618113 Responseshttp%3A%2F%2Fwelkerswikinomics.com%2Fblog%2F2008%2F11%2F17%2Fa-call-for-protectionism%2FA+call+FOR+protectionism%212008-11-16+19%3A47%3A54Jason+Welkerhttp%3A%2F%2Fwelkerswikinomics.com%2Fblog%2F2008%2F11%2F17%2Fa-call-for-protectionism%2F to “A call FOR protectionism!”

1. # Ross Hutchisonon 17 Nov 2008 at 5:18 am

   The difference in the protectionism, as spoken to by Chang, seems to be pretty straightforward. We have an America in the 19th and early 20th century that was not the huge world dominating giant that it is today. It was the protectionism of that period that nurtured it into becoming so. This is quite a startling observation in itself, as it makes America look ever so slightly hypocritical in its free-market capitalist approach.

   But the point seems to be that the protectionism worked. It created the world's largest economic giant and world power. Should it have been allowed to happen under a true capitalist system? It seems not. It seems almost like "cheating". Yet we can't go back and correct this mistake, if that is indeed what it is. Had it not occurred, we might not be as technically advanced or proficiency as we are these days. It seems we can give up die hard capitalism for protection when it nurtures efficient infant industries.

   The problem is in today's world that we now have imposing and monolithic corporations that can already produce things, and fast. How can we impose protectionism against these, without incurring anger at their loss of productivity as their markets fall. Who would get to impose tariffs? Who wouldn't? How do we know if an industry is going to be successful? It's much more difficult in today's fast-paced trading climate to advocate this kind of protectionism. Now it needs to be more aimed at protecting and maintaining existing companies as they move into retooling for goods they can better produce.

   Chang speaks about "intelligently designed" models for this new protectionism of the infant-industries of the developing world and the existing producers in the developed world. But we don't know what these could be, and just how difficult these rulings will be to implement politically will pose an entirely different problem in itself. It makes sense that we do adopt this form of protectionism, seeing as a shift now to actual free market capitalism would result in a huge reconstruction and reordering of the world economic structure. Although this might be the best for the world in the long run, we don't have all that long, and the pain it will create will be unbearable for a good number of the world's population.

   So what can we do? The protectionism has its merits, but it is the system that has failed us here. The capitalism might be the way to go, but we are so set in our ways and the way the world functions that it might be a step we are unable to take.

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2. # Jason Welkeron 17 Nov 2008 at 5:44 am

   Ross, good analysis, thanks! I think you identify the stark reality of America's hypocrisy and identify the obvious difficulty associated with identifying the industries to let die and the ones to resuscitate back to competitive life.

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3. # Dominic McNameeon 18 Nov 2008 at 7:09 am

   In the past America's protectionism was to build up its economy to a scale where it became an economic super power. Today the protectionism is so that America stays as an economic super power.

   In a developing country protectionism is useful until the industry has a base to work off of. For example, factories and dealership network. Once these are in place the protections should be gradually dropped so that the local industry can get used the the competition gradually. If all tariffs, taxes or subsides were to be removed in one go then there is a good chance of the local industry would fail straight away in face of the more established competition. On the other hand the consumer would lose out if the protections remained in place because they would not have a competitive market.

   Allowing smaller companies to fail as Chang said does make sense. However for companies such as GM, Ford and Chrysler this is not an option. Not only do they employ an enormous number of people in America there are a huge number of smaller companies that depend on selling parts to those giants. Not only that but many of those companies branches in other counties are successful but only so because of the access to their global network of parts. For example Holden, the Australian division of GM would have been making very large profits if they weren't all taken by GM America. This partly due to Holden being able to source their transmissions, V8's and inline 4 engines from GM America and a small car platform from Opel. (GM Europe) In turn Holden supplies the rest of the GM network with V6 engines and a large RWD sedan/wagon platform. If GM were to fail, Holden would go down with them, wiping out over 200,000 Australian jobs. In a country of only 20 million that is a huge number of people to be unemployed. So not only America will be effected by the collapse of one of these companies.

   If all these people were to lose their jobs that would mean they could no longer continue to buy as much as they would have in the past. This means other companies lose money and lay off even more workers and the cycle continues.

   That is why it is politically hard for one of these companies to be allowed to fail.

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4. # maddi Don 18 Nov 2008 at 7:28 pm

   America could in the past justify its protectionist policies and high tariffs as necessary because as is stated by Ha-Joon Chang, they simply could not compete with the efficiency of the Europeans. But now that American industries have matured, America still wants to protect industries such as that of the automobil which still cannot compete with rival industries.

   The Infant Industry argument is very understandable when used in developing countries. If for example, an African country wishes to enter into trade of their textiles amoungst many other developed countries and their textile industries, they could never stand a chance; their industries are small, their workers unexperienced and therefore inefficient. It would be necessary for them to impose either subsidies on their producers, or tarrifs on imported textiles (and HOPEFULLY other countries will not retaliate against this) so domestic consumers only purchase domestic goods, further fueling the developing industries. The reason the infant industry theory pretty much works, is because it is in many people's interest for the industries of these developing countries to grow. Their growth with fuel consumers with inexpensive goods, thus raising consumer surplus and it will provide other firms with new sources of exported resources in which to expand their own industries ect.

   As we have learned in class, mature industries who are being crushed at the hands of more competative rivals, are probably better off not being saved because chances are, they will be back i nthat same situation when their protection is removed. In the spirit of free trade, inneficient industries, especially those who have had their chance to keep up with globalization, should be let to die out of the market, and their potential protection money spent elsewhere in the economy, somewhere more useful. For example, in America the government could instead be using this money used to spoon feed the failing industries, for research which may decrease the cost of production of industries that AREN'T failing, because ultimately, these will do more good, and at a cheaper price, for the US in its current state.

   I believe therefore, that Chang's idea about “through orderly liquidation and redundancy” is a very suitable solution to these failing industries. What he means by this is basically removing barriers slowly and forcing firms to discharging costly labour and machinery gradually, saving the firm those costs but decreasing their output,and repeating this process until the firm is no longer able to function, but has not experienced a sudden halt and mass unemployment of workers at one time. This is very hard to achieve politically because the government will have to deal with a large amount of unemployment and therefor have to expend unemployment benifits to these workers, and in America's current situation, mass unemployment would not be ideal. The government must choose between spending money on these unemployed workers who, in the economie's current position, may not find another job for a very long time, or spending money keeping the industries who may have to fire them open hwen the money could be used to better correct other parts of the economy.

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5. # Joelon 19 Nov 2008 at 2:03 am

   What seems to be the difference between America's justification for protectionism in the 19th and 20th Centuries and today, is that in those days had not yet acheived the economies of scale it was to obtain later on, and its infant industries needed room to develop.

   This is in my view quite a valid argument which can be presented for protectionism in developing countries, especially today, when countries are competing against highly developed economies with access to relatively large pools of capital.

   It seems to me that Chang is arguing for protectionism of a very specific kind: temporary protectionism. Acknowledging, albeit subtely, that inefficient sunset industries will eventually collapse and that resources will be moved elsewhere, he argues for a type of protectionism which will allow a smooth transition, allowing for controlled structural changes in the economy while industry is shifted into a kind of production to which it is better suited. I would call this "parachute protectionism".

   It just takes one look at the current global crisis to understand why Chang is advocating this view. Bang, Lehmann Brothers collapsed! Northern Rock, Fannie May, Freddie Mac. It happened so fast! When industries as vital as these collapse as they have done in the current crisis, both political and economic repurcussions are severe. Likewise, if a sunset industry suddenly shut down with that speed because it was pushed out of business by more efficient competition, the consequences of this, too, would be unfathomable. Clearly the crux of Chang's protectionist argument is to provide more time for domestic economies to sort themselves out. Workers could be retrained without being unemployed.

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6. # Wilhelmon 19 Nov 2008 at 4:07 am

   I thought this article was most interesting ones on the wiki. I disagree with Maddi's point of developed economies simply letting their markets fail where they do not have comparative advantage. Like Joel said, 'both political and economic repercussions are severe', and this would be devastating for America for example. America should not let their failing markets simply dwindle and die, because then they would lose their 'advantage' in those markets. As it stands now, America still has a good chance of being able to become competetive once more in Auto manufacture (as the American market slows, with a rise in unemployment causing workers to take jobs at lower wages allowing the market to become competetive once more). If it were to just give up on the Auto market, it would most probably not be willing and able to enter it once more as it would be an infant market, and the costs and risks associated with reentering the market would be too great.

   This logic doesn't apply to something in which America does not, and can not gain comparative advantage in (such as shoe manufacture). While it is better for both the American economy and the world economy to reallocate the resources in shoe manufacture, it would be extremely harmful for American standards of living in the short run. The costs in the short term might even be higher than the gains in the somewhat long term, as there would without a doubt be widespread protests and strikes and a destabilization of the current government. Rather than getting rid of all protectionist measures immediately, it might be smarter to do so over a long period of time (possibly through social propaganda creating a gradual negative outlook of the market), sufficiently allowing resources to correctly allocate without causing too much of an economic shock.

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7. # Moritzon 19 Nov 2008 at 5:04 am

   In the late 1800's and the early 1900's America was protecting its industries from the powerful European economies that were expanding. The protectionism that the USA was making use of were tariffs. These tariffs were in place to set up the "infant industries" as Hamilton decided to call them. These infant industries refer to new industries that have recently been established. Therefore the USA put tariffs on imports to allow the local industries to achieve economies of scale. In comparison to today's protectionism this seems to be a valid argument. The protectionism nowadays is to help protect sunset industries, industries that are slowly dying. That is the main difference between protectionist policies in the late 19th century and today.

   The sunrise industry is a responsible reason why protectionism should be introduced to help developing countries. Without protectionism developing countries will find it very hard to open their borders to trade because they will not be able to compete with the low cost products that can be imported into the country. The infant industries would collapse as soon as they become vulnerable to imported goods. It takes time for an industry to develop and adapt to the needs and wants of the consumers (or producers). Protectionism allows an industry the time it needs until it is ready for competition.

   The idea of Chang's principle of thorough liquidation and redundancy is pure free trade. Without barriers supporting the sunset industries each country would produce what they could with the lowest opportunity cost. However not everything is black and white. If we take the American automobile industry as an example we can tell that the USA does not hold comparative advantage on producing cars. So a free trader would argue, like Chang, let them go under. The free trader would not be taking into consideration all the negative externalities that are tied with the "death" of this industry. The main problem would be unemployment. 3 million American workers would lose their job! First of all this would arise the social problems associated with unemployment such as crime or drug abuse. Secondly fired workers/consumers would receive no more wages, therefore decreasing the amount of goods they will consume and the government will receive less tax revenue. In a time of recession falling consumption and therefore demand. A positive aspect, regardless of unemployment, would be that the American government no longer needs to pay out the automobile industry and can open its borders to free trade. Overall however, unemployment would result in a worse crisis than bailing out.

   A solution for the problem would be to gradually retrain the workers and one by one start to close down sections of the industry, without making unemployment a big problem.

