EKIP– Expert Club for Economics and Politics A Different Opinion
A review of the Bulgarian media recently leaves an unpleasant feeling of a (re)emerging protectionist rhetoric.
A recent review of the Bulgarian media leaves an unpleasant feeling of a (re)emerging protectionist rhetoric. In just one of Tsvetanka Rizova's recent shows, two consecutive guests (a sociologist and a politician) declare themselves in "defense" of the domestic producer and reject Chinese goods. We are witnessing yet another recycling of the familiar argument about the Turkish/Macedonian tomato, which (if you don't know) is not only dishonest, but also less tasty than the Bulgarian one.
Let's look at the most important participant in market exchange, according to politicians - the consumer. What will be the consequences for him of restricting, and therefore increasing the cost of, the import of certain goods into the country?
First of all, we will have an immediate interruption of the most important market process - that of free negotiation. Once a good finds buyers, its exchange brings benefits to both parties - to be specific, people buying Chinese goods want to consume them and evaluate their acquisition as more useful than preserving their monetary equivalent. When the state intervenes in the purchase and sale with its regulations, it inevitably changes the voluntarily achieved balance in the transaction.
Secondly, the above-mentioned intervention will force consumers to turn to the expensive, unpreferred Bulgarian products that are favored by politicians. Or, if they do not want to return to them, they will be charged through the effects resulting from the introduction of tariffs and quotas. The big winners will be those businesses that manage to lobby the authorities most skillfully for quotas in their industry, and the bill will be paid by naive voters.
In a 1986 monograph, Murray Rothbard uses reductio ad absurdum to show how pointless protectionist barriers are. He asks, if they worked so well and really increased welfare, why don’t we have tariffs between cities (how come Kyustendil cherries in Sofia, but local producers?), between neighborhoods (importing sandwiches from Mladost 3 to Mladost 1 is an old problem), even between neighbors. Couldn’t the Ivanovs issue a decree to stop buying goods produced outside the home, wouldn’t that be the ultimate dedication to the family values that our politicians have always found so important?
A good example of the cost of protectionism is the American steel industry at the turn of the century. [1] The auto industry was the first to suffer from tariffs. Each domestically assembled sedan requires about $700 worth of steel, and when the price per ton rises by $50 because of protectionism, the total cost is $6.5 billion per year in additional costs for users of 130 million tons of the product. This money benefits the owners of the foundries, but at the same time it leads to the closure and relocation of factories that use the raw material, and to more expensive goods for the end consumer.
The situation is more unpleasant when it comes to so-called essential goods. Restricting food imports leads to their direct increase in price, and it is known that Bulgarians spend over 50% of their income on food and housing, with the percentage being higher for people in poor economic situations. Imposing a kind of “Bulgarian production tax” will certainly not have a good effect on them and they would hardly support it.
So more economic literacy, less populism from everyone, please.
[1] Griswold, Daniel. "Protectionism Hurts Consumers." February 4, 1999. http://www.cato.org/publications/commentary/protectionism-hurts-consumers (accessed June 10, 2012).
Thanks for the text! I am in the same position, but I couldn't argue it so well 🙂
Thanks for the kind words! I'm glad you like it!
Very lay text. "why don't we have tariffs between individual cities (how come Kyustendil cherries in Sofia, and local producers?), between neighborhoods (importing sandwiches from Mladost 3 to Mladost 1 is an old problem)" And what would you say if your wife took sandwiches out to your neighbor's house in the morning, and the neighbor's wife brought them in to yours? Maybe the neighbor's wife's sandwiches are better than yours? So much for "reductio ad absurdum".
The free market has no reasonable arguments in its defense. Historically, it has harmed 80% of the world, turning it into a third world. That's right, the Third World became such in the 19th century because of the free market imposed on them by Britain. Continental Europe, the USA and some other countries did not embrace a free market and became developed countries. Since you are obviously close to the IME, let me tell you that the "history" you know is falsified. South Korea developed with dictatorship and protectionism and only when it became competitive did it enter the international market. Think tanks, like the IME, use a falsified version, in which cause and effect are reversed. The Chilean experiment in a free market was a complete failure, but the lie "Chilean miracle" was invented about it.
In fact, the free market makes the underdeveloped countries poorer and the developed countries richer. Even when they are at the same economic level, the small differences between the countries are deepened by the free market to the point of crisis. This is what is happening now in Europe.
Then, the free market creates conditions for producing no or poor quality products, and for using more or the best. The result - loss of livelihood and accumulation of debt.
And this is not yesterday. The theory of protectionism was created by A. Hamilton in the USA and brought to Europe by Friedrich List in the 19th century. And unlike the nonsense about the free market, it finds solid historical confirmation, while the free market is proven with hypothetical and illogical constructions and falsified history.
We can argue a lot about South Korea. But I wonder if it makes any sense when I see how unfamiliar you are with the situation in Chile that you cite. For homework, read up on the state of the Chilean economy today. If you don't understand something, we'll help you. 🙂
Not to mention the "analysis" of the situation in Europe
I have nothing to argue with you about South Korea. I have a reliable source, a South Korean professor of economics, currently at Oxford, author of several books on economics, which are, however, "banned" in IME circles. South Korea is becoming developed precisely by cultivating its own industries, and with a dictatorship extremely similar to that of the People's Republic of China. And not only it, but also the other Asian tigers, most of which died in 97 because they had the stupidity to deregulate (open) their financial market, just as we had the stupidity to open all our markets in the 90s.
The Chilean economy today? You won't get away with it that easily. Name a high-tech Chilean brand like the Korean ones, I can't think of anything! So much for the "successes" of the Chilean economy. Besides, who's talking to you about the Chilean economy now? We're talking about Milton Friedman's experiment, conducted between 1973 and 1983 by Pinochet.
So let me introduce you to Chile, inflation and unemployment under Allende were 150% and 3% respectively. Inflation and unemployment a year after the introduction of Friedman's measures (from "The Brick", you should know what it is, you are familiar with it) were 375% and 20%. 74% of the "living wage" was spent on bread alone. In 1982, hyperinflation struck once again. Unemployment was already 30%. By 1988, 45% of the Chilean population fell below the poverty line. The country is still solidly socially stratified and is at the level of countries like Namibia.
After the hyperinflation of 1982, Pinochet made a turn away from the prescriptions of neoliberalism, thus allowing Chile to recover as much as possible from the defeats inflicted. These are the facts about the neoliberal experiment in Chile. A complete failure!
And I can't understand why your sponsor, IME, invites Jose Pinera, one of the ministers of the bloodthirsty Pinochet, to Bulgaria, and at the same time they are writing democrats. Actually, I know why, they want to push private pension funds here too, which are an absolute fraud, even in the form that already exists in Bulgaria.
I'm answering selectively because most of your questions are either too snarky or an attempt at nagging. An example of both:
- things about IME
- the obvious lack of economic education, which I judge from the question about the "brand". If you really need an explanation why this is not an important economic "indicator", I again invite you to spend more time in the library
Regarding who reads what. I can guess that you don't have access to scientific literature without you saying so.
