🚀 go-pugleaf

Poppy - San Francisco Bay Area wrote:
> Interesting article about free trade.  I had not known the history of
> free trade and he makes a good argument for tariffs.  But if we had
> high tariffs against China, for instance, consumers would rebel.  I
> think we would have higher cost and lower quality goods for the
average
> consumer.  The American worker is not oriented for quality work
except
> in the high tech arena.

We tried this in Mexico from the 1950s to the 1970s. We called it
"import substitution". The idea was to keep tariffs very high, so
Mexican manufaturers wouldn't have to compete against foreign (mainly
American) manufacturers, who could produce better, cheaper products.
The hypothesis was that this protectionism would increase the size and
numbers of Mexican manufacturers, creating jobs, and reduce the
pressure on the peso. It worked for a while; in those decades Mexico
grew at an average of 6% per year. Company owners and workers
(specially unionized) gained, but the consumers overall lost. We had
less products to choose from, and more they where more expensive. We
the consumers where maintaining inefficient industries and bloated
unions. I still remember the 70s back then; supermarkets felt
positively Soviet in their scarcity. My friends and I used to buy
American goods on the black market; we would eat Milky Way bars one
slice per day; we kept them on the fridge for over a week, so expensive
and scarce they where.
After the oil crises of the 70s and 80s, Mexico abandoned that policy,
and signed the GATT agreement, finally opening its markets to free
trade. Almost overnight, the market went from Soviet-style to American
style. Supermarkets overflowed with cheap, great quality products. It
was an amazing experience. Then NAFTA came, increasing the market
liberalization even more.
Oh, of course Mexican companies suffered. Thousands of them could not
compete and closed their doors, leaving many factory workers out of a
job. That's when the services sector passed the manufacturing sector in
size, a sign of a modernizing economy.
I don't feel sorry for the companies who couldn't compete. Tough, life
is hard. Why should I, as a consumer, subsidize their inefficiencies?
Why should I have to pay for the inflated salaries of union workers? Go
get educated and find another job; I did.
If you Americans sink into protectionism thinking that is going to
benefit your economy, you just might find yourself eating slices of
Milky Way chocolates for a week. Good luck.