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8. # Eithanon 19 Nov 2008 at 6:51 am

   Professor Ha-Joon Chang states that “the US cannot continue its peculiar mixture of free-trade mythology and uncoordinated, ‘reactive’ protectionism that has served ordinary Americans and the developing nations so poorly.” Instead, Professor Chang advocates protectionism to ease the adjustment of mature industries, which, arguably, can “facilitate, rather than hinder, trade adjustment and industrial upgrading.” This argument is undoubtedly politically more appealing, as it will save millions of jobs and evade the widespread economic and political repercussions of not bailing out the auto industry. However, is it really best for the American economy? In the short-run, the effects of not bailing out the auto industry will be disastrous. In the long-run, nevertheless, according to economic theory, jobs will move into more efficient sectors of the economy, and eventually, the US economy will be more efficient. Even with economic theory aside, the question at the heart of this issue is: can the US really save its auto industry and transform it so that it can compete with foreign manufacturers? Professor Chang believes so, and argues that “industries can be revived through re-tooling of its factories and re-training of its workers.” This argument is idealistic and optimistic at best. The US auto industry is simply less efficient than the Korean and Japanese auto industries. Trying to ‘revive’ the American auto industry will require large government expenditure. Additionally, it will lead to an over-allocation of resources, and even then, the US auto industry might not be able to compete with foreign producers. Hence, it seems that the doom of the American auto industry is inexorable. Although the government should use protectionism to ease out its collapse, it should not attempt to revive it.

   The US achieved its economic supremacy because of the protectionist policies it enacted in the 30’s and 40’s. Indeed, by protecting its infant industries from large and established European firms, the government fomented their growth and allowed these industries to become competitive. Today, however, the US is merely trying to maintain these established industries. It is not attempting to foster new and auspicious ones. Hence, although the US will be able to save its established in the short-run, eventually, they will collapse. If the US does not invest in new industries in which it has a comparative advantage, the economic supremacy it achieved in the 20th century may well soon come to an end.

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9. # Sabrina Walshon 20 Nov 2008 at 7:10 pm

   The US when first going through the industrial revolution set up high tariffs to lessen the amount of imports and nurture the infant industries that were developing within it’s own borders. The introduction of a sense of protectionism in developing nations will hopefully create a similar affect. By setting up tariffs hopefully there will be less imports and thus less competition for the industries in thos e areas. If a government is able to set price ceilings so that the companies still make profit to grow and charge relative to incomes of that area. So the people can afford the products, with affordability and jobs there will be more money in circulation in these areas and the economy will grow. Slowly it can be opened, and new products introduced so that monopolies are not created.

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10. # Gorka Zubieteon 21 Nov 2008 at 1:12 am

    Between the 1830's and 1940's the US' economy was competing with the powerful Old-continent economies, where these controlled various colonies. The US economy, to be able to compete encouraged and imposed tariffs to protect their infant industries. However, things have changed, especially after the great world wars. Here, the economies of Europe were destroyed and the US economy flourished and the economic powers changed. In the late 19th century the US government used protectionism to protect infant industries, that if weren't protected they would have been left to wither away to their European competitors. However, today the US government uses protectionist policies to protect sunset industries, industries that do not have comparative advantage. The US government is protecting these sunset industries to please the voters, and is only slowing down the process in which these ineffiecient economies will disappear from the market. The government of the USA should start to retrain the car manufacture employees and employ them in sectors of the economy in which they have comparative advantage and truly start to promote free trade.

    BASQUE INDEPENDENCE!!!

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11. # Deirdre Stensonon 21 Nov 2008 at 5:46 pm

    The main difference between the protectionism used in the United States in the 19th and 20th century in comparison to the methods used now, is the sheer scale in which the nation was integrated. Unlike today, the United States was not a huge dominant force within the global market, and therefore the methods it put in place where not to the same scale as they are used currently. Furthermore as stated by Chang, the current protectionist methods are in aid of ‘mature’ or ‘sunset industries’, whereas, beforehand they were more focused on ‘infant industries’, this shift itself is a massive overhaul to economic policy.

    Like free trade, protectionist methods can also be beneficial to a nation’s economy. Protectionism in the form of subsidies, tariffs or quotas, can be vital in helping to protect domestic stakeholders from being at a competitive disadvantage. Futhermore, this is often the case in many nations’ current economic plans. As proposed in the economic plan of the United States, protectionism of ‘sunset industries’ is a practice they find to be of vital importance, and can see long term growth in this sector of the market.

    Chang’s belief of responsible protectionism and letting industries to die out through ‘through orderly liquidation and redundancy”, is an ideology based for the most part on freee trade. Chang obviously believes in comparative advantage and letting industries without a future to die out. However, although this does seem to be ideal for a pro free trade standpoint, it is a controversial issue politically. In modern politics, letting industries deeply connected to a nation die out without any intervention is an unpopular stance for politics. Furthermore, the negative short term impacts of letting these industries die, such as unemployment, would also prove to be unpopular stance for politicians.

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12. # Calvinon 21 Nov 2008 at 8:09 pm

    How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism is only justifiable to a certain extent.

    Arguments for Protectionism include:

    The Sunrise Argument, in which a country may claim that it has placed a tariff on a certain good, in order to protect a newly developing domestic firm who is producing the same good. This firm may not be able to conpete on the global market, and while its building up its competativeness it needs to be protected.

    Protectionism would keep jobs from being outsourced, and thus domestic emplyment can remain constant.

    Another popular argument for protectionism is dumping. Dumping is when a a country sells its surplus of goods off cheaply in another country's domestic economy. This would ruin the domestic market of the country being dumped on. This is why many countries claim it is justifiable to have tariffs in place to prevent their domestic economies from being ruined by dumping.

    However all these arguments can all be considered excuses to just protect the certain interests of lobby groups. This will create dead weight loss as resources are misallocated.

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13. # mankaon 21 Nov 2008 at 11:18 pm

    Protectionism isn't always considered good when you are trying to promote free trade, but it is required in order to keep the flow of trade. For instance, if ou want an infant industry todo well and develop fully to be able to compete in the market, the government has to protect it by imposing tariffs or supplying subsidies. ALso, several other factors compell government to protect their industries as discussed above in comments.

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14. # Laura Yilmazon 21 Oct 2010 at 8:20 am

    The difference in the protectionism seems to be pretty straightforward. we have an America in the 19th and early 20th century that was not the huge world dominating that it is today. It was the protectionism of that period that nurtured it into becoming so. This is quite a startling observation in itself, as it makes America look ever so slightly hypocritical in its free-market capitalist approach.

    Like free trade, protectionist methods can also be beneficial to a nation’s economy. Protectionism in the form of subsidies, tariffs or quotas, can be vital in helping to protect domestic stakeholders from being at a competitive disadvantage. Futhermore, this is often the case in many nations’ current economic plans. As proposed in the economic plan of the United States, protectionism of ‘sunset industries’ is a practice they find to be of vital importance, and can see long term growth in this sector of the market.

    The US achieved its economic supremacy because of the protectionist policies it enacted in the 30’s and 40’s. Indeed, by protecting its infant industries from large and established European firms, the government fomented their growth and allowed these industries to become competitive. Today, however, the US is merely trying to maintain these established industries. It is not attempting to foster new and auspicious ones. Hence, although the US will be able to save its established in the short-run, eventually, they will collapse. If the US does not invest in new industries in which it has a comparative advantage, the economic supremacy it achieved in the 20th century may well soon come to an end.

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15. # Laura Yilmazon 21 Oct 2010 at 8:25 am

    calvin,

    what can you say about america in the past and america now?

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16. # Trevor.echl.f09on 21 Oct 2010 at 8:21 pm

    1. The protectionism America needs today is a limited one that only exists to allow the transition to an economy which can operate on the basis of free trade. This means shifting the sectors of jobs where the U.S. obviously does not have a comparative advantage. It is unlike the late 19th and early 20th century where the U.S. took an “infant industry” approach to rely on protectionism to become one of the strongest industrial giants in the world.

    2. As outlined by Alexander Hamilton, if infant industries are protected through various means then it will allow them to grow, expand, and enlarge. This will lead to the desired economic growth and development and allow the country to become a player on the international economic stage. They could then begin openly trading the good they have a comparative advantage making over other nations. This holds particularly true for industries in still-developing countries that are liable to have a workforce taken advantage of

    3. He means that the industries should be phased out without the people employed in those industries becoming unemployed for an extended period of time. Trying to adopt the most seamless transition as possible is what he’s looking for. Inevitably, though, it is difficult for a new business to be asked to come into a certain area where another left and immediately hire all the old workers who may not have the new skill set for the new job. Its politically unviable because at some points this would inevitably lead to greater frictional unemployment and more people out of work for a time. Politicians would be vote out of office in favor of others who would reinstitute the protectionist policies. This is why it is hard to have this done on a political side.

    Trevor Tezel

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17. # Trevor.echl.f09on 21 Oct 2010 at 8:36 pm

    Laura,

    I have a hard time seeing how the U.S. is hypocritical in its free-market capitalism with protectionist policies. The main American economic goal in my opinion is to allow every individual a chance to make something of themselves and to hope one day to achieve success. This is a national aspiration, not an international one. In order to preserve this quality of our economy, we need some protectionist measures to ensure that cheap labor from overseas doesn’t steal the opportunity from local manufacturing industries to rise up. Because America isn’t 100% capitalist. We have protections in place to protect workers’ rights and to ensure that they aren’t taken advantage of by employers. We also ensure that industry is acting within its means and are ready to break up monopolies. It’s all about giving people a fair shake and that’s why the U.S. engages in this perceived contradiction.

    I do believe, also, that the U.S. will make this transition to a more green energy future which will be necessary to stay competitive with the world. This may involve a little pushing and prodding but will ultimately be solved by the American entrepreneurial spirit and desire to get the most money out of brand new ideas.

    Trevor

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18. # Mattea.echl.f09on 24 Oct 2010 at 3:21 am

    1.Historically, the United States employed protectionism to protect infant industries that needed time to develop economies of scale. Now, it needs protectionism to protect mature industry, who are threatend by countries with cheaper resources.

    2.Developing countries could use intelligently designed infant industry protection in order to allow their economies to develop further. As they grow, they should ease off protectionist measures.

    3.This means that industries that aren't performing well, such as the American auto industry, should be allowed to fail even with protectionism. This is politically difficult because these industries account for many jobs, and legislators' constituents will not respond well.

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19. # Mattea.echl.f09on 24 Oct 2010 at 3:24 am

    Trevor,

    I wouldn't say that the type of protectionism America needs right now is transitional. Utilizing protectionism to allow failing industries, such as the auto industry, to stay in business is not going to encourage a shift of jobs to sectors with more of a comparitive advantage. Rather, it will allow the maintenance of the status quo to become much easier. Protectionism in this case wouldn't result in economic development, but instead the preservation of a dying and inefficient industry.

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20. # Eline.echl.f09on 25 Oct 2010 at 7:18 am

    1) Protectionism was used by America in the 19th and early 20th centuries as a manner of being able to compete with the more advanced Europe. At that time, protectionism allowed them to develop their industries and become one of the world's major economies. Nowadays, America needs protectionism to safeguard its dying industries and the many domestic jobs that go together with these industries.