Regarding Chile, the economic framework in Chile has not changed radically since your beloved 70s and 80s. That's why I mention "now" because the state of affairs in our time is the result of the reforms back then. Fortunately for the Chileans, they have the most stable economy in the region, thanks to the Chicago Boys.
Shall we comment on your statement about the "numbers"? Or should I point out that in one post you push them on me, and in another you claim they are not useful. A little integrity and consistency would be helpful.
It's ridiculous to tell me that the country's growth is a product of money supply expansion. Regarding copper, follow the price of copper and you'll notice a very nice crash, right in your favorite historical period. And if the country relied on this raw material for its growth, we would have the same thing that happened in Zambia.
I seem to have gotten confused about including all Asian countries. I apologize.
That's right. Unlike you, I live in the UK and I'm an academic on East Asian economies. If I had to compare what you're saying, I know a lot more than one professor who specializes in NICs. To give you some direction on the subject, look up Bruce Cummings' articles on the development of the region, you might learn something, and he himself is by no means a liberal economist. And how ignorant you are is evident from the fact that you put Japan and Hong Kong under the same denominator, for example.
Regarding, Chile. The hyperinflation of 82 was caused by the incomplete compliance with the recommendations in "The Brick", Milton Friedman has an article about this. Economy of Chile, sketchy facts:
Fiscal reserve - $35 billion
Reserve of the central bank - 40 billion dollar
Economic growth in the 1990s - 7-8%
The first South American country in the OECD
Highest GDP per capita
Private pension system
Please, either in the library or in North Korea.
Bruce Cummings is not a liberal economist. As far as I could find information, he is even a historian who dealt with the Korean War. I did not find anything about the development of South Korea after the war. But anyway, most economists make exactly the mistake of reversing cause and effect, as well as believing in the myths about the free market that they themselves created. So how many professors with the opposite opinion you know cannot impress me.
Milton Friedman is such a compromised liar that I wouldn't believe a word he said. He himself mentored Pinochet since 1975 (Hayek also visited Chile) and in some of his memoirs he lied that he started later. I don't remember exactly, but he lied.
Then, I'm talking about Chile in the 70s and 80s, you're talking about now? The numbers often don't mean anything. 7-8% growth in what? GDP? GDP mainly reflects the growth of the money supply. You need real GDP. And in the 90s, Pinochet and the Chicago boys are gone!
Where did I mention Japan and Hong Kong? Can you point out? Not only do you read selectively and answer selectively, but you also invent things that I did not say. You seem to be a decent student at your school. 🙂 If you are really interested in East Asian economies, I recommend Ha-Joon Chang.
And by what criteria is the private pension system a positive thing? For me, it's a negative thing. High GDP per capita doesn't mean much in a country with solid social stratification. And finally, where is the famous high-tech Chilean brand? There isn't one. Wouldn't you say something about the price of copper, as you would say about the price of oil if it were Russia? 🙂
I admit, I haven't dealt with the economy of Chile in detail, but that shouldn't reassure you. 🙂 Unfortunately, there is too much lying in your profession. I was going to read Rothbard, but after the example with "reductio ad absurdum" I think I'll skip it. It seems low-level with prejudice to me.
In my opinion, protectionism as an economic policy never leads to economic development on its own. The same can be said about free trade. In order for "capitalism" and all the benefits that come from it to happen, other specific conditions are needed in the economy and society. Trade policy can only raise or lower the standard of living further due to the optimization of production through the distribution of resources between trading economies and secondly by increasing competition between foreign producers. The example of "third-rate" countries is not very bearable, because there, institutionally, things are simply not favorable for economic progress to happen and trade policy is not of decisive importance at all.
In principle, there are mainly two cases when protectionism is justified - when an industry is "nascent" and needs to be given time to develop and gain scale, and the second when an industry is of crucial importance to the state (military industry mainly). The problem, however, is when it has to be decided which industries exactly need support, for how long, etc. In general, every time the state has to choose local companies to be the national pets, it is much more likely to make a mistake, or to choose for some non-economic reason, than to help.
There is a lot to be said about South Korea and other Asian developed economies, but in my opinion they are developing precisely because they have access to the American and other markets and can export the things in which they are efficient as producers. If they relied solely on their own market, they would hardly be able to produce the goods they need so efficiently. In addition, there have been very pronounced industrial policies there, which are another form of protectionism and state intervention, even without the need to raise tariffs on foreign goods.
And also, let me not forget, with free and efficient foreign exchange markets, there is no way for foreign producers to "robber" local consumers. This is because every import must be paid for with exports at the government accounts level. It can also be paid for by selling financial or real assets, but in principle this cannot continue for too long without currency adjustments that balance competitiveness and investment attractiveness.
It depends on what you mean by protectionism.
"There's a lot to be said about South Korea and other Asian developed economies, but in my opinion they are developing precisely because they have access to the American and other markets and can export the things in which they are efficient as producers."
This does not contradict protectionist policy in the least. I don't know why when some people hear protectionism they think that the country in question should completely close down and isolate itself economically. There is no such thing, protectionism implies selectivity of imports and exports, not prohibition! And yes, tariffs are not the only form of protectionism. However, there is the following thing - Asian economies enter the American market only after they have become developed. An underdeveloped country can enter the European and American markets with only bananas and remain a banana republic for centuries. These are the facts! I have already said, you are reversing cause and effect. It is not entering the market that leads to development, but development that leads to entering the market.
What do you mean by “third-class” countries? The Third World? I told you how they became that way and why they continue to be poor. This is not about institutions, it is about an imposed free market that does not allow for development. And since this situation has been going on for nearly 2 centuries, the social damage it has caused is obviously quite severe.
"The problem, however, is when it comes to deciding which industries need support, for how long, etc."
Such a problem exists only in some chapters. It is obvious which industries should be protected - those that bring high added value, i.e. high-tech. You simply choose any high-tech industry and protect it until it becomes competitive. Plain and simple.
"but in principle this cannot continue for too long without currency adjustments"
That's right. This already means that the country in question has become poor enough and the prospect of returning to the rich is more or less negligible.
Speculation on free foreign exchange markets is also an extremely great danger, especially for small countries. Therefore, to protectionism, regulation of the foreign exchange market must be added. Furthermore, the original version of protectionism from the 19th century did not include agriculture, because then mechanization was not significant. However, now agriculture also needs protectionism. I think that the self-sufficiency of each country with its own food is quite necessary from the point of view of national security.
In my opinion, you have a distorted idea of the wealth of countries, and individuals in general. If every country supported protectionism, most likely there would be no opportunity at all to develop profitable trade for both countries, and the strategy would be "steal production from your neighbor". Also, would you as a consumer be willing to buy domestic, but expensive, just to line the pockets of some of our pet producers?
In general, free trade is one thing that most economists agree on, so it would be very difficult to convince anyone of the correctness of your views.
