What are you protecting against? If you're protecting against lower cost foreign competition, isn't that the same as encouraging inefficiency?
If you're trying to protect against the consequences of stupid managers, then aren't you protecting stupidity? I'm with DRB and the libertarians in this one. You can't regulate in a way that forces efficiency. Sure, as Posner says, there's a place for ensuring fair trade on both sides, and protecting crucial munitions. But I don't see any way to protect an industry without that protection distorting the market. Maybe in a some cases the distortion is worth it, but to deny the distortion is dangerous. E Sent from my iPhone On Apr 24, 2012, at 10:20, [email protected] wrote: > > Ernie : > Why are a set of assumptions made repeatedly --not just by Posner-- > to the effect that promoting manufacturing and manufacturing jobs > must necessarily mean subsidies and toleration for inefficiency ? > Similarly for protection, which many writers assume must mean > protecting inefficient and obsolete plants and industries. > > These kinds of assumptions are self serving --and are assumed by > people who think that unbridled free trade is always and necessarily > for the good. Which is nonsense. > > Free trade can be for the good ; but that does not mean it will always > be for the good, and it may well undermine national security needs. > > As for protection and manufacturing, we have been over this ground before > so no need to repeat that discussion. But basically, whenever something gets > protected, gvt policy should insist upon efficiency and cost effectiveness > as a price for that protection. > > My view, anyway. > > Billy > > ----------------------------------------------------------- > > 4/24/2012 9:20:46 A.M. Pacific Daylight Time, [email protected] > writes: > Contrarian but well-argued. I mostly agree. > > E > > > > Decline of U.S. Manufacturing—Posner > http://www.becker-posner-blog.com/2012/04/decline-of-us-manufacturingposner.html > > The only secure ground for the government’s subsidizing a producer is that > the goods or services that he sells are likely to confer external benefits, > which is to say benefits that, because they are not paid for by the buyers, > do not contribute to covering the producer’s costs. The total social > benefits, private as well as public, that his production creates may exceed > his costs, but he will not produce if the private benefits (the payment he > receives from customers) do not cover those costs. > > Some manufactured products, vaccines for example, confer external > benefits: when most of the population is vaccinated against some disease, the > risk to the rest of the population may be so slight that they stop buying the > vaccine: they are benefiting from it but not paying for it. Another example > is intellectual property that, in the absence of patent or copyright > protection, could easily be copied: the original producer of the intellectual > property would be conferring benefits on the copiers for which he would not > be paid. > > External benefits are actually rather pervasive in manufacturing as in other > sectors of the economy. For example, consumers who value a product much more > than its market value derive an external benefit, because (by definition) the > manufacturer does not capture this “consumer surplus [value].” But there is > no reason to think that manufacturing confers greater external benefits than > other sectors. > > There is a general anxiety about becoming dependent on foreign nations for > products that are vital to our nation. That is a legitimate concern when one > is talking about products that are essential for national security or > economic welfare, such as military aircraft; and obviously our military > production is heavily and justifiably paid for largely by the government, > although some is paid for by foreign buyers. The foreign “products” that > might be thought essential to our security and welfare are not manufactured > goods at all, but commodities such as oil and rare earth metals. The United > States is still the world’s largest manufacturing country, accounting for a > fifth of total world industrial output. > > Becker points to the analogy of agriculture. Employment in agriculture has > plummeted, leading to anxieties spurred by agricultural companies about the > decline of the “family farm” and the loss of the imagined virtues of the > independent farmer, to combat which agriculture continues to be heavily > subsidized. The subsidies are widely recognized to be a pure social waste, > and the same would be true of subsidizing manufacturing. Like manufacturing, > American agriculture is thriving with its historically small labor force. > > The decline in agricultural employment is a product of technological advance, > and likewise the decline in manufacturing employment. Subsidizing > manufacturing will no more increase employment in manufacturing than > subsidizing agriculture has prevented the precipitous decline of agricultural > employment, for a manufacturing subsidy will be used to speed the automation > of manufacturing tasks and so accelerate the decline of manufacturing > employment—unless the subsidy is conditioned on increased employment, which > would mean diverting workers from more to less productive work. We would not > be better off if 40 percent of the labor force were in farming rather than > 2.5 percent, or if 28 percent of the labor force were in manufacturing rather > than 9 percent. > > Some concern has been expressed that we need to boost manufacturing in order > to reduce our trade imbalance, because many manufactured goods are exported. > But a recent article in the New York Times (April 10) points out that the > United States is the world’s largest exporter of services—and would be larger > still if we took steps, such as loosening visa restrictions that impede > international provisions of services and making the same efforts to pry > open foreign markets to American services as we do to pry open foreign > markets to American goods. > > The politicians know all these things. The push to promote manufacturing is > political in origin and may (one hopes will) be abandoned after the election. > Its political appeal is related partly to the fact that unions still have a > foothold in manufacturing, and partly to the fact that America’s prowess in > manufacturing (think of the vast output of munitions in World War II) is > associated in the public mind with the epoch of greatest American world > power. > > I have no objection to efforts to negotiate with foreign countries trade > agreements that facilitate U.S. exports (they also of course facilitate > imports—and that’s fine too). Such efforts are the centerpiece of the > Administration’s program of stimulating employment in manufacturing. But the > efforts should be extended to services. I can think of no rational basis for > putting manufacturing ahead of services. > > (via Instapaper) > > > > Sent from my iPhone > > -- > Centroids: The Center of the Radical Centrist Community > <[email protected]> > Google Group: http://groups.google.com/group/RadicalCentrism > Radical Centrism website and blog: http://RadicalCentrism.org > > -- > Centroids: The Center of the Radical Centrist Community > <[email protected]> > Google Group: http://groups.google.com/group/RadicalCentrism > Radical Centrism website and blog: http://RadicalCentrism.org -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org
