits accruing to Canadian consumers – is made crystal clear in the federal government’s recently released overview of the Canada-EU Comprehensive Economic and Trade Agreement (CETA). The entire document explains how reduced EU tariffs will give Canadian firms greater access to the huge EU market, how regulations will be streamlined, how the obstacles to foreign investment will be reduced, and how the dispute-settlement mechanism will operate. This is all very good.

But this document contains almost no discussion of how Canadians will receive access to a wider range of imported products and that prices paid by Canadian consumers will likely be reduced. There is equally little said about how Canadian firms that purchase foreign-made intermediate inputs might enjoy cost reductions.
Exactly.

This is a more general problem. For example, in Watercooler (I mention this for those too squeamish to visit there) we have occasional discussions of employment, minimum wage, and so on. The impression I get is that many think jobs are important in themselves, or as a way of allocating society s riches. or because work is dignified, etc. Whereas I view jobs as a way of producing stuff that consumers want, and of making us materially better off. It seems to me that the former view leads us to do what is good for business and their employees, rather than what is good for the citizenry as people who should enjoy life. Or in other words, live to work, rather than work to live.

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Re: Protectionism

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Somewhere, I'm sure, a Proudhonist is saluting you, as wage-slaves question their existence and cast querying eyes on their bosses. :lol:
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Re: Protectionism

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Mark up another small, but significant victory for Milkfare! Just when I thought that progress was being made on liberalizing trade on this front with the yet to be ratified EU Free Trade Agreement, the sabre rattling of one Pauline Marois comes to Quebec dairy producers' rescue. It's hard to see the light of day when your head is stuck in the sand. The rest of us continue to pay. The sad part is that I'm far from convinced that the dairymen are really benefitting. :?
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Re: Protectionism

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When I was growing up, we frequently went over the border to buy milk -- well before Wal-Mart.

I don't understand why the Harper government doesn't act. After all, it doesn't have any more votes to lose in Quebec.

And the changes to the CWB don't seem to have affected his popularity in the West.

Of course, this could all be a government plot. Dairy products are high in cholesterol. Therefore, let's make them unaffordable. People will switch to soy-based products.

No more waiting until the cows come home!
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Re: Protectionism

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parvus wrote:
I don't understand why the Harper government doesn't act. After all, it doesn't have any more votes to lose in Quebec.
I suspect that this is a backroom deal to ensure that Marois will sign off on the EUFTA. One thing that I believe Harper understands quite well is horse trading.
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Re: Protectionism

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Ah, but they still eat horses in France (and Quebec), don't they?
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Re: Protectionism

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parvus wrote:Ah, but they still eat horses in France (and Quebec), don't they?
Yes they do...and I'm told that it's wonderful!

Aside: I recall my father recounting tales of his billeting in the Belgian Ardenne during WWII. He had to forage for food and the only thing that was prevalent was horse meat. He had never eaten it before, but the woman of the house where he stayed was a gifted chef and she could turn scavengings into a gourmet meal. He told me that was the best he had eaten during the war and it was a far cry from the steady diet of mutton, turnips and sprouts that had sustained him in England over the 3 previous years.
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Re: Protectionism

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So will EUFTA die because of cheese? It seems both Canadian and EU producers don't like it: http://www.bbc.co.uk/news/world-europe-25363611
Since all provinces and all members of the EU have to ratify it, it doesn't look like it has much of a chance of going anywhere.

Sucks to be a consumer...
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Re: Protectionism

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parvus wrote:Ah, but they still eat horses in France (and Quebec), don't they?
Off topic but I have frequented one of the only restaurants in Toronto that serves "cheval" Simply amazing. A horse tenderloin properly prepared is stunning. Wonderful flavor and texture. Pity the proprietors are treated so poorly by the PC crowd.
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Re: Protectionism

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DW's family is from Friesland. Dutch grocery stores (at least in Kingston & Ottawa) sell paardenrookvlees - smoked horsemeat.
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Re: Protectionism

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We know how the Canadian government keeps the price of milk and cheese between two and three times world levels. We also know how U.S. entrepreneurs put together "pizza kits" which they sell to Canadian pizza makers. The purpose is to bring in mozzarella at reasonable prices.

(I note that the federal government has cracked down on this heinous evasion, but that the whole matter is going to the courts.)

What I didn't know is that this kind of thing is part of a glorious tradition. From Alex Tabarrok:
In the 1980s when the US price of sugar was pushed as much as four times higher than the world price there were many smuggling schemes if not actual sugar-runners. In our textbook, Modern Principles, Tyler and I discuss one scheme where Canadian entrepreneurs shipped super-sweet iced tea to the United States where the “tea” was then sifted and the sugar resold. And from 2000 here is a great moment for US democracy, namely US Senator Byron Dorgan rising in support of legislation:
…to prevent molasses stuffed with sugar from being allowed into this country. As others have stated, the molasses in question is stuffed with South American sugar in Canada [those Canadians again, AT], and then transported into the United States. The sugar is then spun out of this concoction and sold in this country while the molasses is sent right back across the border to be stuffed with more sugar–and the smuggling cycle starts over again.
-
I love it. Human ingenuity versus government greed and stupidity. Show me a really bad piece of regulation, and I'll show you human creativity at its best.