    2) Developing countries can use protectionism to allow its infant industries to develop and grow without facing too severe competition and to let declining industries to strengthen themselves. The stronger domestic firms will then open up new job opportunities for domestic workers. This will increase living standards and thus generate economic development. As soon as their industries are strong enough, they can open up trade barriers and acquire foreign currency through exports. This will ensure economic growth.

    3) By gradually removing trade barriers, industries with no future will have to face superior foreign competition and will have to cut down prices, and therefore also supply to compete. They will be compelled to dismiss a certain amount of labour and resources, and will have to continue doing so each time more trade barriers are removed. Finally they will end up with little or no resources to allow survival, and will cease to be. This approach would be a lot milder than taking away all trade barriers instantly and thus causing a sudden surge in domestic unemployment, which might have serious economic consequences. However, the policy still causes unemployment, which is generally unpopular. This, and the fact that unemployment would require unemployment benefits to be paid by the state, is why this policy is difficult to accomplish politically.

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21. # daniel.echl.f09on 25 Oct 2010 at 9:16 pm

    1.What is the difference between the protectionism America needs today and the protectionism it used in the late 19Th and early 20Th centuries?

    Context is the difference between the protectionism needed today and that of the 19-20Th centuries. This is because back then America needed to protect its markets from the highly advanced European markets and they had to nurture the infant industries and larger industries until they were able to compete with the european businesses. Where as today the contrast has change drastically we see that they are needing to protect there dying auto motive market and many others in order to hold onto American jobs that are enticed into these markets.

    2.How could protectionism be used responsibly by developing countries to promote economic growth and development?

    They need to look towards aiding and protecting there infant markets from highly competitive imports. This is so that these markets are able to grow domestically and start opening job opportunities to the local population. This will therefore lead to an increase in living standards and disposable income and thus economic development.once they have achieved a certain level within this market then they will be able to reduce the tariffs and start trading therefore bring in foreign currency and this will lead to economic growth.

    3.Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    The professor is proposing that governments slowly eradicate the barriers to trade in markets that have no future. The way in which this will be done is as each barrier is taken away foreign imports will become more and more competitive leading the domestic industry to downsize every time as it will see a loss in customer base and resources. Then as more and more barriers are taken away they will be unable to compete with the foreign imports and therefore be liquidated and phased out. Doing this gradually would mean that there isn't a huge influx in unemployment when all of the barriers are taken away immediately but rather phased out slowly. This policy would lead to a loss of jobs domestically and this isn't popular in the eyes of the local populace this would therefore affect the image of the government that is in power. This would also lead to higher welfare payments and reduction in taxes as no income is being taxed therefore governments will not use this kind of tactics as it is politically hindering.

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22. # daniel.echl.f09on 25 Oct 2010 at 9:25 pm

    Eline,

    Great response to the article and questions. I think that for question one the major difference is context of the time period and the situation of the country. Also with the protectionism in developing countries they can use the tariffs and the barriers to fund and aid the industries as well as protect them from the foreign imports. With the un popularity of the phasing out idea i think that the short term thinking of the governments and the self interests also means that they are unable to introduce these ideas that would be potentially beneficial for the country in the long run.

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23. # sara.echl.f09on 26 Oct 2010 at 11:29 pm

    1. In the past America’s protectionism was to build up its economy to a scale where it became an economic super power. Today the protectionism is so that America stays as an economic super power.

    2. In a developing country protectionism is useful until the industry has a base to work off of; for example, factories and dealership network. Once these are in place the protections should be gradually dropped so that the local industry can get used the competition gradually. If all tariffs, taxes or subsides were to be removed in one go then there is a good chance of the local industry would fail straight away in face of the more established competition. On the other hand the consumer would lose out if the protections remained in place because they would not have a competitive market.

    3. The idea of Chang’s principle of thorough liquidation and redundancy is pure free trade. Without barriers supporting the sunset industries each country would produce what they could with the lowest opportunity cost. If we take the American automobile industry as an example we can tell that the USA does not hold comparative advantage on producing cars. So a free trader would argue, like Chang, let them go under. They would not consider the negative externalities however, such as unemployment and a decrease in aggregate due to a decrease in income which would mean the government would receive less tax revenue. A positive aspect would be that the American government no longer needs to pay out the automobile industry and can open its borders to free trade. Overall however, unemployment would result in a worse crisis than bailing out.

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24. # sara.echl.f09on 26 Oct 2010 at 11:37 pm

    Daniel,

    Good point about the automotive industry in the united states. What kind of protectionism do you think the US government could use to protect it's failing car industry?

    Do you think that it could be salvaged?

    Sara

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25. # masayaechlf09on 27 Oct 2010 at 5:24 am

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The difference between the protectionism American needs today and the protectionism used in the late 19th and early 20th century is that protectionism during 18-19th century were used to nurture the "infant industry" and to protect from European influence. Whereas in the early 20th century, America used protectionism, not to protect its venture industry, but to desperately keep together the dying mature industry.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Developing countries can promote economic growth, development by not only protecting its infant industries and securing jobs for its people, but by also facilitating structural change through government expenditures into workers training, and R&D development could use protectionism responsibly.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    In other words, Professor Change means that there should be no mercy to industries whom are incapable of competing in the market. By protecting these weak and diseased industry, it is severely damaging the national economy and stripping away government expenditures. He basically advocates for the removal of protectionist policy over these matured but dying industry and allocate valuable capital resource to more profitable industry. However, this is politically difficult considering the fact that American automobile industry have been associated with politics for a long period of time. In addition to that, by removing barrier from automobile industry that employs vast majority of people in major industrial cities, any job loss means a loss of vote for politicians.

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26. # Eline.echl.f09on 27 Oct 2010 at 8:54 am

    Masaya,

    Though I completely agree with your opinion that Professor Chang is advocating the elimination of weaker industries, I don´t believe he intends to show "no mercy" in doing so. I think that Professor Chang is hoping gradual elimination, by removing trade barriers one at a time so the industry and domestic workers and domestic firms will not be hit too hard and there will be no too dramatic economic consequences.

    -Eline

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27. # Chamonix.echl.f09on 27 Oct 2010 at 1:16 pm

    1. The protectionism that the United States needs today is to help already developed industries which are struggling because of the recession rather than aiding the development of “infant industries.” The aim of this is to help existing industries adjust to changes in demand caused by free trade, rather than to help new industries.

    2. Developing countries could use protectionism to ensure employment in their own nations. This would help to encourage development as more people would be able to afford basic standards of living such as healthcare and education. Economic development would also result as more people employed and greater domestic production means that more money is earned, and therefore spent, within the developing nation.

    3. Chang’s idea of phasing out industries without a future with “orderly liquidation and redundancy” means that he thinks workers in futureless industries should be fired from their jobs as companies close down. This is easier stated economically than executed politically. First, it looks bad for nations to say that their traditionally strong industries are closing down. Think of the US auto industry—America was ashamed to admit market failure. Workers are also some of the better-organized groups. In most industries, laying off workers is quite difficult and requires planning and long-term payments. Finally, voters are, for good reason, skeptical about this sort of policy. Some “unskilled” workers will be able to move to new industries, but the meat and textile industries have their own experts and qualifications, and it is almost impossible for many workers to easily switch jobs.

    Chamonix

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28. # Chamonix.echl.f09on 27 Oct 2010 at 1:28 pm

    Trevor,

    Great post! I really liked how you discussed the challenges facing industry in response to the rising green movement. You're right; this movement is mostly coming from outside of the United States, particularly Europe. For a long time, “green” has been a niche market, with a few expensive and ecologically responsible goods making up almost all of the sales. Now, however, countries are very conscious of their environmental impact. My bookmark this week was about EU discussions to end trade with countries with unregulated carbon use. This sounds good, but where does this leave developing nations? If half of your population is illiterate and malnourished and you have no trading power whatsoever, how can you hope to recover? I think that for the United States will come to produce goods more environmentally responsibly, as you said. This will cause an increase in price that won't go over so well, but especially with the EU measures I think that it will be a choice between green production or enormous protectionist measures–not too likely in a recession.

    Thanks so much for the great post!

    Chamonix

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29. # masayaechlf09on 27 Oct 2010 at 8:32 pm

    @Eline

    Thank you for the correction. You're right, its not a complete abrupt abolition of protection over these weakened industry, but rather a smooth and gradual withdrawal of government care.

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30. # elijah.echl.f09on 29 Oct 2010 at 12:52 am

    The difference between the protectionism America needs today and the protectionism it used earlier is that earlier protectionism was used to grow its industries until they could compete with the world. Now it needs protectionism to help maintain these industries or to help them transition into non-existence. Instead of growing industries it needs to be used to give time to help them be re-evaluated.

    Protectionism can be used responsibly by developing countries to promote economic growth and development by having them gradually open up as first their industries would be sheltered and later on they would gradually open up to the world. In this manner they would be able to develop their own industries while also setting up a framework by which they would transfer to free trade which would benefit all.

    Professor Chang's phrase "through orderly liquidation and redundancy" means that those industries that cannot continue must not be allowed to keep trying to live only to just barely fail and to cause chaos. Rather they must be stabilized and then destroyed in a neat and orderly fashion, their capital and resources being quickly re-invested in more profitable ventures and not being tied up in whatever previous engagement they were in. This policy is hard to accomplish politically because it means admitting that your nation does not have a comparative advantage and also because it means accepting job loss (at least in the short term.) No party wants to go to the election with the platform of cutting jobs or industries because it doesn't sound good, and as such often times needed economic steps are not taken.

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31. # elijah.echl.f09on 29 Oct 2010 at 12:56 am

    Charmonix:

    I like your post's attention to Unions. I had forgotten about them when I wrote mine and it's interesting to think that Unions could provide a large problem. It could in fact lead to situation in which there is both no profit in keeping and industry open or in closing it. Also the idea of their specializations I thinks shows why we are so politically uncomfortable doing this. For example saying a million or so peoples’ skills are unimportant and that it's more important to make money is place money before human life, and while we do this all of time, to have to admit it in such direct context is often hard to do.

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32. # Dennis.echl.f09on 29 Oct 2010 at 8:13 am

    1. The protectionism the United States used during the late 19th and 20th centuries was for the purpose of protecting its "infant industries" from superior European industries. Thus they set a very high tariff wall to protect America in its industrially developing stages. The protectionism America needs today is more of a form of assistance to the stagnant American industries that need to either be liquidated or allowed to reform, but only under strict conditions. American industries simply need a bit of moving room so that they can find their place, which can be achieved with a few light protectionist policies.

    2. Like I stated in the last answer, protectionism can be used by developed countries in order to give their industries some breathing space to either calmly liquidate or to be reformed. In either case, conditions as to whether or not the industry has a real future apply.

    3. Professor Chang means that inefficient businesses with no future can be eliminated easily

    with the freedom that protectionism gives each particular industry. This policy is quite difficult to achieve politically because many people will become unemployed, which entails large increases in state unemployment payments and is also unfavorable in the eye of the public. Therefore, politically, many people would be very unhappy with this although in the long-run it would mean an increase in efficiency.