Kosyo,
I don't know if I have a distorted idea of "wealth", but I wonder even more how you can't understand the effect of protectionism, since the entire developed world (with the exception of Great Britain in the 19th century), i.e. continental Europe, the USA, Canada, Australia applied protectionism and existed among themselves under conditions of protectionism throughout almost the entire 19th century until the 1960s. Protectionism is not an innovation. It is a long-standing practice of developed countries. On the contrary, the free market in the 19th century and up to now (again with exceptions) has been the practice of countries that are now the Third World. And imagine, at the beginning of the 19th century, the countries of the current Third World were no more backward than continental Europe. I didn't make this up. This is the work of the economic historian Paul Bairoch http://www.amazon.com/Economics-World-History-Myths-Paradoxes/dp/0226034631 The book can be found on the net as a PDF, although it is difficult, but if someone wants it I can send it to them. Moreover, it is not a book like those of the Austrian "school", where there are 95% empty talk and 5% data for proof, but quite the opposite - the book is full of data on customs tariffs and pacts, traded volumes and so on. And yes, developed countries, and even Great Britain, have not become rich from exports to third world countries, since the latter quickly became insolvent. In other words, protectionism between them has not had a negative effect at all, even the opposite.
As for consumers - I think that producing bad and low-quality products and using cheap and high-quality imports is not a sustainable policy at all. Ultimately, it is about exchanging goods, not consuming religion.
This argument about the "nascent" industry has always made me laugh out loud. I guess anyone who believes in it should support the idea of banning the import of cars to stimulate the newly created factory in B. :))) And not just cars - but spare parts - everything. This will help the economy a lot. 🙂
You clearly don't understand protectionism. More thought needs to be given to it. Whatever you do, if you do it stupidly, it will look stupid.
When it comes to protectionism of this nature, it is good to look for other examples beyond those available at every stall. For example, why argue about Chile when we have a Bulgarian example - With the Industry Act of 1936, the state determines the tasks of individual enterprises and industries, the nature of production and the production process. It establishes control over exports and full supervision over prices on the domestic market. This was done to get out of the crisis that began in 1914. The state intervention in question is to a degree that may shock you quite a bit (for example, what will you produce, how much and at what price?!). As a result - you all know about Bulgaria in 1939...
Yes, 1939 was an absolute tragedy.
I wasn't interested in 1939 in Bulgaria, but I wouldn't say that since it's a Bulgarian experience, it's any better than the Chilean, Korean or African ones. And you have to understand the anti-communists, they claim that Bulgaria was a developed European country in the 1930s, and then the communists came and you know what... 🙂
"Such a problem exists only in some chapters. It is obvious which industries should be protected – those that bring high added value, i.e. high-tech. You simply choose any high-tech industry and protect it until it becomes competitive. Plain and simple."
How is it so obvious? Do a handful of government officials know better than the millions of agents in the market? This is ridiculous, to say the least....
Regarding Chile, Stoyan has selected some of the current macro data in the country, which clearly speak to what free markets lead to. Chile is currently the most open economy in South America, the country with the lowest corruption (in the rankings it is lower even than developed countries like the USA), the country with the best conditions for doing business in South America. The country undoubtedly has its problems, such as relatively high inequality, but in my opinion this problem will be eliminated in the next 10 years or so, especially with the low unemployment that the country enjoys. In just 18 months after taking office, 500,000 jobs have been created during the administration of Sebastian Piñera, and wages in real terms are growing by about 3% per year.
I could talk a lot more about Chile, but in this case, in my opinion, the country's economic development is a consequence of the implementation of free market values in the country.
Methods,
"millions of agents on the market" now this sounds funny! This is religion! And I don't know if you understand what you're talking about or you're just inspired by the "free market". Because the "millions of agents" have already had their say, for example, on mobile phones, laptops, etc. You just take a product that is already being sold, protect it until it becomes competitive and put it on the market. Elementary. Besides, how do you think big companies design their products? Do they wait for the "millions of agents" to draw the blueprints for them? They probably release whatever comes to mind and if it survives, it survives if they don't suffer the losses. If you study economics somewhere, you're downright desperate.
I can't say about Chile now, considering how well you know other things, I doubt whether you are correctly assessing Chile's "success". If there is any, what is it due to 🙂 . Neighboring Argentina also has extensive experience with neoliberalism 🙂
You really don't know what you're talking about. Nor do you understand what the other commentators are writing. It's frustrating that people who make their living (and other things) with economic analysis are explaining something to you, and you're spouting nonsense.
And we all see that you can't say. And that you have no idea about the economy of either Chile, Korea, or Bulgaria. I don't think it's worth explaining to you about Argentina, sign up to study somewhere 😀
I also have no idea about the economy of Chile and Korea, I have no economic education. Will you explain to me how the opening of the market and the lack of state protection of domestic producers is good for our country? If, say, a tomato producer in Bulgaria can take out a loan with an interest rate of 10% for the development of his farm, without using state aid and with an average labor cost of 2 BGN/hour, how could he compete with a Chinese producer for whom the same loan interest rate is, say, 6%, his labor costs 0.5 BGN/hour, and the state subsidizes him (by about 50%)? (* the example is not with real data, but as you can imagine, in this case this is not important)
Wouldn't the lack of protectionism and the open market be exactly what would ruin Bulgarian agriculture and animal husbandry (and not only them)? Yes, we will eat tomatoes for a leva less, but at what price? Shouldn't the state protect both consumers and producers?
Once upon a time in school, our teachers explained to us that Bulgaria is blessed with excellent natural conditions for agriculture. Shouldn't the country then protect and preserve its wealth and take advantage of it?
I am not an economist either, but under the circumstances I do not think that economists deserve trust. Indeed, it is a pity to say this, but it is so. Economists do not deal with nukes, but with politics, which they try to hide behind the mask of science. And unfortunately, the politics they promote are not in the interest of the people, but in the interest of their political (economists') sponsors. If these sponsors were not there, economics might have become a science, but for the moment it is not and I do not see a chance of it becoming one in the near future. That is why economists and their theories can fail ad infinitum, and they, the economists, still give their minds everywhere.
Working with the free market is very simple. Imagine, you make flip-flops, I make tomatoes. But imported flip-flops come that are nicer than yours, so that I don't suffer as a buyer, I don't buy yours, I buy the imported ones. You are left without income. Then, you look at cheaper Macedonian donmats and don't buy mine. I am left without income. So we are both left without work and without income and accordingly we can no longer buy either imported flip-flops or imported tomatoes. Accordingly, we cannot produce them, because we cannot buy them even if we produce them ourselves. Of course, there is a way out. Let's print money. But economists forbid us from doing that either.
Protectionism comes to protect countries from precisely this type of impoverishment. And if restoring a collapsed tomato production seems easy, a collapsed mechanical engineering or electronics industry cannot be restored in a year or two.
Here, economists will present you with the thesis of competitive advantages as the basis of the free market. Within its framework, countries should specialize in what they do relatively well, not the best, but relatively well. That is, if it takes 10 times more resources for Bulgaria to produce computers than Japan and 5 times more to produce hoes, then Bulgaria should specialize in the production of hoes, and Japan - in computers and trade. At certain price ratios, both countries benefit. The point is that price ratios cannot be respected. Then, more progressive economists already recognize that such a practice leads not to the development of the less developed, but to the consolidation of their underdevelopment.
So protectionism makes sense.