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Re: Protectionism

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Ah, revenuers. Moonshine. Pot. So gummint really does create jobs? :lol:
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Re: Protectionism

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When I was growing up in Montreal in the 1950s and early 1960s in Montreal, we generally thought of the U.S. as a bunch of socialists. One of the things that stood out, as I remember, was the large number of restrictions on people trying to earn a living, for example the need for occupational licensing.

Turns out that, even after the right wing turn since 1980, occupational licensing is still very much a force:
Although the occupation is somewhat specialized, it defies common sense that auctioneering requires permission from 33 states to practice with average requirements of 100 days—more than three months—in education and training, one exam and grade and age minimums. Worse, five states require a full year or even two of education and training to earn an auctioneer’s license.

Similarly, to become a manicurist—licensed in every state but Connecticut—requires an average of 87 days in education and training and two exams. In 10 states, securing a manicurist license takes more than four months. Yet at least in Colorado, less than one-third of that time is to be spent learning “disinfection, cleaning & safe work practices,” the only subjects related to health and safety.18

And keep in mind that the average burdens faced by would-be auctioneers and manicurists are somewhat low for the 102 occupations we studied: On average, the occupational licenses measured in this report keep job aspirants out of work for nine months, cost them about $209 and require them to pass one exam.

<snip>

Finally, irrationalities are particularly notable when few states license an occupation but do so onerously. One clear example is interior design, the most difficult of the 102 occupations to enter, yet licensed in only three states and D.C. Another is social service assistants, the fourth most difficult occupation to enter. It requires nearly three-and-a-half years of training but is only licensed in six states and D.C. Dietetic technicians must spend 800 days in education and training, making for the eighth most burdensome requirements, but they are licensed in only three states. Home entertainment installers must have about eight months of training on average, but only in three states. The seven states that license tree trimmers require, on average, more than a year of training.
This too is a face of protectionism -- protecting higher incomes for certain favored people at the expense of consumers.

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Re: Protectionism

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I wouldn't call that socialism; regulationism mebbe (is that a word)? Or mebbe just protectionism, of which far too many examples exist for those with credentials (doctors, lawyers, dentists, tenured academics, electricians (very popular during the Toronto ice storm)) and some by reason of licencing (taxi drivers, dairy farmers, Quebec maple syrup producers).

Some are valid -- for example, during ice storm, you wouldn't want an unlicenced electrician reconnecting the pipe to your house so that Hydro can reconnect you to the grid. Some are less valid: paralegals, nurses, pharmacists are prevented from doing mundane work at lower prices. Some are clearly guild privileges: dairy farming, owning a taxi licence ...

I'm tempted to go with guild feudalism as the name, the corporate state so beloved of European fascists and romantics, but that wouldn't account for credentialism (lawyers and doctors accountants, among others) who have carved out their own monopolies since feudalism, as governments have recognized self-governing professional bodies. Nor does it account for the quota carveout of the dairy farmers or Quebec's maple syrup producers.

It does conform however to Adam Smith's adage: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

The problem then is not socialism (unless by that you mean central planning) but the absence of free markets, which, after 500 years, are still in statu nascendi.

(But I got into trouble with one of my Marxist profs for saying that: that the state precedes capital, rather than being its creation. We are very far from living in a capitalist society -- as the privileges of universities as feudal corporations granted autonomy through charter by a kind sovereign demonstrate. Oh well.)

(P.S. Must look up the grounds of Henry VIII's disssolution of the monasteries. Must have something to do with his taking over as temporal leader of the church.)
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Re: Protectionism

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parvus wrote:The problem then is not socialism (unless by that you mean central planning)
Yes. I should have been more precise.

Fifty years ago in the U.S., the problem was not so much government ownership of enterprise (we had more of that in Canada) as pervasive interference with markets. So for example interest rates on savings and checking accounts were tightly regulated, transportation and telecommunications were regulated much more tightly than in Canada, there was massive interference in agriculture (we didn't have dairy and egg supply management back then).

I believe that much of the government apparatus in the U.S. was a consequence of the New Deal. Much of it was intended to increase prices and so defeat deflation. Since then, it has been captured by special interests, who basically are using the government as a lever against the general public.

Protection against competition from imports, most famously identified with Smoot-Hawley, is the most obvious form, but far from the only one.

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Re: Protectionism

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That leaves us with a fundamental problem: fixing prices to create an equilbrium, even though equilibria only exist in textbooks. (Haven't finished with Hicks, right now I'm on Keynes, and a few Marxist commentaries.)

From all three, they seem to be leading back to Say and Mills: supply creates its own demand. The problem is (in theoretical economics) not whether there is underconsumption, or effective demand, but whether capital can realize sufficient profit through more investment.