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33. # Dennis.echl.f09on 29 Oct 2010 at 8:24 am

    Elijah,

    In regards to what you said about the second question, I think that industries could use the protectionist policies in order to give themselves some leverage in order to be able to more easily liquidate and reform existing industries rather than removing protectionism, which would be the opposite. What do you think? Regardless, I like what you have to say about the smooth shift of capital that comes "through orderly liquidation and redundancy." I did not really think about that.

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34. # Ralph.echl.f09on 01 Nov 2010 at 2:33 am

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The protectionism the United States used during the late 19th and 20th centuries was to protect its “infant industries” from more competitive European industries. They set up high tariffs to enforce this protection. However right now it seems that American industries need a push in the back to see where they can go next. To go back to the 19 and early 20th century policies would just be a big mistake, as it would be an over reaction.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism could be used just like America did when they started their industries, by giving them a little boost in being able to set up and not having to comepte straight away with foreign imports. With the initial boost it will allow confidence to brew around the developing country, which could increase output.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    As I have mentioned in an earlier welkereconomics page, Politicians tend to want to think what can benefit them and not what is good for the country. To liquidate the companies would cause high unemployment, and an increase in demand of government benefits which would cost more on the short term, yet over long term it would be advantageous.

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35. # Ralph.echl.f09on 01 Nov 2010 at 2:40 am

    Dennis,

    I like your answer for question two, yet would you also say thats the developping country's GDP would increase with the protectionism policy being followed?

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36. # Armando.echl.f09on 04 Nov 2010 at 12:53 pm

    1) In the past America’s protectionism was to build up its economy to a scale where it became an economic super power. Today the protectionism is so that America stays as an economic super power.

    2) Developing countries can use protectionism to allow its infant industries to develop and grow without facing too severe competition and to let declining industries to strengthen themselves. The stronger domestic firms will then open up new job opportunities for domestic workers. This will increase living standards and thus generate economic development. As soon as their industries are strong enough, they can open up trade barriers and acquire foreign currency through exports. This will ensure economic growth.

    3) Politicians tend to want to think what can benefit them and not what is good for the country. To liquidate the companies would cause high unemployment, and an increase in demand of government benefits which would cost more on the short term, yet over long term it would be advantageous.

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37. # Armando.echl.f09on 05 Nov 2010 at 1:09 pm

    Hi Eline,

    Its true the fact that its not a complete abrupt abolition of protection over these weakened industry, but rather a smooth and gradual withdrawal of government care

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38. # Thomason 23 Sep 2011 at 5:56 pm

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    In the late 19th and early 20th century the U.S. relied on protectionism in order to allow their infant industries to grow and expand, in order to become one of the strongest economies in the world. Nowadays the U.S. wants to use protectionism in order to allow these industries to transit into a global economy on the basis of free trade. Therefore these industries will have to compete with other industries around the world in the future.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    If infant industries are being protected, it allows them to expand and grow. This will give a nation time to reach a certain level of economic growth and development, which allows the nation and its producers to compete on the global market. Therefore these industries don't have to fear to be overwhelmed by competition when they are still growing and trying to expand.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Industries should be phased out but the people employed in these industries shouldn't become unemployed for a long period of time. He focuses on a seamless transition from protectionism to free trade. It may sound easy, because in one sector of the economy jobs are being lost but in another sector jobs are being created. However we have to consider structural unemployment, as the new unemployed workers might lack the skills to work in another sector of the economy. This makes the transition from protectionism to free trade very difficult and almost impossible to accomplish politically.

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39. # Debbieon 24 Sep 2011 at 10:02 am

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    In the past the U.S. used protectionism in order to make their infant industries grow and expand, so that they could become a super power. Now, the U.S. wants to use this protectionism to let these industries become a part of global economy on the basis of free trade.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    When infant industries are protected, it allows the nations to growth both economically and social, without the nation fearing competition.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Industries with no future should be phased out, is what he argues, but by this statement he does not mean that the people should become unemployed for long. He is trying to make the transition between protectionism and free market work better. But there are many problem such a structural unemployment which are hindering this smooth transition.

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40. # Alexandre Kon 24 Sep 2011 at 11:33 am

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    In the late 19th and early 20th centuries, America used a form of protectionism to let its infant industries grow and expand. This reinforced the role of America as a strong economic power. However, now, the protectionism that the United States needs is to help the well-developed industries move into the global economy, on the principle of free trade.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    If infant industries are protected, it allows developing countries to promote economic growth and development. The industries do not fear the competition as they are protected, and can thus easily expand.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Professor Chang argues that industries that are only able to exist through protectionism should shutdown. This marks the transition between protectionism and free trade. Such a measure would clearly cause a lot of unemployment, in particular structural employment, as the people may not necessarily have the skills required for other industries. Politically speaking, this is nearly impossible to accomplish because the people do not wish to be unemployed and it would also hurt the economy – at least on the short-run.

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41. # Emma Walwyn Brownon 25 Sep 2011 at 11:38 am

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    In the late 19th and 20th centuries the US used protectionism to help it's infant industries expand and grow. Now the US uses protectionism to aid it's industries into becoming part of the global economy.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    If protectionism is used with infant industries in developing countries they do not have to fear competition therefore giving them a chance to grow and expand which leads to economic growth and development.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Professor Chang says that if an industry will not survive once it is no longer protected should be phased out. This is to make the transition between protectionism and free trade smoother. However, this would cause a rise in structural unemployment, which is not popular with the public therefore politicians do not want to introduce a policy that could increase unemployment.

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42. # Beatriceon 25 Sep 2011 at 5:26 pm

    1. In the past protectionsim was used to help "infant industries" to grow; whereas today protectionsim is used to engage these industries to become part of the global economy, following the principle of free trade.

    2. Protectionism is used by developing countries in order for the "infant industries" to grow and to contribute to the nations economic growth and development. The growing industries do not fear any competition due to protectionism.

    3. Professor Change states that industries, that are no longer protected and have no chance against its competitors, should be phased out in order to ease the transition between protectionism and free trade. However governments do not want to see a rise in structural unemployment as this would slow down the growth of the nations economy.

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43. # Cedricon 25 Sep 2011 at 5:56 pm

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries is that the protectionism used in the late 19th and early 20th centuries was used to help "infant industries" expand and grow. The protectionism that America wants today is that infant industries become part of the global economy so they can enjoy the benefits of free trade.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism could be used responsibly by developing countries to promote economic growth and development because since these countries are "protected" they can focus on economic growth and focus on expanding. This could also help increase the GDP of such Infant industries.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    What Professor Chang means by "through orderly liquidation and redundancy" is that it reflects industries that have no future and therefore should shutdown. This is the transition from protectionism to free trade. At such stage, unemployment will increase as people no longer have the skill required for such industries. Such policy is hard to accomplish politically because no one wants to be unemployed as it hurts the economy and can slow down economic growth.

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44. # Sarah E.on 25 Sep 2011 at 7:04 pm

    1.What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    In the late 19th and early 20th century, America used protectionism to help the infant industries grow. Protectionism has changed to help its industries becoming part of the global economy. The difference is that it changed from aiding infant industries to grown to helping bigger industries be part of global economy.

    2.How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Due to the usage of protectionism by developing countries, the infant industries don’t have to fear competition and will therefore grow. This expansion will lead to economic growth and development.

    3.Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    What is meant by this is that industries with no future without protectionism should be phased out. The aim is to make the transition between protectionism and free trade work better. The result of this would be an increase in unemployment (structural unemployment). However, a rise in unemployment is unpopular due to the slowdown of economic growth.

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45. # Pvanderweijdon 25 Sep 2011 at 7:23 pm

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The protectionism America needs today is one to protect its working force, by ensuring that, for example, foreign car manufacturers cause the 3 million or so American workers involved in the automobile industry to lose their jobs. That of the 19th and 20th century was to protect entire American industries, allowing them to grow till the stage wherein they could protect themselves.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism could be used responsibly by developing countries as a means of protecting infant industries from more mature giants, by nurturing their growth to the stage wherein they can compete with other industries worldwide without being overrun right away.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    What Professor Chang means is that the industries that could only exist through support, and that will never be able to compete in a global economy, should not be allowed to survive for the sake of making the transition from protectionist to free market policies easier. Such a policy would be hard to accomplish politically because few people would vote for a party that would consciously cause the amount of people employed to fall.

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46. # Nathan Pon 25 Sep 2011 at 7:49 pm

    1. The protectionism the US had in the late 19th and early 20th centuries is different from the proposed protectionism because in the 19th and 20th century, the American economy was still growing, while now the protectionism was to keep the economy as strong as it has been.

    2. Protectionism can be used to help developing nations promote economic growth and development, because it gives them a chance to reach economies of scale in their different industries, which would be totally obliterated by the larger industries in other nations, which would lead to a decrease in growth and development, and hider the home nations economy.

    3. Professor Chang means that the different industries are not large enough to compete on a global scale without tariffs and other protectionism, and that these industries should be phased out because they simply cannot compete. A policy like this is hard to accomplish politicly, because there are certain barriers that each government will have with the other.

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47. # Susanneon 25 Sep 2011 at 9:46 pm

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    -The protectionism of the past promoted and encouraged the growth of infant industries. Today, America needs protectionism which will allow these industries to participate in the global economy and experience the benefits of trade.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    -The way I see it is that protectionism in developing countries can be used to aid in the development of infant industries by protecting them from the mature competitors who experience economies of scale. As an infant industry, it has not yet grown in size and has high costs of production. Such industries will need protection from imports until it has grown in order to compete.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    -If industries can no longer sustain without protectionism, they should be ‘phased out’. However, eliminating various industries will cause a rise in structural unemployment, as the skills of workers will no longer be needed.

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48. # Maphridaon 25 Sep 2011 at 9:47 pm

    Since the other two questions have been well answered by other peers, I will just focus on the third one. Professor Chang means that an industry that will not be able to sustain itself without the support of a nation, should shut down because it wouldn't be able to survive or compete in the global economy. He suggests that the right way to do this would be through liquidation, which is when a firm sell its assets to creditors after it has been shut down. But this only eliminates the firms debts. The political dilemma this can result to is structural unemployment, stagnating economic growth, which is what protectionism attempts to initiate in the first place. It is hard to accomplish politically because unemployment is not favorable for any nation, and a transition into the free market, which is healthy for the economy, would be difficult.

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49. # Kristyon 25 Sep 2011 at 11:08 pm

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    In the 19th and 20th century America used protectionism to allow it's infant industries to grow, now they use it to keep themselves a super power as they could not compete in many industries with free trade.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Developing countries could be given temporary protection to allow them to grow to a level where they could compete and then the protection would gradually be removed.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    He means that industries that are not able to compete with free trade in place should be removed entirely as they only perpetrate harmful protectionism. But this would be difficult as there would be, if only temporary, widespread unemployment which could lead to an overall slow down of economic growth as people can afford less leading other industries to lay off workers.