Regarding the discussion: Yes, protectionism should not be applied - it is unnecessary and harmful to favor a given entity on the market, even if it is Bai ti Ganya with the muskrats. But what has been omitted, and in fact the most significant, is the difference in the purchase prices and the prices at which we buy our tomatoes on the market. The truth is that the domestic producer is suffocating, but not squeezed by Macedonian, Turkish and Chinese greengrocers. The problem is in the hundreds of percent markup that the resellers put in their pockets. And if you object that such speculation is a free market, I can only add that its implementation is accompanied by not so free and beautiful methods, which even include violence, threats and extortion. And all this under the benevolent gaze of political entities who fill black boxes from the looted profits on exchanges and markets. What kind of protectionism are we talking about when our politicians are directly benefiting from the crisis in our agriculture??? Has Mr. Miroslav Naydenov - the advocate for clean food and Bulgarian production forgotten how tons of 20-year-old Irish meat are imported into Bulgaria... or how each of the new laws he is pushing through was not drafted under pressure from large meat, milk, etc. agricultural producers and veterinary pharmaceuticals and is not aimed at increasingly benefiting narrow circles at the expense of small and medium-sized businesses and leading to increasingly large amounts of garbage on the market?...
Yes, you are absolutely right about the resellers. They have a solid contribution to the destruction of our agriculture. But that was the practice in the 90s. Now I am not sure. Now the large Western retail chains are making similar extortions of our producers. There are several chains and they are foreign, they should be on the principle of the free market. Why it happens the way it happens is another question. In fact, the free market sets monopoly prices. For example, the wheat you produced may cost you less, but you do not sell it cheaply, because on the Pembenistan exchange the price was so-so. If you do not know about the Pembenistan exchange, a company comes along who knows. It buys it from you cheaply and locks it in the Pembenistan exchange. That is how they brought us to a grain crisis in the 90s.
In general, the free market is extremely harmful for underdeveloped and middle-income countries.
For me you are absolutely right. The problem with violent speculation is created by the state and the lack of law and order. If the police and the courts cannot protect producers from physical assault and threats, this is no longer a free market but a mafia structure.
What you are describing is state intervention in the market, which, as with protectionism, is completely wrong.
I was referring to the first commentator Marotte. The free market is the most appropriate thing for economic development.
I don't know about you, but some of my comments lack the "Reply" button, so I'm posting at the bottom, but this is a reply to Stoyan Panchev's post on June 11, 2012 at 2:09 pm.
So about the IME. The IME is worth the nagging. I've dealt with them quite a bit. They "make their living" by pushing foreign interests in our country, i.e. they are something like economic janissaries. Their competence is extremely questionable. Not only do they invite Pinera to our country, but they also maintain contact with Richard Rahn. I simply have no words for what an "expert" the latter is. But to expand on the topic here is not the place, I can refer you to Dostena Laverne's book "The Experts of Transition", which, by the way, is a dissertation defended at a French university. I hope that French universities have weight for you because for the IME, France is a "backward socialist country" and everything French is downright communist. And since I'm looking at you young people - run away from the IME while there is still time. Well, if you are incompetent economists, you may not have any other chance than the IME. Of course, it's not just IME, in our country there are also CLS, CID, IRMI .. etc. about 20-30 such permanent "NGOs". There are several thousand around the world, starting with Open Society, Cato, Heritage Foundation, Fraser Institute, NED, etc. which are ultimately funded mainly from one place - USAID, which is subordinate to the US Secretary of State. If you also find the Canadian documentary "Siege", you will see what evil we are talking about.
Regarding the "brand". Yes, the existence of trademarks is not a macroeconomic indicator, but it is certainly a sign of success and competitiveness. South Korea has not only one brand, it has several world-famous brands. Chile has none. Well, China has only one for now, but on the other hand, most branded electronics say "made in China". However, "made in Chile" is not found either, right?
Yes, I don't have an economic education, I have a much better one and I'm grateful for that. I don't speak "your language", but if you understand the concepts, you should recognize them in whatever language they are told to you. Economic education is currently a deep brainwashing, lest I write "mandfuck". Economics, unfortunately, is not a science. It is not successful not because "its object was complex", but because it does not use scientific methods. And I understand scientific methods quite well. I have access to well-known economic scientific literature, but do you believe that if you throw a name at me I will immediately rush to search for and read his works. Moreover, you yourself are pushing under the sign of the Institute for Market Economics, which is absolutely compromised in my opinion (their logo is at the top of the "Partners" page). Still, thank you for freeing me from Rothbard 🙂 I have so many things to read.
I have also read specialized economic literature, since I choose mathematics more than the average economist. Well, I can tell you that over 90% of the economic articles I have read are garbage. Strictly economic, and not from the circle of think tanks to which IME belongs. Their main problem is that most of them do not even look for a connection with reality. Mathematics mathematics, mathematics, sometimes quite difficult, and sometimes two crossed imaginary curves. More than half of the articles I have read do not even deal with real data. Unmeasurable parameters are invented and inserted into equations, insignificant hypotheses are tested, etc. So much for economic literature. And there are even more striking cases when two Nobel laureates have different opinions on an issue that can be checked on the spot, and a Nobel laureate and a world-famous economist cannot agree on whether there was a currency board in Argentina or not. But you should keep track of these things, not me telling you.
I took the trouble to check the data for Chile. and they are as follows. Average real GDP growth before 83 is difficult to register. From 83 to 1997 it averaged 7.8% (annual effective growth rate). Since 1997 it has been 3.8% which is not that impressive, considering that the US has been 3.3% since 1945 and Bulgaria has been 5.8% since 1997 to 2008, and we have not had "Chicago boys", but socialism. Now hold on tight. Chile's M3 growth between 86 and 1994 was 37.4%, then it slowed down and after 1997 it was about 10%. I haven't looked for GDP at current prices, but as I told you, it mainly reflects the growth of the money supply (the largest monetary aggregate). You can check this yourself with the data from the St. Louis Fed. There is data there not only for the US. The interesting thing about Chile is that real GDP copies the movement of M3. Which leads me to think either of incorrect calculation of inflation or of the predominance of the financial (investment) over the commodity component in GDP.
The truth is, real GDP more or less follows the trend of copper consumption in the world, with the exception of the 1990s-1997s. However, I assume that the increase in consumption during this period was due to the collapse of the socialist bloc and therefore did not affect Chile. 50% of Chile's exports are copper and related non-ferrous metals. So Chile has the profile of a "raw material appendage", not a developed country.
Finally, these data (if the growth is real) fully confirm the thesis, which is not mine, that Chile recorded growth only after the second hyperinflationary blow in 82, after which Pinochet expelled the Chicago Boys and deviated from the policy of neoliberalism. The claims that the economic growth in the 90s is a consequence of the chaos between 73 and 83 is ridiculous. There can only be one thing true in it, that it starts from a very low base. Then, Chile lags behind Brazil and even Bolivia in which neoliberalism was applied to a more modest extent.
