Economic protectionism

[Foxxed]

I saw this in the EU thread, from @@Webbo, and didn't want to derail it:

 

Protectionism is always a bad idea.

 

I think in most circumstances the economic trade repercussions of protectionism outweigh its advantages.

 

But there's some argument that protection helped, for example, the world's forth largest steel manufacturer. The government ensured imported steel would be more expensive than local, thereby ensuring its growth. It's hard to see POSCO being so successful now, weren't it not for government intervention.

 

I've no idea if there were any trade restrictions on South Korea because of this, especially by other economies wanting to sell them steel, but it's worthwhile noting they managed somehow to weather the storm.

 

Free trade normally helps the big guys more than the smaller guys. If everyone started putting increased tarrifs on imported cars, Germany and Japan would be fuched (providing they don't threaten economic retaliation). However, that would help other countries car manufacturers, no?

[DJ Barry Hammond]

As with anything, it's about balance.

Protectionism in some areas, especially key sectors you want to grow or big employment sectors you want to protect, is a good practice - but over doing it is detrimental to an economy.

[Webbo]

I'm sure @@Dodgy Bob would agree with me here but if we ban cheap steel into this country then that puts our manufacturers at a disadvantage to countries where it's allowed. You could save 10,000 steal workers jobs but cost 100,000 jobs in other industries. 

[DJ Barry Hammond]

I'm sure dodgy Bob would agree with me here but if we ban cheap steel into this country then that puts our manufacturers at a disadvantage to countries where it's allowed. You could save 10,000 steal workers jobs but cost 100,000 jobs in other industries.

But the steel situation isn't as straight forward as that - China are selling loads of the stuff below cost price, to nobbel the market.

If our Steel production folds completely, then we're totally beholden to imports and are therefore completely susceptible to whatever prices steel goes for in the future.

There's also an overall cost / effect case, given the location of the UK plants and the importance of them to the local economy. Supporting our plants is likely to be more cost effective than having masses of laid off workers and the knock on effects that can create (plus doing nothing doesn't help you pick up votes).

[Webbo]

China are dumping their steel on the market which is against the rules and therefore banning would be legitimate and it wouldn't strictly be protectionism but at the same time cheap steel also helps manufacturers.

[MPH]

But the steel situation isn't as straight forward as that - China are selling loads of the stuff below cost price, to nobbel the market.

If our Steel production folds completely, then we're totally beholden to imports and are therefore completely susceptible to whatever prices steel goes for in the future.

There's also an overall cost / effect case, given the location of the UK plants and the importance of them to the local economy. Supporting our plants is likely to be more cost effective than having masses of laid off workers and the knock on effects that can create (plus doing nothing doesn't help you pick up votes).

 

 

 

Its really no different to why OPEC are keeping the oil prices low... They are trying to strangling the life out of the growing shale oil market, especially the american shale oil

[DJ Barry Hammond]

Its really no different to why OPEC are keeping the oil prices low... They are trying to strangling the life out of the growing shale oil market, especially the american shale oil

Maybe not - but major governments aren't going to complain at that if it reduces the power of Russia's and Middle East factions who hold tonnes of black gold - and provides more favourable conditions for citizens / business.

[Thracian]

But the steel situation isn't as straight forward as that - China are selling loads of the stuff below cost price, to nobbel the market.

If our Steel production folds completely, then we're totally beholden to imports and are therefore completely susceptible to whatever prices steel goes for in the future.

There's also an overall cost / effect case, given the location of the UK plants and the importance of them to the local economy. Supporting our plants is likely to be more cost effective than having masses of laid off workers and the knock on effects that can create (plus doing nothing doesn't help you pick up votes).

 

    https://www.theguardian.com/info/2015/dec/08/daily-email-uk

[DJ Barry Hammond]

https://www.theguardian.com/info/2015/dec/08/daily-email-uk

Fancy tying to link what you intended again?

[DJ Barry Hammond]

http://www.independent.co.uk/news/business/Leading_business_story/charts-that-show-why-china-really-is-to-blame-for-the-steel-crisis-a6978871.html

[Dodgy Bob]

The only reason I'd want the steel industry protected is if we think the low prices are both artificial and temporary, in which case it would make sense to maintain our steel making capacity for when prices revert to normal. But even that should be a decision for the business itself to make. If Tata, or whoever, aren't themselves confident enough in the long term viability of British steel making to absorb temporary losses then we shouldn't be throwing public money at it. If the government is considering underwriting Port Talbot's £1m per day losses to protect 3,000 jobs, I'd argue that's more than £300 per worker per day that would be better spent proactively retraining them for careers in an industry that does have a future.