Ep. 133 Protectionism Doesn’t Cause Depressions, But Here’s What It Does Do

9 April 2018     |     Tom Woods     |     13

Opponents of protectionism sometimes misrepresent what the real danger of it is. It isn’t going to cause a depression or mass unemployment. But it does do something — beyond just raising domestic prices — that undermines everyone’s standard of living.

Krugman Column

Trade Wars, Stranded Assets, and the Stock Market (Wonkish)” (April 4, 2018)

Contra Column

“‘Using IPCC to Defeat UN Climate Agenda,” by Bob Murphy

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  • tz1

    My biggest problem is China (and others) impose Tariffs or similar barriers and NO ONE complains that Japan, China, etc. are starving their people to death or destroying their economy. If I understand correctly, China/Japan is incurring the same error that we are when THEY block their markets or impose tariffs. Or Israel (see Ben Shapiro). Why is it that only the USA suffers from imposing Tariffs but there is silence on the rest of the world when they impose tariffs on our exports?

    • Tyler Folger

      Mainly, because it’s not necessary to cover every instance of a bad policy across the world. An economic critique of American protectionism applies similarly to China or Poland or Cuba, or wherever. It goes without saying that China / Japan’s protectionist policies are also bad for their people.

      But also, Americans don’t have even nominal influence over Chinese policy. It’s true that the Chinese are hurting their people with tariffs, but it’s not necessary to drive home this fact to the American audience. It’s the Chinese that need to hear that message.

      • tz1

        But you isolate the economic benefits of using their evils and things which would be crimes here.
        Trading blood diamonds? Destroying african villages and polluting them to mine some useful mineral – but we ought NOT care to let it interfere with “free trade”?
        Economics recognize “externalities” which is where third parties are damaged with very real costs not paid by the parties to a transaction, e.g. pollution. Why does it suddenly become a non-issue when the costs are imposed overseas? This is like saying assassination is merely free trade, a voluntary exchange between the person who wants someone dead, and the person who will do the killing, and that third party that will be killed doesn’t matter.

        • Tyler Folger

          I’m not sure how this relates to free trade. If certain Chinese companies are engaged in criminal behavior, that’s something for the Chinese government to police. If Americans are hiring Chinese companies to engage in criminal behavior for the Americans’ benefit, that’s a matter for the American courts, or perhaps the foreign countries’ courts if they can secure an extradition. Incidents of criminality have nothing to do with trade policy. We do not prohibit all domestic trade, just because some of it is criminal in nature.

          • tz1

            If American are using known Chinese companies who have used bribes or other effective but illegal means to evade the law?

            But it is not neutral. See the JAPANESE example of Takata AirBags which might kill you tomorrow since they declared bankruptcy, you can’t defuse the bomb in your steering wheel (for safety), and have to wait for your manufacturer to eventually recall and replace it.

            Chinese companies regularly change ingredients in things where FDA requires labeling. What happens when a Chinese company adds Peanut oil, a child dies of an allergic reaction, but somehow China doesn’t respond.

            See what happened to Mattel – who had to apologize to the Chinese when they used Lead paint in the toys they manufactured!

            Trade with Pirates and then hope your customers won’t die?

          • Tyler Folger

            American companies sometimes manufacture shoddy products too. We do not prohibit all domestic trade just because some of it is poor quality.

            You can’t simultaneously complain that everything is made in china, and everything China produces is dangerous and fraudulent. Obviously, most of the products we encounter in our day to day life from China are perfectly fine. In fact, China’s more lax regulations give Americans a sort of escape hatch from our own overbearing regulatory state. Consumers can choose cheaper products when it suits them, but the principle of buyer beware applies as always. No trade prohibitions or regulations will ever absolve companies or the consumer of personal responsibility for what they buy.

            If a Chinese company defrauds an American company, that’s a matter for the courts.

  • Allenbard Woodison

    Those sound-absorbing panels that Dr. Woods is so repelled by come in many colors. Perhaps he could find a color sufficiently conventional and bourgeois-looking that he would feel comfortable with them. The phrase “earth-tones” comes to mind.

    • http://www.TomWoods.com Tom Woods

      The main problem is that I have many other things I want to hang on my walls instead.

      • http://2vnews.com 2VNews

        Try Sound Absorbing Ceiling Foam

      • Christian Loveridge

        Two possible solutions before you destroy a beautiful wood floor:

        1) Try an isolation shield — it’s essentially the same effect as having padding on your walls, without the awful look: https://www.monoprice.com/product?p_id=602650

        2) Use detachable panels that you can set up and take down like hanging a picture (You can even hang them over the pictures!) This is what my wife did in her recording studio/my workspace, and it takes all of 30 seconds to hang the panels up, or take them down and store them in the closet. It works just as well!

  • Tyler Folger

    Krugman’s understanding of capital suddenly becomes much more complex when there’s a Republican president

  • Michael Thompson

    Tom. Before you destroy your beautiful wood floors with tack strip, try using a very large area rug instead. That should muffle the echo dramatically yet still show you have good taste. 🙂

  • mary

    The idea that trade with China is free trade is so pathetically naive, I don’t even know where to start.

    At least take the time to listen to Gordon Long who has no misconceptions about what’s going on.