Let me quote myself about the "numbers" "Numbers very often may not mean anything. 7-8% growth of what?" So what I said is that numbers may mean something or may not mean anything. The numbers I gave you are unemployment (which is often underestimated), and a minimum value of hyperinflation (there are estimates of over 1000% during the Pinochet era). You can't tell me what the numbers you quoted me are growth of. Well, I found out for myself that they could refer to the real GDP of Chile. But you should have known that. You have to be very careful with numbers in economics.
"It's ridiculous to tell me that growth in the country is a product of money supply expansion."
Here again I should ask which growth? GDP growth at current prices reflects the growth of money in the broadest sense. Real GDP growth is approximately 2 times smaller. How authoritative a measure GDP is is also debatable, since it necessarily includes investments (gross investment), which implicitly includes the growth of the money supply even when inflation is taken into account. Then, at least in the US GDP there are such manipulations as hedonic adjustments and including the rent, at market prices, that a person would pay if his own home were not his. Now you understand what manipulation can be done with Bulgaria's GDP in the same way. And maybe it is being done. Then, at what price are imports taken out of GDP? At the purchase price in the producing country or at the selling price in the importing country. I assume at the first, and the difference between the two can be up to 25 times (for example, Nike sneakers). It is true that there are calculations of GDP by purchasing power parity, but I have not yet personally verified how authoritative the procedure is. And more often than not, the media simply cites GDP, when we are talking about GDP at current prices, i.e. the most inaccurate estimate, if it is an estimate at all.
I have not looked for the price of copper. Since I am looking at GDP at fixed prices, I should compare it with the volume of production, not with the price. That is what I did. The most accurate would be to look for data on the production of copper in Chile, but I did not find such data. My comparison with the world consumption of copper (in tons) is based on the assumption that Chile produces a significant and proportional part of it. Chile is the largest producer of copper in the world, and in 2008 it produced 3 times more than the next country in the ranking. I have already concluded above that Chile has the profile of a "raw material appendage", unlike South Korea. I do not know what happened in Zambia. I am not paid for these activities and I cannot cover the whole world.
I'm catching you from the first paragraph in another speech by heart. I'm not a defender of IME, I don't think they need it, but enlighten me whose foreign interests they are promoting and how. I'm also interested in how your persona gives assessments of people like Richard Rann.
I see that you don't understand why the brand is not an important macroeconomic indicator. I really don't have the opportunity to educate you in the basics of science, you will excuse me. Try Google, if you need a textbook I will recommend you.
I see that you have things to read. It shows with every line you write 🙂 Otherwise, it is normal not to have access to academic literature, it is a rather expensive pleasure. Regarding the statement about how 90% of economic articles are not done...I will directly remain silent. By the way, if you are looking for economic theory without mathematics, take a look at the Austrian School of Economics - free advice.
Again throwing numbers, again truths mixed with half-truths. Regarding growth, I never claimed that it occurred before 82 in its majority. Like any economy, the Chilean one needs restructuring of the socialist nonsense done before that. Inflation alone in 73 was 700%. After the removal of Allende, the country's economy was even more rotten than ours in 90. What has been achieved is stable growth and an extremely sound macroeconomic framework. Not to mention that pro-market reforms are not introduced all at once, but in three stages.
I see that you are interested in the methodology for calculating GDP. Like any economic indicator, this one is far from ideal, but there are documents in the NSI and Eurostat. Read and answer the questions. So check the purchasing power parity, it will be useful. And you are right that at current prices it is not the most suitable indicator, I absolutely agree with that.
You haven't checked about copper. Well, check how the sector is managed in Chile. Compare the world price and judge for yourself whether the Chilean economy could be in such good shape if it relied only on copper. Of course, it is an extremely important export, but you can't compare it to oil-rich countries. Zambia is a great example of what happens if a parasitic government runs a copper-rich country. The same would happen in Chile, without the Chicago Boys and the brick.
I think the argument with you is pointless. You simply do not read what I write to you, but repeat what you know. I gave you a source for the network of think tanks, which is the IME. But you do not notice what you are reading. Well, if it is up to me, I will make it easier for you. A concise retelling of the book I recommended http://www.antipropaganda.comxa.com/Ekspertite.html. More about the IME connections http://www.antipropaganda.comxa.com/SmallWorld.html. If you do not know which political circles Thatcher, Pinochet, Reagan, Bush Jr., Rumsfeld, Cheney, Rice, Powell, Nitsche, Wolfowitz, Stanley Fischer and Arthur Laffer are from, that is your problem. This is the circle that Richard Rahn and the IME and the entire network of "think" trusts serve. Something from Krugman about "economists" like Laffer http://www.antipropaganda.comxa.com/PedlProsp.html, and finally about the "competence" of IPI and Richard Rahn http://www.antipropaganda.comxa.com/IPI.html http://www.antipropaganda.comxa.com/IPI2.html. Here's a little about the lobbying activities of think tanks in our country http://www.antipropaganda.comxa.com/Belene.html. So much for IPI and the like.
What you wrote about my access to "scientific" literature is also nonsense. I write to you that I have read articles, you tell me that I did not have access. Moreover, articles from the IME circle and similar ones are usually free, because they are not in refereed journals. They cannot go there.
Free advice? You don't read what I write to you, you don't read. I told you that I select from mathematics, I'm not looking for "economic theory without mathematics", quite the opposite. And it is precisely the Austrian "school" that writes nonsense by the kilogram, as I wrote 95% speculation and pseudo-logic supported by 5% selected data. You sat down to recommend them to me. The Austrian "school" is a propaganda creation from the Cold War era. There is nothing scientific in their creations, only pretentious nonsense and elementaryisms.
About Chile I told you that you don't know the reality, you know the historical falsification. The reality is like this http://www.antipropaganda.comxa.com/ChilChudo.html. But no matter how much I repeat it to you, it will hardly be of any use. I can't understand why the neoliberal lobotomy affects so badly. I guess because of the financial benefits, the false prestige and the pathological messianism.
For Chile, I have done the math and research well enough, as far as can be done in about an hour, but it is clearly beyond your ability to understand it. I have explained very well why I do not use the price of copper. But you do not read. Too bad, because this should be your territory.
It's a pity when the failure of the Friedmanists is passed off as a success. Simply amazing ignorance and stubbornness. Once again I am convinced how deeply the lie has penetrated the circle of think tanks. But what a surprise. Economic and historical falsifications are the main activity of the network of think tanks. It is not by chance that I mentioned Argentina. Recently, one of yours, Gosheto Angelov, invented a new history of Argentina. It turned out that he took it from some newly published book. Again historical and economic falsifications. How long will we rewrite history, gentlemen "experts"?
With that, I have nothing more to say to you. In order to analyze and have a reasonable argument, you must at least be able to perceive the texts you read.
No, my friend, you don't read anything. Haven't you read and understood the difference between Bush, Rice, Cheney and Thatcher??
You don't have access to scientific literature because it's expensive. And since IME is scientific literature, it's clear to me that you don't even have a clue what a scientific paper is, for example. What a sad story.
