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To: GOPcapitalist
I had another one of my infamous work discussions the other day in which I was informed that a capitalist can in fact be in favor of protectionism for "infant" industries.

After some thinking, I guess I had to agree so long as the protection was in place for either national security reasons or furtherance of competition in an otherwise closed market. Now herein lies the rub: There's no real-world mechanism for carrying it out that is not instantly subject to corruption.

In the end, it's like a time machine. It's a neat idea, and could be used for our benefit, but any notion of fair and unbiased implementation is science-fiction.

718 posted on 09/23/2003 8:14:58 PM PDT by Gianni
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To: Gianni
I had another one of my infamous work discussions the other day in which I was informed that a capitalist can in fact be in favor of protectionism for "infant" industries.

That is to some degree what Milton Friedman has concluded. It comes with a caveat though - infant industry protectionism is kind of like a "temporary" welfare program. When it is installed its proponents always insist that it will be removed after the given industry has "established a foothold" or something of that nature. But when the time comes around to remove it, the tariff's beneficiaries will almost assuredly find an excuse for why it should be continued and, like a welfare program that has run its course, the tariff will almost assuredly remain in place for decades after its original intent has been exceeded.

This happened in the late 1940's in one particularly notorious case of "national defense" protectionism. Back then a special type of wool was the primary component of many military uniforms so congress enacted a tariff to protect the domestic producers of that wool type in case a war cut us off from the importers. Synthetic cloth came into wide use in the mid-1950's and they replaced the wool component of the uniforms with it. But the wool producers lobbied to keep the tariff intact, even though it was no longer needed for national defense. Last I heard the wool tariff was still in place well into the 1990's and is probably still in effect today even though its use ended over half a century ago.

For that reason I am very hesitent of "infant industry" protectionism, and even its national defense corrollary, and believe it should be used sparingly. The best way to do that is to use time-expired patents for the given good that cease after a certain preset number of years and cannot be renewed. Since steel certainly isn't an infant industry today nor was it one in 1860 little cause exists to protect it either.

As for protectionism itself as a concept it is indeed wholly without merit. In my experience the die-hard protectionists always come from one of three types of people and all of them are completely wrong on the issue:

1. Ignorant people who don't know any better.

2. Stubborn people who willfully refuse to know any better in order to avoid having to admit they are wrong.

3. Recipients of protectionism who depend on the government for their livlihood.

719 posted on 09/23/2003 9:02:20 PM PDT by GOPcapitalist
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