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50. # Philippaon 26 Sep 2011 at 12:37 am

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    In the late 19th and early 20th centuries, protectionism was used to promote Infant Industries and make them grow, whereas now, protectionism is needed to support the mature industries and ensure they reap the benefits of trade.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism would help the industries to grow without the fear of competition from other nations.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Professor Chang means that if an industry cannot survive by itself without protectionism, it should be phased out (shut down) because it wouldn’t be able to survive in the global economy against other strong competitors. However, this would be difficult to accomplish because it would lead to unemployment for those in that industry which is undesirable. Many politicians are also against free trade for this reason, therefore it would be even more difficult to implement free trade.

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51. # Matthew Burnhamon 26 Sep 2011 at 9:18 am

    The difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries is that the old protectionism was used to help “infant industries” in their growth and expansion. Today the protectionism would mean that infant industries join the global economy to gain the benefits of free trade

    With protectionism being used by developing countries it means that they can focus on their own economic growth instead of worrying about other countries economies as well. It could also lead to an increase in the GD of the infant industries

    Professor Chang's argument is that industries who don't have a future place in the economy should be shut down. This, however would increase unemployment and very few business owner would want to shut down their own business voluntarily for the economy. Politically this change in policies that would lead to an increase in unemployment would be difficult to instate.

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52. # Chris Bertramon 26 Sep 2011 at 9:31 am

    • What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The primary difference between the protectionism in America today and America in the late 19th and early 20th centuries is reason why it is being done. Nowadays, the protectionism is used to keep the economy strong. In the late 19th and early 20th centuries, it was used to promote the growth of the economy.

    • How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism could be used responsibly by developing countries to promote economic growth and development as this would allow the domestic economy to gain economies of scale in some areas that can compete on international markets.

    • Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Professor Chang wants to say that some industries are not large enough to compete on a global scale. These industries should be phased out by the government. However, the government would have a hard time to implement these actions due to political barriers.

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53. # Reem Hassanon 26 Sep 2011 at 10:50 am

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    Earlier protectionism was used in America to only develop its economy. America needs protectionism now to anchor the local industries and local jobs aswell.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism would be used responsibly by developing countries, by developing countries and protect american jobs in the long run.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Phasing out an industry would cause a loss of revenue and unemployment which is undesired in an economy.

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54. # Penelopeon 28 Sep 2011 at 12:01 am

    1. In the late 19th and early 20th centuries America used protectionism to help infant industries to grow. Today it aims for these industries to become part of the global economy.

    2. Protectionism could be used responsibly by developing countries so that the infant industries can grow and bring more income into the economy. Growing industries need to be protected against factors such as imports in order for it to grow and develop. Protectionism is then used so that these industries do not have to fear competition until they are able to compete equally.

    3. Professor Chang claims that industries that cannot fend for themselves should be phased out. An industry cannot be protected forever and if it cannot survive without protectionism then it shouldn’t exist because it will become a burden to the economy. This policy is hard to accomplish politically because of the rise in unemployment that will occur and result in slowing down economic growth.

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55. # Ozge Elifon 20 Oct 2011 at 10:10 am

    1.What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The difference is the aim. The protectionism used in late 19th to nurture the infant indursty and to avoid European influence. In the early 20th, it used to help the mature industry. Today the aim is to help the other countires to involve in global market.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protection of infant industries is to allow developing countries to have economic growth and development. Since the industries are protected, they will be able to compete.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    He believes that the industries which are not capable of competing with others should not be protected. Protection of these kind of industries can result in damaging the national economy and can have bad affects on the government expenditures. He states that the protection policy should not be used. However, it can be used in the industries which are new and searching for capital, resorces.

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56. # Ozge Elifon 20 Oct 2011 at 10:12 am

    Hi Kristy,

    I agree with the idea that the protection of industries which are going to bring more profit can result in unemployment.

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57. # Nesibe Zirzakiranon 22 Oct 2011 at 10:56 pm

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    In the late 19th and 20th centuries, US embraced the idea of infant economy which relied on protectionism to come to the power and this economy needed time to develop economies of scale. Today US has a different approach to the protectionism as means of imposing it to the cheap imports floating in the market ( eg. tariffs and quotas on Chinese products. ) and it shifts from one sector to another if the sector do not have any comparative advantage.

    2.How could protectionism be used responsibly by developing countries to promote economic growth and development?

    It can be used to provide fair competition in the domestic market which would increase growth rate of developing countries by having protectionism on imports because imports would ruin the domestic economy.

    3.Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    He states that industries which cannot deal with the consequences of protectionism, which are not able to compete with other firms , shouldn't be protected because they are load for government as also they will cause decrease in government expenditure, rising unemployment. However the firms which can deal with fierce competition should be protected because they contribute to domestic market a lot and they have to be protected against cheap imports.

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58. # Nesibe Zirzakiranon 22 Oct 2011 at 11:00 pm

    # Ozge Elif

    Your attitude for " capable firms" on the third question as "firms which are new and search for capital, resource" is interesting

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59. # Nesibe Zirzakiranon 22 Oct 2011 at 11:03 pm

    # Chris Bertram

    In the third question I liked the way you linked that government may have a hard time to implement actions for incapable firms with the political barriers.

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60. # Dilan Guneson 23 Oct 2011 at 12:04 am

    1.What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    There are a little bit differences between the reasons of used protectionism in the late 19th and early 20th centuries and today. In the late 19th and early 20th centuries America was protecting itself from the developed European countries and by protectionism America became good at some industries. But today one of the biggest economies in the world, America, uses protectionism for make their dying industries survive and repair.

    2.How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Infant markets are the ones that developing countries should ‘work on’. By protectionism the domestic markets will be protected from the foreign competition. When it is protected the domestic markets will make more profit and this will lead them to create new jobs that domestic workers can work at. This will affect the unemployment rate in the long run. The decreased unemployment rate will improve the living standards. If domestic markets make profits then government make profits too. Therefore, there will be an economic growth and development.

    3.Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    This sentence is said for the markets that don’t have any future. If the barriers are absent then the industries with no future should deal with a big competition environment. But these kinds of industries don’t have any power to compete with others. On the other hand, for competing these industries should produce things but with nothing they can produce nothing too. This competition environment will make those kinds of industries out of the competition and at the same time out of the industry.

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61. # Dilan Guneson 23 Oct 2011 at 12:08 am

    To Philippa,

    I want to say that you be can write more for the second question I think. Yes you touched upon the most important point but it would be better if you explain it a little bit. For example; as you mentioned the domestic industries will protected from the competition but this will lead them to what? increase their profits? creating new jobs? But still I liked the other answers.

    Thanks…

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62. # Dogan Ozcanon 24 Oct 2011 at 8:05 am

    1-)What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    -America used protectionism in 19th,20th and 21th centuries(today). Of course there are differences between these. In 19th and 20th centuries America was not a developed country. So it was protecting itself and economy from the other developed countries on the world. This situation had advantages for America such as developing economy and developing itself in some industries. In 21th century(today) everyone know that America is the biggest economy on the world. In this time period some other countries also developed and this development effected America and its economy. America started to apply protectionism again. But this time the aim is different because America's economy effected in a negative way by other countries' economies. The aim is recovering the economy and survive their dying industry.

    2-)How could protectionism be used responsibly by developing countries to promote economic growth and development?

    -In this situation the aim is protecting the domestic markets from the other foreign markets. Because foreign markets effect the economies of domestic markets' in a negative way. For example they make less profit. So when protectionism applied domestic markets are making more profit. Also this situation has some affects on unemployment rate. If domestic markets are protected they will have a chance of creating new jobs and giving some jobs to local people. So unemployment rate decreases. Finally, if domestic markets make more profit there will be a decrease in unemployment. When the unemployment rate decreases and domestic markets make more profit also government will make profit. It will also develop.

    3-)Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    -This argument is about some markets which don't have future, or which will not have any improvment or development in the future. There are some big and developed markets around these markebts and they don't have a power to compete with these developed markets. So they can't compete with them and they will not be able to make profit. When they don't make profit they are not able to produce products. So they will not be able to become in the competition and they will be out of the economic activities.

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63. # Dogan Ozcanon 24 Oct 2011 at 8:09 am

    #Nesibe

    I liked your answers but for the 2nd question if you could talk about domestic markets a bit it would be better. You should also give some examples and explain those examples.

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64. # selin tatlicanon 24 Oct 2011 at 8:13 am

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    There are some little differences between aim of the protectionism in the late 19th and early 20th centuries in America and today. In earlier times America protected itself from developing European countries and developed its industry. But today the aim is to help other industries and to repair their industry.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    The infant industries will be protected by protectionism, this will supply a opportunity to have economic growth to the developing countries. Also the industries will be protected and the countries will be economical developed.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Professor Chang believes that the industries that are not able to have big competitions should not be protected because these industries don’t have power to develop and this can damage the economy. So that, in this case the protectionism should not be applied. It can be useful for the industries which are new and have future for the economy.

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65. # gökçe g&on 24 Oct 2011 at 8:18 am

    In America the protectionism is a limite done that only exist to allow the transition to an economy in order to operate on the basis of free trade. This means shifting the sectors of jobs where the U.S. obviously does not have a comparative advantage. It is unlike the late 19th and early 20th century where the U.S. took an “infant industry” approach to rely on protectionism to become one of the strongest industrial giants in the world.

    In the article it is already stated if infant industries are protected through various means then it will allow them to grow, expand, and enlarge. This will lead to the desired economic growth and development and allow the country to become a player on the international economic stage. They could then begin openly trading the good they have a comparative advantage making over other nations. This holds particularly true for industries in still-developing countries that are liable to have a workforce.

    He says that; the industries should be phased out without the people employed in those industries becoming unemployed for an extended period of time. Trying to adopt the most seamless transition as possible is what he’s looking for. Inevitably, though, it is difficult for a new business to be asked to come into a certain area where another left and immediately hire all the old workers who may not have the new skill set for the new job. Its politically unviable because at some points this would inevitably lead to greater frictional unemployment and more people out of work for a time. Politicians would be vote out of office in favor of others who would reinstitute the protectionist policies. This is why it is hard to have this done on a political side.

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66. # selin tatlicanon 24 Oct 2011 at 8:22 am

    #Dogan

    Your answers are really clear and informative, but you can explain the second question better I think.

    Like or Dislike: 0  0

67. # gökçe g&on 24 Oct 2011 at 8:23 am

    @nesibe

    you are good at explaining the terms but in the second question it would be better if you mentioned domestic markets..

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68. # Aaydoganon 24 Oct 2011 at 9:11 am

    1.) What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The economical ideology of the USA has changed since the 19th century. The aim of America was basically to protect itself from the other countries (esp from European countries) for its own good by having protectionism-tariffs, quotas so on. Later in 19th century, especially in 20th century, the approach of USA towards free trade has changed as it got bigger and became one of the most important economics in the world. Now the aim is to protect the industries which are losing their effects and about to shut down in the USA.