When I see where you quoted from in your article about Chile, it becomes clear to me why you are chasing conspiracies and falsified stories. But yes, you did the calculations yourself, you haven't heard of economic journals and everything else is a falsification of Bush and Friedman, for example. Or Thatcher and the men in black with the reptiles. I just don't understand how people like you deny obvious facts. The neoliberal doctrine was gone - oh man, there are historical facts, collected statistics and it tells you that it hasn't gone. I quote you - large reserves, private pension system, little state intervention and you are still babbling nonsense.
*TEAM: Maintain good manners.*
South Korea is one of the countries that is suffering a lot due to its protectionist policy. There are many examples, but the most obvious is the automotive industry, which several decades ago was designated by the South Korean government as an 'infant industry' and therefore protectionist barriers were introduced so that it could develop, which it subsequently did. Currently, South Korean car brands such as Hyundai are creating serious competition in Europe and this would not have been a fact if it were not for the skillful protectionist policy. There are many examples in this regard. But one needs to be a little more aware in order to have a constructive discussion...
Chido or Gazzara123,
I'm compromising with your language this time, if you don't take it into account, there won't be a second one. As for the presentation, it's obvious who's doing it 🙂
The reasons Korean and Japanese protectionism led to growth are rooted in the complex system of aid and subsidies built by the US in the region to counter
of Soviet influence. As I have mentioned in my posts, there is academic literature, I have given examples with authors who do not even share my views. From them you can read how
did the mechanism work in Korea and why it stopped working with the crisis of 1997.
"But one needs to be a little more informed to have a constructive discussion..."
And it's important for a person to be informed, especially how to write in Bulgarian. Your comment is ridiculous, and you are illiterate.
"The reasons Korean and Japanese protectionism led to growth are rooted in the complex system of aid and subsidies built by the United States in the region to counter Soviet influence."
Before I researched the question, I thought so too. Academic literature? Who is academic literature? Olson Manker? Or Rothbard?
chydo is completely right and actually knowledgeable. And you are referring to historical falsifications, in academic language - myths.
I refer to historical documents, Bruce Cummings and the crisis of 1997. I'm waiting for the name of an article and author from you to prove your thesis to me. Not empty chatter about how Hyundai is a very good car brand. Do you even know how EOI differs from IOI? Where, when were both used. I don't even know why I'm wasting my time answering you 🙂
What a complicated system of support for the US??? Did this have anything to do with the protectionism of South Korea?? As a rule, such measures are taken against other countries, including the US and its industry. You have no idea what you are talking about. I will not bother to teach you anything at all. Go to the library and read until then, don't write nonsense that people will laugh at you.
Regarding the fact that he deleted part of my comment, it's normal, considering that he's against you, but he expresses the general opinion. Don't worry, you won't have to delete my comments anymore!
You have no idea what you're talking about. You haven't read a single line about the economic (or other) history of East Asia, and you come and start insulting me in an illiterate way. I can see that you won't bother to research anything, you didn't do it while you were learning spelling and manners, and you won't do it now.
In the interest of truth, the moderator decided to delete your words. I had left them in so that it would be clearer what "position" you are coming from.
Aman from illiterate and ignorant, but with an opinion
Oppaa,
"Your comment is awaiting approval"
Censorship is taking over. Let's quote one of the idols, Hayek
"It is not difficult to deprive a large majority of people of independent thinking. But the minority who will retain their tendency to be critical must also be forced to remain silent."
Congratulations 🙂 You've never been a fan of democracy and freedom of speech, have you? Sponsors will stop your money if you lose the ideological battle on your own turf. 🙂 Don't worry, gentlemen. I won't disturb your peace anymore 🙂 I'm not interested. But I'm hardly the only one who thinks like that, right? :).
When you post 15 links in your comment, protection is automatically triggered. Should we educate you on this topic too?
But are we still on the subject of Macedonian tomatoes - we negotiated them in early 1999 ... and this agreement of almost 6 years is no longer in effect because we are implementing the EU trade agreements with Macedonia??? And why is the issue being considered so narrowly - whether to release the tomatoes in question or not (a completely separate issue is whether we can even exert influence on the import of the unfortunate tomatoes) ... And why is the issue framed in such a macroeconomic way (let me clarify that by education I am from the most lousy group of economists, the so-called "macroeconomists", although I deal with trade policy), with its main dimension being international ... No one is talking about high tariffs or quantitative restrictions anymore (reference: World Trade Organization), they are talking about multinational companies, supply chains, access to raw materials, access to the market for services and investments, access to public procurement, protection of intellectual property rights, technical requirements, standards and tests, approximation of legislation, etc., etc. increasingly relevant problems in the fight for markets...
So, the gentleman who lamented protectionism can sleep peacefully - protectionism these days simply has other, more complex forms, but don't worry - we, the liberals, will fight them too 🙂
I opened the topic of these already aging forms of protectionism because various political and other marginals have started to appear, trying to ride a wave of the "let's protect the Bulgarian thing" type. And as it turned out, they have supporters in the dark corners of the Internet. But you're right, they will remain marginals 🙂
Well, that's exactly the problem, that instead of reasonable protectionism, we talk about multinational companies and other things you listed.
And you "liberals" will not fight anything. I don't see where your self-confidence comes from. I guess it has something to do with the saying "Ignorance is strength!" 🙂 People still hate you because of the harm you cause them. When their patience runs out, they will kick you to the trash with terrible force.
Stoyan Panchev..I see how democratic your page is! No matter how much you delete our comments, your incompetence shines through and everyone witnesses it! He wanted some information about South Korea. I will just say that there are many factors for Korea's success, but in any case, the country's protectionist policy, introduced back in the 1960s, plays a major role.
Here is an explanation of Korea's success - case studies - http://qed.econ.queensu.ca/pub/faculty/lloyd-ellis/econ239/readings/skorea.pdf
However, the best place to start is by reading Pack, Howard, and Larry Westphal. "Industrial Strategy and Technological Change: Theory versus
Reality.'.
So as not to give you everything ready-made, do some research on the "Automobile Industry Promotion Policy" in South Korea and The Automobile Industry Protection Act, which protect the country's automotive industry.
After you read a little, write to me and I'll send you another dozen articles to get acquainted with. I would recommend that you step out of your fictional world of liberalism and similar paradigms, because they only get in the way. Start thinking objectively, and not in a certain framework like a horse with shutters, because otherwise you risk remaining a simple ignoramus, as before!
Of course it's not a democratic page. If you had any idea what democracy was, you wouldn't be spouting such nonsense. The only thing that was deleted was your cynicism. But we still talk about whatever comes to mind 🙂
Now I'll deal with the link you sent me.
1. It was cut from something, somewhere. No author, no publication name.
2. Quote:
Now that the Korean economy is established, the Chaebol are seen as liabilities to further
growth. They are also seen as political liabilities, or as companies that unfairly received government
advantages in the past from which other companies did not benefit. Antitrust regulations are now
being enacted and enforced; this will probably make the Korean economy much more competitive
in the future. As the Korean economy approaches maturity, government's role in the productive
sector continues to recede.
From it we establish that your position is for protectionism until the infant industry stage is reached. Since this is the case, we focus on the so-called benefits of the existence of protectionism for a certain period of time.