Redistribution, while nice for all of us, assumes equilibrium with constant productivity improvements. But the goal of capital (in the Marxist sense) is not a constant factor return -- otherwise it would be a regulated utility, which is sort of what underlies New Deal thinking. It is capital expansion (through innovation/technology, at least in part). Of course, this perspective is based on the labour theory of value.

But it seems to me to help explain why many companies are, on the face of it, immensely profitable, given their cash in the bank. To be sure, many attribute this not as hoarding, but as a lack of investable opportunities -- given low consumer demand and deleveraging.

But does consumption drive growth, or production? Do not iPhones create something new, even at prices that many consumers cannot afford? iPhones don't supply a need; they create one, and there is the value added. New Deal policies, it strikes me, try to keep everything as it was.

It seems to me (and you'll correct me, I'm sure) that Marx cottoned onto something that neoclassical economics does not, and which the new growth economists are trying to figure out. Let's call it, for the moment, a power law of innovation.

I find this more interesting than an industrial policy focus, which strikes me as neo-mercantilism.
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Re: Protectionism

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parvus wrote:Do not iPhones create something new, even at prices that many consumers cannot afford? iPhones don't supply a need; they create one, and there is the value added. ..
I think it is some of both. The iPhone wipes out demand for iPods, and regular mobile phones. And it eliminates the need for PCs for simple web browsing. It replaces the need for GPS devices and all but the most advanced digital cameras. Through UPC scanners it offers automated shopping assistance. Through pictures, it eliminates the need for image scanners, like depositing cheques or supplying copies of receipts. There is also the growing potential for them to replace payment mechanisms like debit and credit cards. There is a growing list of vendors that provide parking systems where you can renew the rental on your spot simply by knowing its unique number.

Through WiFi, it becomes the universal phone enabling long distance calling anywhere, eliminating the need for mobile phones and landlines. We use MagicJack on our iPhone, iPad, and Samsung Galaxy.

It creates new demand with add-ons for medical monitoring, and others. We ain't seen nothin' yet....
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Re: Protectionism

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I half agree (and I don't even own an iPhone!) :wink:

On the one hand, you are suggesting that the iPhone is a productivity improvement and displaces older technologies, and I agree that it is. But wouldn't this be a reprise of the automation thesis, namely that machines can do it better, more consistently and cheaper per unit? I'm not denying that, but if all you are doing is putting your erstwhile competitors out of business, wouldn't you simply be assuming their profit share, all else equal?

Hence my interest in PPP debates. If the government contracts out, is it paying more (to assure a profit margin) than it would it it took over hiring and so on to build a highway? Or is new value created?

I think with iPhones, new value is created, but I'm at a loss as to how to explain it, just as I am about P3s. I think my problem is deterministic thinking, such that technology is zero-sum game and so is contracting out. Same input, same output, but now winners and losers.

In a way, this is the growth problem. If growth is calculated as population increase plus inflation plus innovation, what is it exactly that innovation does? Is it merely a residual? Is it the more efficient exploitation of existing resources? Or is it something else.

To concretize this, we may live better than a hundred years ago, but is this simply because of greater efficiency? What do we mean by a bigger pie?

The reason many people are protectionist is because they don't believe in a bigger pie, so they fear their slice will diminish.
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Re: Protectionism

Post by blonde »

Govt deals with 'EFFECT' of a problem. Cost = Dollars.

P3 deals with 'CAUSE' of a problem. Cost = Cents.
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Re: Protectionism

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You can allocate price to each of the functions provided:
Mobile Phone - $100
Digital Camera - $100
Palm Pilot/Trio - $75
GPS - $50
Mini-PC - $100
Mobile eMail - $100
Music Player - $50
So $575 and then consider the added convenience of the other apps.
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Re: Protectionism

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The Economist reports on a new study of offshoring by American companies:
Although 23% of American companies undertook some offshoring, when it came to their primary business functions—which account for two-thirds of domestic employment—an average of only 4% by cost was offshored. For large goods-producing companies the figure was much higher, at 10.5%. Because the products those manufacturers make tend to be highly visible (e.g., smartphones, clothing), this increases the impression that masses of American jobs are being exported.

<snip>

The second surprise was that the majority of offshoring (57% by cost) was to locations with costs that were the same as or higher than America, such as Canada and Western Europe, rather than to low-cost developing countries (29%)—the ones typically suspected of gobbling up American work.

<snip>

In terms of jobs, the researchers found that the more companies offshored a particular function, the fewer low-paid jobs they had in the same function at home. An obvious reason for this could be that offshoring is siphoning away low-paid jobs.... There was, however, one outlier: R&D. As firms offshored more of R&D functions, the ratio of low-paid to high-paid R&D jobs in America increased. ... A larger problem, perhaps, is just how little American firms are investing in R&D, whether measured by cost or headcount
So offshoring is not as menacing as some think.

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