    2.) How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism can be used responsibly by protecting domestic markets from foreign competition and have a balanced and fair competition between firms and so countries. If this balance is required, then the domestic firms will have the chance to have a greater profit and so those firms would want to hire people, and this development will lead to new job opportunities and unemployment rate will be lessen. Plus, from the agreements between countries, both countries (export and import) will benefit, which would also affect economic activity and promote economical growth.

    3.) Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Those kinds of industries will decrease the government expenditure, since they don’t have the power to compete with the other firms; so in this case Chang argues that those who cannot protect themselves shouldn’t be protected by the government because it’ll have many consequences for the government of the specific country.

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69. # jjowetton 24 Oct 2011 at 11:05 am

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries is quite drastic. In the “olden days” America used protectionism to promote the growth of their own economy with “infant industries” in need of protection in order to succeed on the international market. Nowadays, America is one of the greatest and most powerful economies in the world. Its growth is being outshined by that of developing countries who have the ability to produce lower-priced goods and services. Nowadays, America uses protectionism to keep its economy strong with mature industries needing to be protected against “unfair” competition.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism could be used responsibly by developing countries to promote economic growth and development by protecting infant industries so that they can gain a competitive edge on the international market. They need to give their infant industries time to establish themselves; otherwise they will be easily brushed aside by more mature and developed firms. They need to allow their infant industries and domestic market to gain economies of scale.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    When Professor Chang made this statement, he meant to say that their s no point in protecting an industry that is on decline anyway and has no future in the ever-modernizing world. These countries are given a little time through protectionism, in order to be able to shut down in an orderly and awaited fashion. However, this policy is extremely is extremely hard to accomplish as there are many political barriers. An industry that is going through this may argue that it is not fair and that the government has no right to “nose it” into shutting down.

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70. # jjowetton 24 Oct 2011 at 11:09 am

    # Nesibe Zirzakiran

    A very correct and interesting response overall. However I feel as though your response to the second question is lacking in depth. You shoudl definately go into the fact that it is wise for them to use protectionism in order to protect their infant industries.

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71. # Huanni Wuon 24 Oct 2011 at 12:37 pm

    1) The protectionism for today no longer serves the goal of 'developing infant industry' as it did in the 19th. As the society moves onwards into a technologically advanced and economically developed future, the inevitable structural changes of industries are the reasons for nowadays protectionism. There are manufacture production transfering from American sunset industries to industries in developing countries. The protectionism is needed for provididng industries which are unlikely make the best out of existing resources with safer landing.

    2) Developing countries should make use of protectionism to develop their own high-end industries, which are still at infant phases.Given that there have been already plenty inflow of exotic ideas and technology from global trade, now it is time for them to develop their own strength and cut off the reliance on imports. Well-designed and coordinated protectionism would allow growth for them in the future.

    3) I think liquidation and redundancy are used to prevent sudden bankruptcy and unemployment. They should be gradually achieved as the process involve massive capital and labor transfer – resource reallocation.

    It is fairly easy to say 'let an industry gradually degrades and will shall make it safe so that you don't worry'. However, facing the losses of jobs, the changes of existing environment, American are unlikely to stay quiet and just accept the apparent 'benefit'. Politicians constantly are having the headache of balancing the interest of differnt stakeholders of a decision. It is very hard to divide an economic cake evenly because the concept of scarcity tells us: one gets, the other gives. If they want to enjoy the welfare of comparative advantage and overall economic growth, they have to give up jobs to people in other lands.

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72. # Mehmet_Mert_Sumaon 24 Oct 2011 at 12:39 pm

    1. The aim of the former protectionism America used was to encourage the growth of its infant industries. Aware of the inferiority of US products against European products at that time, America used protectionism to support its infant industries. Today, America uses protectionism to protect domestic employment and the mature industries which don't have comparative advantage in the free trade. So, America uses the benefits of managed trade.

    2. It is simply the protection of infant industries from international mature industries which benefit from the economies of scales.

    3. Shifting the resources and the labor force to an area where the country has comparative advantage is so difficult to accomplish in the short run. It would lead to structural unemployment. Considering that none of the voters would care about the benefits in the long run, the policy would cause the decline in the support for the politicians. Most of the politicians would not dare to lose their support, and they would choose protectionism to protect domestic employment.

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73. # Mehmet_Mert_Sumaon 24 Oct 2011 at 12:42 pm

    @# Sarah E.

    The slowdown of economic growth is likely to be seen, as you say. The inactivity of unemployed and the insurance of unemployment would be factors to cause that.

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74. # Huanni Wuon 24 Oct 2011 at 12:45 pm

    @gökçe gündüz:

    Regarding the 3rd question, I agree with your point about difficulty of labor mobility. Sudden bankruptcy of sunset industries would lead to structural unemployment. Pro. Chang said 'orderly' so as to point out such movement should be taken slowly and gradually, avoiding massive unemployment at the same time and give those workers opportunity to retrain themselves.

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75. # Muhammet Murat SEKBAon 24 Oct 2011 at 8:31 pm

    1. What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    In the late 19th and 20th centuries the main aim of the USA by using protectionism is to help and make growth it’s infant industries. If we look at for now, the main aim is to improve its industries and to be the part of the global economy.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    In developing countries by the usage of protectionism, the infant industries don’t have to fear competition and this situation will give them a chance to grow and expand, then finally these will trigger the economic growth and development in this country.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Professor Chang means that there are some industries which are not large enough to able to compete on a global scale. These industries should be phased out by the government. However; this action can’t be so easy for a government, because there can be some certain barriers which makes the process difficult.E.g. political barriers.

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76. # Muhammet Murat SEKBAon 24 Oct 2011 at 8:36 pm

    @ gökçe gündüz

    I agree with your responses. Especially in the second question the usage of terminology is good and explaining the relationship between protectionism and infant industry is obvious.

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77. # Gunnhildur Ómon 24 Oct 2011 at 11:47 pm

    What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    Between 1830’ and 1940’ the US were not nearly as significant in international trade as they are now. US industries were new and had a very hard time competing against other countries, which were more developed and were able to offer lower prices of goods. Therefore it was important for the US to use protectionism to protect these industries, so they could reach economies of scale, grow bigger and stronger and eventually offer lower prices of their products. As time has passed the US has come more and more powerful economically. Now the US is not protecting infant industries that needed help to get on their feet, but rather protecting industries that are fully developed and simply do not have a comparative advantage in production. The US is preventing countries to import goods that are cheaper in production, hence cheaper for consumers, to keep the enormous economic power that they already have. They are giving the US firms an artificial comparative advantage.

    How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Just as the US did in the 1830’ to 1940’ where they were using protectionism to protect infant industries from outside competition that was able to offer lower prices, developing countries can do the same thing. Developing countries can use protectionism to allow firms to get stronger and more efficient and thus prepare them for outside competition. By this they are creating new jobs and there will be more domestic production, which will boost up economic growth.

    Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically

    He is saying that it is a responsible protectionism to gradually remove barriers that are protecting a certain industry that has no future. This will cause this particular industry to be completely unprotected from competition from other nations. It will most likely lead to the end of the industry since firms will not be able to compete in the market without help from the government. This however will slowly cause more and more people to be unemployed and that is the huge downside of this. The unemployment threat often is the factor that makes government keep these industries going. The reason for why this is hard to accomplish politically is that it won’t attract many votes to inform the public of actions such as this, actions that cause unemployment. Therefore most politicians will try to play it safe and try to reduce unemployment in the short run rather than increasing it.

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78. # tsekineon 25 Oct 2011 at 7:28 am

    1. The difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th century would most likely be the fact that back then, the American industries and markets needed protectionism in order to grow (without the threats of “superior European competition”). In order to protect their industries, America had imposed a very high tariff on the foreign imports, averaging 48%. Therefore we could make an understatement that the United States were a developing country, until they had a significance economic growth and development. The protectionism that America needs today would be the actual protection of the industries, from foreign industries. Although protectionism of the modern industries may be important (employment, etc), it is stated in the article that Obama should impose temporary protection to the declining industries to allow them to phase out.

    2. It is stated in the article above that the “infant industry argument” can be adopted by developing countries to experience economic growth and development. Or simply, I believe that the sole purpose of protectionism policies is to enhance the rate of economic growth and development as most protectionist policies include the encouragement of domestic suppliers/producers to supply more goods in the market, while restricting foreign imports. By protecting the domestic markets in the developing country (tariffs, quotas, subsidies), they are able to “mature” and furthermore compete with producers “from more economically developed countries” (foreign markets).

    3. I believe that Chang is trying to express the concept of comparative advantage in free trade. If an industry has no future due to the high competition from foreign industries, it would be logical for the industry to shut down, rather than the government spending more money on protecting the market (the government could be spending money on other things; opportunity cost). Then again, these types of policies are hard to accomplish politically as doing so would ruin the image of the people in charge (due to a high amount of sudden unemployment, etc).

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79. # tsekineon 25 Oct 2011 at 7:29 am

    To: Huanni Wu

    I really like the metaphor of the “economic cake” you used there. I completely agree with that ‘concept’ or idea that “one gets, the other gives”. In the ‘real world’ I don’t think there will ever be a balance and a fixed cycle of things, since there is always going to conflict from one side or another. In the end, one party is going to be upset, or all.

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80. # nchaneliereon 25 Oct 2011 at 8:37 am

    What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    Back in the 19th and 20th centuries, America was not the superpower it is today, which means that to protect its newly founded “infant” industries, it used methods of protectionism to allow it to grow and be a competitive country in the trade world. Unfortunately, today America boasts for the ideal of free trade. It’s like having thousands of soldiers fight for your country and winning, and then a century later forgetting the sacrifices they made so that we can live the way we are today. America has to remember that their use of protectionism is what has allowed them to be the super-nation of the world and that by wanting free trade and preventing protectionism, might it not be taking advantage of their presence in the trade world. All things being equal though, their fight for free trade has come back to bite them, as we have seen with the GFC affecting many of their industries in which they has the comparative advantage (ie. Automobiles). America should now be consider a few protectionist methods to ensure an honest presence in the world of trade or they will be taken over.

    How could protectionism be used responsibly by developing countries to promote economic growth and development?

    One of the most important or successful protectionist methods for developing countries is the one of the infant industries. The privileged people such as us, are constantly faced to statements such as “more than 50% of the world population suffers from poverty, due to lack of education and resources”. If we think about it, an economically developed country has a government which can pay for resources and education. You educate the people, you get a stable economy and you help people lead better lives. However, the hypocrisy of the situation is that our developed nations are greedy and hungry for profit, so money comes first, then poverty. By allowing protectionist methods on infant industries in developing countries, you are allowing them to build an industry that will not crumble the second it enters the international market, employ many workers, and help them achieve the comparative advantage. It’s a small step, but over years, this comes to help the country strive economically and on the long-run become more developed which reduces poverty and raises the HDI of the country. This also raises an important TOK issue that is often recurring in economics: are people willing to substitute humans lives for profit?

    Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    This statement means that industries that have been in the world trade for a while and start crumbling, that there is no point to keep spending money for the protection. We have seen that in most cases, the protection is just reducing the speed at which the industry is falling, and the second you remove it, it all crumbles. So this method is to slowly reduce workers, reduce the output at small intervals to prevent the whole industry from crashing suddenly until it is no longer able to operate. In political terms, it is hard to keep spending money in firms that will be firing people, costing a lot of money, and if not, there will be mass unemployment which means that the government will be spending a lot of money on unemployment benefits.

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81. # nchaneliereon 25 Oct 2011 at 8:43 am

    @Muhammet Murat SEKBAN

    I agree with your opinions in the answers, although for the third answer, I think that a small elaboration was implied in the question. Since we know that there are political barriers, maybe to state what they could be such as the government unsure about where to spend its money appropriately or not and to explain in a little more depth exactly what the problem about protecting failing industries.

    Nothing major

    I just found that it helps grasp a better understanding.

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82. # twilliamon 25 Oct 2011 at 9:17 am

    The protectionism was used for domestic industries in USA to achieve economies of scale by imposing tariff. While, now, the protectionism is used in order to help the dying industries and to avoid unemployment.

    Protectionism can be used so that industries in the developing country will have enough time to set up the industries and benefit from the economies of scale in order to compete with other industries who can sell their products at low price. Since the health care in developing countries may not be as good as the developed countries (e.g. medical machines, medicines), protectionism can also help to prevent harmful goods from foreign countries and so the local people will not be affected. Affected employees will bring troubles for production industries.

    From what i understand, he is saying industries which are closed to bankruptcy should be allowed to be closed down. Although this will lead to unemployment, but delaying its closing down will only increase costs which are unnecessary. For example, increasing advertisements.

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83. # twilliamon 25 Oct 2011 at 9:17 am

    @ # Moritz

    one of the reasons for industry to be ready for competition, can be protectionism. As there are plenty of other competitors who benefited from the economies of scale, which is why they can sell products at low price. good comment!

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84. # Jaime Ariason 25 Oct 2011 at 3:17 pm

    What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The protectionism needed by the US nowadays is a complete protectionism for the car industry in order to protect its industry and its citizens from foreigner industries.

    It is more a protectionism that is not so general the protectionism that should be used by America is a more specific one than a general one than the one of the 19th and 20th centuries.

    How could protectionism be used responsibly by developing countries to promote economic growth and development?

    it shouldn't use tariffs or any measures that will increase the price of the imported products imported by less developed countries, because this will eventually cause the imports to increase its price and it would be harmful for the country importing the goods.

    Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    He means that the companies should leave slowly by taking steps, not doing in it in a abrupt way.

    it is difficult because a lot of money would be used for this to happen, and the opposition would not agree to do so, it might also be a unsuccessful measure.

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85. # Jaime Ariason 25 Oct 2011 at 3:20 pm

    @ nchaneliere

    Hi;

    I agree with your answers and i think you did a great job on answering the questions. I specially liked your answer for question number 1, it helped me to understand better thanks.

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86. # yoferon 25 Oct 2011 at 3:36 pm

    • In the late 19th and early 20th centuries America needed a kind of protectionism that infant economies in developing countries need now as it was an infant economy. It needed the protectionism to give a chance for its growing industries to reach a level where the can compete with other well developed industries around the world. Today America needs protectionism to prevent the collapse of its industries which are overwhelmed by the international market, and give them time to recapture and improve so the can compete better.

    • Protectionism may be used to ease the adjustment of the nature of the industry, thus allowing them to re-tool its factories and re-train its workers but an industry like the US automobile industry is probably doomed to fail (or at least scientifically shrink in size) as it probably will not be able to compete internationally with other industries which posses a comparative advantage. Therefore the US is better investing money in researching and creating new industry rather than maintaining an industry which according to the ideas of free trade is doomed to fail.

    • Professor Chang means that by using protectionism a slow, controlled declining of the economy may be arranged instead of sudden collapse which free trade will cause. This policy is almost impossible to accomplish politically because it require big amount of people knowingly giving up their job without any promise for a new job to be found, for example the 3 million people which will lose there job as a result of a possible declination of the American automobile industry are not garneted a new job.

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87. # yoferon 25 Oct 2011 at 3:57 pm

    # Eithan

    I completely agree with your analysis about the Professor Chang speech, even though the protectionist policies may sound very appealing to the public according to economic ideas they are undo-able. Only in very limited amount of cases an industry can improve enough in the short time given to it by the protectionist policies of the government in order to be able to compete once more in the international market, therefore America should should seek new industries to develop in order to maintain its economics supremacy.

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88. # Quinn Richardsonon 25 Oct 2011 at 4:04 pm

    1.The main difference between the protectionist policies of today and those used back in the 1930's is that previously they were used to protect infant industries from superior European competition. This allowed the US industrial sector to built strength and gain the ability to compete with their European counterparts. Today, however, they are used to facilitate the adjustment of mature industries. The idea is that it gives the industry a 'break' from competition which allows it to modernize equipment and ease unemployment.

    2.If used responsibly, developing countries can benefit from the implementation of protectionism. It is important, however, that these protectionist policies are not permanent but are simply put in place to protect infant industries. Once these industries gain the comparative advantage, the protectionism is no longer needed and can thus be removed. It allows these countries to gain economies of scale as has already been achieved in the MEDCs.

    3.This means that only minor protectionist policies would be put in place. Their objectives would not be to sustain the industry but simply allow the industry to be disassembled and sold off. Employees could receive some form of temporary compensation during the period of frictional unemployment. However this is difficult politically to accomplish because no one likes the idea that their unemployment is certain. They would much rather see policies that allow the industry to survive and continue to produce into the future.

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89. # Quinn Richardsonon 25 Oct 2011 at 4:20 pm

    @Gunnhildur Ómarsdóttir

    I agree that it is politically unwise to institute policies that would foresee the eventual loss of jobs however, it makes sense in the long run. When the industry fails, it is not as disruptive as it would be if it were not given any cushioning by temporary small protectionist policies. It essentially eases frictional unemployment and reduces the costs to society. It is important that these policies allow the industry to fail and do not sustain it as this would lead to misallocated reasources.

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90. # HEppleron 25 Oct 2011 at 4:25 pm

    What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The protectionism in the late 19th century was designed to protect infant industries. The US now has mature industries in most fields, in particular the auto industry. The US is now using the tariffs it claimed to advocate solely for the protection of infant industries to protect the mature industry, which is struggling because it does not have a comparative advantage.

    How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Economic growth and development could be encouraged with protectionism by allowing industries to grow. For example, farming traditional crops in Africa should be encouraged with protectionism because the industry has the potential to employ thousands of people who are unemployed. The greater the employment the more likely economic development is to occur because people who are currently impoverished and unemployed will be employed, therefore improving their living conditions. Protectionism allowing for the market to form and grow will cause economic growth because the profits will add to the GDP of the country.

    Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    He means that firms, which no longer have a comparative advantage should slowly be eliminated in favour of markets in which the country has the comparative advantage so as to create the maximum GDP and profits for the firms in the country. The policy is difficult to achieve politically because it results in a short term increase in unemployment and in firms going bankrupt. A loss in income is unfavourable because politicians are elected based on the short term effects of their policies.

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91. # Bryan_DiLauraon 25 Oct 2011 at 5:17 pm

    -What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The protectionism that the US needs now is very different from what it needed in the late 19th, and early 20th century. At that time, most of the USA's industries were in their infancy, and actually needed the protectionism in order to be competitive in the world market. Now, however, these industries are very well developed (some of the best in the world) and the protectionism is more to just protect the workers in an industry where the comparative advantage has moved on to other places.

    -How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism used responsibly does wonders to economic growth and development. Just look at the US over time. They used protectionistic techniques and it allowed their industries to become the most powerful in the world. What these techniques allow the developing countries to do is help their developing industries get off their feet. Without this, the other firms (with a possible absolute advantage, etc.) can come and out-compete them. Protectionism gives them a chance.

    -Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    What professor Chang is talking about is when an industry has lost its comparative advantage to produce some good. This means that this industry is no longer able to be competitive in the world market (with free trade), and will end up hurting the economy if allowed to continue in the long run. Professor Chang is saying that these industries should go away, but should use protectionism in order to ease the blow that they could take. This means that they can fade out, rather than go out in one big explosion. This is helpful to the employees as well as anyone who is invested into the industry. This is hard to accomplish politically because people don't want it to die at all. They view this policy as "admitting defeat".

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92. # Bryan_DiLauraon 25 Oct 2011 at 5:22 pm

    @HEppler

    I absolutely agree with your answer to the third question. I think that it is because politicians are in power (often times) for very short amounts of time, they only care about the short term effects of their economic decisions. Even if it ends up being detrimental to the the economy as a whole in the long run.

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93. # Asucan Odcikinon 25 Oct 2011 at 6:40 pm

    1)In the 19th century the main goal was to develop infant industry in order to encourage the growth. In that times they used huge tariffs on imported products in order to develop their power in the market. On the other hand, now America uses protectionism to protect its domestic market. It means that they are using protectionism to provide the best levels of employments and economic activities in the country. The key point of protectionism today that the USA uses is protecting its own industries from foreign industries like they are imposing on Chinese industries for textile.

    2)In simple words, it basically aims to protect the domestic production in the country which can bring economic growth and development. As it is stated in the article there is an issue about infant industry which can be developed by protectionist policies. By using protectionism countries can provide the best levels of employment and economic growth which are necessary for a country to be developed.

    3)What Mr. Chang stated means that there is no logical reason to protect an industry which has no future. But in the real world it is very hard thing to do for a country. The basic reason is that there are loads of political consequences of situations. For example simply politicians are afraid of voters so that they cannot let this idea happen as it can cause unemployment. So as political leaders and politicians have several benefits from citizens they cannot risk an industry by not helping it in order not to have high level of unemployment and low level of votes.

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94. # Asucan Odcikinon 25 Oct 2011 at 6:43 pm

    @tsekine

    I really liked your explanation on the second question. You explained the statement of Chang very well. As you said what Chang stated can be seen as logical but if we think of the real world and political barriers in countries deciding on such a decision which means not helping some industries because they have no future, can cause severe problems like unemployment and lack of belief from citizens to the politicians. So even if it seems logical, the economic and political benefits are more important in the world I guess.

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95. # Caroline Mooneyon 25 Oct 2011 at 7:05 pm

    #Quinn Richardson

    I think you went into great detail about how each aspect of the specific organization of trade can be taken into consideration when protectionism is used. Also I agree with your assessment of Professor Chang, as it makes sense for employers and employees to want it to work a certain way.

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96. # Caroline Mooneyon 25 Oct 2011 at 7:06 pm

    What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    The protectionism that was used in the late 19th and early 20th centuries differed from the modern protectionism because it was more involved for the purpose of protecting infant industries. It was a way to support them and give them a sort of insurance. Compared to then, the modern protectionism is used more or less to benefit companies that are already mature. Modern protectionism is used in a less responsible way than it used to be.