3. In that case, let's see where the capitalist development state succeeds. Japan, South Korea, and Taiwan. What is very characteristic of the period? The American geopolitical strategy of pushing the Soviet Union away from the Pacific. How does the US subsidize the three countries?
- takes over the defense of the region. There is still a limit on the size of the armed forces in the Japanese constitution
- makes an incredible transfer of technologies. There is a huge database and documents for this. In general, transfers technologies
- direct subsidies, especially in Japan after WWII
- IMPORTANT: privileged (read WITHOUT PROTECTIONISM) access to American markets
- IMPORTANT: The crisis of 1997, which is perfectly explained by my model, is not something that yours is doing. Even in the article you sent me, they don't babble nonsense, like you and Kihancho.
Other factors also contribute to success, the authors argue about how important they are:
- the existing markets and relationships between countries as a result of Japanese imperialist expansion in the 1920s and 1930s
- the Asian "work ethic" - i.e. cultural factors
- the special situation of dictatorial (note we (almost) always talk about dictatorial regimes) regimes that must achieve economic success in order to respond to pressure from within and from without (the USA and the Cold War) - this is one of Cummings' main theses
So you want to tell me that we are waiting for a dictator to fix the Bulgarian industry (for example, if you want, maybe another one) for 20-30 years and then everything will be a mess? Go run to North Korea, you might like it there.
"From it we find that your position is for protectionism until we leave the infant industry stage."
Well, that's how it is in theory, but you're clearly not familiar with it.
"In that case, let's see where the capitalist development state succeeds. Japan, South Korea, and Taiwan."
Well, how can it be done in Latin America, where the amateur "Chicago Boys" roam? 🙂
"What is very characteristic of the period? The American geopolitical strategy of pushing the Soviet Union away from the Pacific. How did the US subsidize the three countries?"
If the US had a strategy to support the economic development of these countries and believed in the usefulness of the free market, then the US would have imposed a free market on them, like on the countries of Latin America, and not shower them with subsidies while they struggle with wrong methods. Isn't that right? But the US preferred the exact opposite. In Korea, Japan and even West Germany, which had to develop in order to limit the influence of the USSR, the US relied on the safe option - protectionism. And it experiments with neoliberalism far from the USSR - in Latin America. So we are a bit weak in logic.
logic.
Quijano, let's get back to the topic - that of protectionism. The question of freedom of trade is a litmus test for whether the person who comments on it has elementary economic literacy and/or for his ethical orientation. Protectionism is nothing more than another name for mercantilism, which is one of the branches of the statist philosophy of violence. Devoid of all semantic games and references to false nobility and erroneous psychological and sociological theories, mercantilism is a theory that attempts to oppose the irrefutable truth that when two individuals trade with each other, they do so because they believe they will be relatively better off. And since the followers of mercantilism are helpless in demonstrating the opposite, they invoke all sorts of other pseudo-theories of nationalism, a perverted idea of human nature, etc. But ultimately, the mercantilist advocates the forcible redistribution of property from some to others - from consumers, whose free trade choices are limited, to producers, who are given state privilege through a tax on imported goods or a complete ban on imports.
What you wrote is nonsense. The opposite is very easy to prove. To make the right decision you need to be well informed. When you are not informed you cannot say whether a trade deal is beneficial or not. If every trade deal was beneficial there would be no losers and bankrupts.
By denying protectionism, you deny people's right to association and group self-defense. This about redistribution is complete nonsense. To show that a given redistribution is unfair, you have to prove that the result of it is a distribution more equitable than the initial one. And that's exactly what you can't do. The free market leads to a non-stationary distribution of income and wealth, which deepens over time. There are corresponding computer simulations for this. The role of the state is to redistribute, taking from the rich and giving to the poor, and thus bringing stability, i.e. potential stationarity, to the distribution of income and wealth. That's why in normal countries there are progressive tax rates and the result of taxation is a decrease in the Gini coefficient. Social programs are separate. That's why neoliberals, as fierce defenders of private property interests, are dragging themselves on their bellies to push through a flat tax, as small as possible, and a reduction in social spending. Both things are extremely harmful to society and lead to economic and social instability. But even more harmful is privatization, which, in addition to being associated with enormous corruption, deprives the state of income that it particularly needs. And the profit of state-owned enterprises is a case study in the theory of the "redistributive role". Whose profit is the profit of state-owned enterprises and how should it be used (redistributed)? If it can be redistributed fairly, then the profit of private enterprises is obviously not distributed fairly, since it is appropriated by the private individual. If state profit cannot be redistributed fairly, then the state should not receive it, but it follows that private profit should not be received either, because the mechanism of formation is the same.
Anyway, neoliberalism is an attack by private individuals against the state. Their goal is to transform the state from an organization of society into their own repressive apparatus, which will protect only their interests - that is, the ideal is Chile under Pinochet. What some call a fascist dictatorship. This is the goal of neoliberalism and so far it is moving very well in this direction using a rather powerful weapon - total deception of citizens.
Regarding "human nature", you are again wrong. When using this phrase, one should at least familiarize oneself with it and the relevant scientific discipline - psychology, and not with "one's own observations of practice".
Because with such observations, an ancient Greek philosopher had concluded that being slaves was in their blood and therefore it was beneficial for them to be slaves.
I don't know who makes them up and where you learn these nonsense, but you are seriously deviating from common sense, not to mention the scientific approach.
"The opposite is very easy to prove. To make the right decision you need to be well informed. When you are not informed you cannot say whether a trade deal is beneficial or not."
Look again at what I wrote. Now I'll write it even more clearly: What does it say that two individuals want to make an exchange with each other? The answer is - it says that ex-ante (i.e. before the exchange), they believe that if they don't make it they will be relatively poorer, or to put it another way - they make it because they expect to be relatively richer if they make it. Otherwise - in the opposite case, which is the one in which they expect not to be relatively richer as a result of the exchange - they would not participate in the exchange.
Each individual makes an assessment of the benefits/losses of an exchange, and this assessment is a subjective process occurring in the individual's mind, in which he makes a decision to economize resources, using his AVAILABLE information. A person acts under conditions of uncertainty (he cannot predict the future with perfect accuracy), and accordingly the information is not COMPLETE, but it is SUFFICIENT for him to make a decision whether to exchange or not. Whatever decision he makes, it reveals his EXPECTATIONS about the benefits and losses of the exchange. If his decision is to exchange - this means that his expectations are that the benefits exceed the losses (i.e. the opportunity costs of the exchange - what he gives up to acquire what he wants, but does not have, and the other has and offers him).
Accordingly, your counter-argument does not attack the irrefutable claim that when two individuals trade with each other, they do so because they believe they will be relatively better off, but rather that an individual can make mistakes in his choice and ultimately, as a result of his choice, be relatively poorer, not richer. This argument DOES NOT CONTRARY to the argument for freedom of exchange. It is quite different and derives from another implication of human action, namely the uncertainty of the future.
"By denying protectionism you deny the people's right to association and group self-defense."
This is the height of hypocrisy and lies. Protectionism, which as I have described above LIMITS the free choice of consumers, you claim to protect the right to association. Now this is a CONTRADICTION. Protectionism PREVENTS one individual (consumer) from associating (buying a product) with another individual (producer).