    2. How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Protectionism could be used more responsibly by protecting budding companies rather than those whom are already developed. Protectionism is a very useful way of bringing up new companies from countries that are less developed, instead of supporting ones that are already developed and have full mature companies. If the rights of protectionism are simply put aside and reserved for infant countries, it can aid greatly in their development. It can be used as a a tool to support each infant company until it is self sustainable.

    3. Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    When Professor Chang says that industries with no future should be phased out “through orderly liquidation and redundancy”, he means that a company that is showing no sign of success should not be considered "allowed" to be involved in the trade system. by doing this, it would be a more dissolved decline of the economy rather than a rapid fall that would be an effect of free trade being instilled into the economy.

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97. # Muhammet Emin Uylason 25 Oct 2011 at 9:20 pm

    1-)What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

    Countries mostly using protectionism for protecting the domestic markets from the bad effects of free trade which is caused by foreign markets. America used this protectionism method for two different aims. One of them was about protecting domestic industries for developing more which is done in the late 19th and early 20th centuries and other of protectionism is done in today to stay biggest economy on the world because we knew that all countries affecting badly by Chinese products and America is trying to survive from these bad effects at today.

    2-)How could protectionism be used responsibly by developing countries to promote economic growth and development?

    Aim of protectionism in developing countries is protecting own domestic markets from foreign markets because foreign markets can affect domestic markets profit badly and it may cause bad situations like bankrupt in domestic markets which will cause unemployment problem so countries are using protectionism by making some limitation in free trade and putting barriers by using some taxation methods.

    3-)Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

    Professor Chang thinks that industries which are not capable for competing big industries shouldn’t be protected by protectionism because it may cause bad effects in countries own economy.

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98. # Muhammet Emin Uylason 25 Oct 2011 at 9:24 pm

    @Murat Sekban

    I agree with your comments but I thought that you should explain thirth question by talking about some barriers.

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99. # jcuervoon 25 Oct 2011 at 10:16 pm

    1.) Protectionism today isn’t the same as protectionism in the late 19th century and early 20th century in the US because the amount of international trade that occurred then nearly as large as it is today. Currently, the US is a more dominant power in international trade and thus has more influence and effect on trade between nations. During the late 19th century and early 20th century, the US was one of the first industrialized countries but now most countries, even developing countries, are industrialized. So, protectionism back then wasn’t trying to develop and grow infant industries, which were the first of their kind. Nowadays, protectionism has the goal of maintaining and keeping mature industries in the US because now they face more foreign competition.

    2.) Developing countries should responsibly use protectionism responsibly by protecting their infant industries and allowing them to grow and develop. By doing so, these countries can learn to mature their industries and develop successful ones that they can use to ease the dependence that they have on other countries. This is similar to what the US did in the late 19th Century and early 20th century: the US was able to allow specific industries to grow so that they can reach a great level in the future.

    3.) Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What he means by this is that instead of a country, like the US for example, not protecting its dying industries, it would be more efficient to keep those industries and protect them because they are industries that are already matured and they just need to be adjusted. This is more efficient than letting them die out and protecting new infant industries. This policy is so hard to accomplish politically because it takes the process of protecting a dying industry and allowing it to adjust takes a while. This is difficult for a politician because they only have office for a short-term and the move would seem to risky for the people that elected them to office.

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100. # jcuervoon 25 Oct 2011 at 10:16 pm

     # Aaydogan

     I like and agree with your answer. I think your first answer is very true because the US protected itself in the late 19th century and early 20th century from European countries in order for its own industries to grow. This is different nowadays because now the US is a dominant force in international trade and many of its industries are at high-levels of production that they don’t require the same protection. One question I have for you concerns your third answer: could it be that politicians can’t address Chang’s policy due to their political restriction to hold office only for a short amount of time if they are elected?

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101. # Talia Greeneon 25 Oct 2011 at 11:13 pm

     1. When America was developing, its protectionist policies were aimed towards allowing its industries to develop – this was “infant industry” protectionism. Now, those already developed industries need further protection so they can advance to be able to compete with other countries. The protectionist policies are aimed at allowing this, not allowing new industries to develop.

     2. The countries could use protectionism to allow new industries to grow and catch up with the rest of the world. As these industries become more developed and competitive, they could lower the amount of protection.

     3. He means that they should be provided with protection and policies that would allow the industries to slowly decline, as opposed to an immediate collapse. This would facilitate the transfer of the industries’ workers into the rest of the economy. It is politically difficult as it means admitting that some industries will fail and some unemployment is inevitable.

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102. # Talia Greeneon 25 Oct 2011 at 11:16 pm

     @ jcuervo

     I disagree with your answer to the third question. I think he means that dying industries should not be protected, as they will not be able to compete. He says that industries that are already developed and only need adjusting to be competitive should be protected, but mature industries that will not be able to compete even with a period of protection to adjust should be allowed to end in an orderly fashion.

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103. # Ccolbergon 25 Oct 2011 at 11:20 pm

     1. In the late 19th and early 20th centuries, America had extremely high tariffs ranging from 35% to 55%. The theory that justified this protectionism was to protect “infant industries”. This argument is that infant industries need to be protected through tariffs, subsidies, and quotas so that they can grow and thus compete on an international scale. In contrast, the protectionism needed for today is for mature industries. Protectionism is needed to re-energize and revive mature industries.

     2. Developing countries should be able to use protectionism to protect infant industries, like the US did a century ago. This would allow these infant industries to grow and in the end would benefit everyone.

     3. He means that industries that have no future and really cannot be saved should get temporary protection so that when they are eventually abolished it is easier on everyone. This is so hard to accomplish politically because this will lead to a large loss of jobs and will leave many people unemployed. No politician wants to have to deal with this, and so this would not be a popular move for any politician.

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104. # Ccolbergon 25 Oct 2011 at 11:23 pm

     @Dogan Ozcan

     I think you had some interesting answers but I think for question 2 you should look at more specifically developing countries as the question asks.

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105. # Cleon 26 Oct 2011 at 12:19 am

     What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

     The protectionism used in the 1930s and the 1940s was created amid the great depression, when the production of the country was at a low point. The Agricultural Industry was severely crippled. The us needed to create jobs within the domestic markets at any price. Now, the us is not encountering the same issues, yes the american economy is less than yeasty, but it is great compared to what it was like in the 1930's. The US no longer needs that high tariff barrier that it once needed.

     How could protectionism be used responsibly by developing countries to promote economic growth and development?

     It could use protectionism to slowly phase out failing markets, instead of artificially sustaining those markets. Which is bad for the domestic economy in the long run.

     Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

     it is difficult to accomplish politically because politicians are always trying to create jobs, not to loose them. And because the negative repercussions of this policy would be evident much more than the benefits from this policy, its especially bad for political re-election.

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106. # Cleon 26 Oct 2011 at 12:24 am

     # jcuervo

     i agree with your answer to the second question, but am wondering about the extent to which protectionism should be establish, once protectionism ceases, wont this practice destroy the developing market anyway?

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107. # HEppleron 26 Oct 2011 at 4:05 am

     @ Caroline Mooney I agree with your response to the first question. I feel that if the industry is mature and unable to compete then there is no comparative advantage and resources could be used in a better manner.

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108. # Merve Akpinaron 28 Oct 2011 at 8:19 pm

     What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

     When we look at the America in 19th and early 20th centuries we may not see a super power which captains world. We may see a country which tries to establish its economy and a new system. That is why their protectionism was a struggle for being super power. However today America is a super power and their protectionism is to stay as a super power.

     How could protectionism be used responsibly by developing countries to promote economic growth and development?

     The infant industry argument is a way to protect new industries from foreign competition until they are large enough to compete in international trade. So, it is a perfect system for developing country. It gives a chance to new companies to make them developed.

     Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?

     Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. It means that the industries which have no future can be easily driven a competitor out of business. But that is hard to apply because a lot of will be unemployed. Apart from these it will be successful policy in long run.

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109. # Merve Akpinaron 28 Oct 2011 at 8:22 pm

     @Cle

     Hi Cle I liked your interpretation about the first question since you have mentioned the great depression. I want to ask a question about the Wall Street Crash: does it also affect the policy in that time?

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110. # Suyeon Soon 19 Nov 2011 at 5:02 pm

     1. As it is clearly stated in the article, in the late 19th and early 20th centuries, America was not a developed nation as it does right now, so it used protectionism to protect its ‘infant industries’ from ‘superior European goods.’ But in nowadays, America uses protectionism to keep superior position in the domestic market by excluding cheap foreign goods from the market.

     2.In developing countries, protectionism helps a lot to protect infant industries from foreign goods that has comparative advantage. Since developing nations don’t have adequate infrastructure, industry, and resources compare to developed nations, their cost of production is much higher and the quality of goods is lower. For example, to produce clothes in Africa almost all the works would be done by hands, the quality of goods will be low, and the production won’t be that good. However, in America, since they use machines to produce clothes, massive amounts of clothes would be produced and the quality would be much better than that of clothes produced in Africa. In this situation, if two clothes compete in the market, it is obvious that African goods won’t success. Therefore, by using barriers like tariff and quota, developing nation limits amount of imports so it can earn time to develop and protect its industries.

     3. Limiting protectionism gradually will stimulate reclining businesses to go back to the right track because it motivates those businesses to invest and improve by increasing competition in the market gradually. It is obvious that if barriers are removed at once, those industries will not be able to survive in the competition. Therefore, by gradually removing barriers, those industries can have time to modernize. However, it will be hard to do this politically due to its cost. It is obvious that unemployment will increase due to increased competition and lost of market share. This makes politicians look bad and might affect next election. Therefore, although it is really effective way to revive reclining industries, it is hard to think that politicians will promote this policy.

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111. # Suyeon Soon 19 Nov 2011 at 5:05 pm

     @Dilan
     I agree with most of your views in your comments. Especially for third comment, I think your explanation of competition and survival of industry is really interesting.

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112. # abredeeon 05 Dec 2011 at 12:04 am

     1.) What is the difference between the protectionism America needs today and the protectionism it used in the late 19th and early 20th centuries?

     The protectionism the US needs now is very different from what it needed in the late 19th, and early 20th century. Back in history most of USA´s industries were infant industries and needed to be protected. However, nowadays that there industries are well established protectionist measures protect the workers of the industries.

     2.) How could protectionism be used responsibly by developing countries to promote economic growth and development?

     Protectionism can protect infant industries and help countries to grow and develop economically. This is particularly important in a world where some countries are more developed than others and have advantages in production due to economies of scale for instance. The US exemplifies how a country can move from developing to developed by using protectionist measures.

     3.) Professor Chang argues that responsible protectionism should allow industries with no future to be phased out “through orderly liquidation and redundancy”. What does he mean by this and why is such a policy so hard to accomplish politically?
     If comparative advantage has moved on implementing protectionist measures may be disadvantageous to the economy in the long term. Professor Chang argues that industries with no more comparative advantage should be left to slowly die, but protectionist measures should be taken in the short run to create less of a shock in unemployment. This is hard to accomplish politically because many people( workers, industries) do not want the industry to die out at all and thus the politicians would be moving against the public.

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113. # abredeeon 05 Dec 2011 at 12:06 am

     I agree with your second argument but it also has the benefit of protecting infant industries.

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