And this about group self-defense is the nationalist fallacy.
The rest of your post stems from your mistakes, which I just pointed out, and there's no need for me to comment on it in detail.
to Stoyan Panchev June 14, 2012 at 5:50 pm
"No, my friend, you don't read anything. Haven't you read and understood the difference between Bush, Rice, Cheney and Thatcher??"
I guess it's a false distinction. (I see, I missed the Clinton surname) Something like this "Bush printed money, Thatcher didn't". Everyone listed is in the neoliberal camp and its American militarist wing. The same ones who feed the network of think tanks and their money most likely reaches you. That's why you so zealously defend their ideology.
"And since IME is scientific literature, it's clear to me that you don't even have a clue what a scientific paper is, for example." Where did I write that IME is scientific literature? I wrote to you that IME (and Richard Rann) don't accept nonsense in refereed journals, i.e. in scientific literature. I told you that you can't read.
Which quotes do you object to? The reports for the US Senate or the declassified CIA archives? The American sabotage of the Chilean economy during the Allende era is well documented and proven. How does this fit into your economic considerations? Ah, you have something against Naomi Clay because she caught your lies. Well, she is conscientious enough, her book has over 1200 quotes, including those about Chile. Including quotes from Ftidman alumni. And the thesis she defends and which I have retold actually goes back to Nobel laureate Amartya Sen. So much for "conspiracies".
This thing "The neoliberal doctrine is gone - oh man, there are historical facts, collected statistics and they tell you that it is not gone. I quote you - large reserves, a private pension system, little state intervention and you are still babbling nonsense." I don't understand it. I recently wrote that the neoliberal doctrine is gone? For the second time you are "reading" things that I did not write. The problem is that the neoliberal doctrine is being spread forcibly by paid economic janissaries and is causing irreparable damage to society! That is the problem!
And wow, the global conspiracy in action :) but that's just theoretically, apparently we can argue until the second coming (God forbid). As a Doubting Thomas, I would like to ask how many companies have been surveyed about the extent of the "vile interference of neoliberal, economic janissaries" when they decided to seek sales of their production in other markets or want to import raw materials from other markets? Have you ever thought about the opposing interests of, for example, producers of raw materials and processors (those who produce tomatoes and those who make ketchup and chutney, those who produce meat and those who make salami - aren't they all Bulgarian producers, but some say no! to imported tomatoes and chicken, while others say - you're destroying us if you stop importing since domestic production is not yet in the necessary quantity and quality) - the production of raw materials has a low added value, and processing has a high one - you, my dear protectionist, whose interests would you protect, in order to increase the total added value and the common good of the entire Bulgarian brotherhood? I respect when someone sees further than their nose and can afford the luxury of idealism and defending the interests of the wronged, but before that, let them really make an effort to ask the wronged what their interests are, and then rush to defend it... otherwise they are only satisfying their own ego for short ovations and if expectations are not met, they fall into unbridled rudeness, which generally affects the otherwise good cause of Balgorod!
Protectionism has its own theory and corresponding tricky practice. I have given enough information in my above postings. Find it and read it. I don't think this is the place to lecture you.
Your information is theoretical, you didn't answer my practical question, because unlike you, I actually ran into him! So can you answer or not?
Ivan Georgiev June 15, 2012 at 7:41 pm
With this you are affirming the liar's right to lie. In other words, if the deceived person is deceived in making a decision, it doesn't matter, it's even very good. Right? That's why in advertising, which is 90% lies and whose purpose is to manipulate, not to inform, it is not only permissible, but also morally justified. Nothing that distorts the information on the basis of which decisions about transactions are made. Right?
Then, you have to eat, right? You can't do without eating. And no matter what information you have, you have to buy food, right? There is no informed choice here, there is compulsion. The example is extreme, but indicative. In general, the engine behind compulsion is the need for social status and self-respect, but you can't understand that, so I give the example of food. Then, the proposal for people in this system is to take on more and more work for less and less income, right? (You call it competitiveness in the labor market.) Does that sound motivating to you? Because it doesn't sound motivating to me. Such a scenario can only work in conditions of compulsion, compulsion created by permanent unemployment. So talking to me about freedom in this system is just cynicism. Capitalism is a system based entirely on compulsion and lies.
This about the need for protectionism, at least for poor countries, is quite obvious even to non-economists. It is clear to any reasonable person that someone who has only 1,000 leva cannot compete on the free market with someone who has 1 million. The poor producer needs state protection. What kind of manners is this not to recognize such a truth - as obvious as a geometric axiom?!
Calm your egos a little, gentlemen economists, and first think about the simple truths on which theories should be built. This is how scientists in the exact sciences act, and that is why their theories are fruitful, not like your neo-liberal pseudosciences.
Economic science and history have long shown that protectionism does not work and actually harms poor countries the most.
Economics is not an "exact" science because it deals with individuals, not natural phenomena.
Please excuse me for getting involved in the argument, but I will speak solely from personal observations, not from an academic or any other perspective.
After the destruction of Seoul and the coming to power of a military-run government in the Republic of Korea, very strict measures were imposed, including a ban on the export of raw materials and facilitating their import. If technological and/or technical requirements are not met, everything is destroyed, so if it is a factory (just
the sappers blow up the site and it's over).
What you need to know about the Republic of Korea is that, together with the PDR and China, they are the main suppliers of the so-called "rare earth metals". They practically control the entire world production. Limited quotas and strict control force large companies to "invest" in them (mostly electronics, shipbuilding, metallurgy, etc.). Control over rare earth materials allows them to control sectors such as electronics, the food industry (there are also canned foods, after all), fuel extraction (probes and pumps are not made of newsprint), etc.
If I had to compare the situation, I would compare it to the pharmaceutical and cosmetic industries in Europe. Russia has them under total control with the export of ... pine cones, which are a very important raw material.
As for Japan, I can point to two illustrative examples here:
- Sony does not profit from electronics, music and movies. This company was, is and remains the largest producer of electrical steel in the world, including low-alloy steel.
- Mitsubishi is a global manufacturer of ... cigarettes and tobacco products. Not just one of the world's largest, but the largest.
These are simple truths that you won't learn in economics classes. There are things that are not accepted to be talked about.
Chile is recovering from the damage that was done to this country. Let us not forget that Chile is the largest supplier of saltpeter. Saltpeter is a major export product and a basic raw material for the chemical industry. The truth is that many economies need saltpeter, and the source is one. It is natural to use all possible means to put this source in some form of dependence.
Monopoly is power. If you are a monopolist, you dictate the terms. Here, "financial" mechanisms are irrelevant. Give me a monopoly on water (for example), but on a global scale and then come and talk to me about economic mechanisms. Either a commodity for which there is demand but no supply and whose PRODUCTION you can control, or you are nobody.
As for the academic community, in the words of a colleague of mine, it has long since fallen into a state of introspection and detachment from reality.
The service sector will always be "service" and "real production" will always be real. The imaginary economy has proven its shortcomings. But even its supporters (mostly them) want to eat, use airplanes and cars, talk on a mobile phone and get medical treatment.