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kojax
Post  Post subject: Protectionism as a Job Creation Tactic  |  Posted: Thu May 21, 2015 8:31 pm
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I know "protectionism" is a dirty word. However, we have to ask ourselves : where will new industry and all those new jobs come from?

Guaranteed loans? Free donations to startups? Tax discounts (which kind of push that boundary)?

It all basically starts with some entrepreneur(s) getting investors behind them, all excited to invest in and start something. However, investors don't get excited about ventures that aren't likely to be able to pay them back. It's all risk/reward ratios. If the risk is too high, then an unrealistically high interest rate is the only way to counterbalance that. And if the interest rate is too high, then our new venture will soon be strangled to death by its own capital costs. (Especially when one considers just how much capital investment it takes to start a competitive company these days.)

So,... how do we eliminate risk? Seems to me the quick and dirty way is to simply not play fair. Put up some protections. A protected industry is an investor magnet.


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iNow
Post  Post subject: Re: Protectionism as a Job Creation Tactic  |  Posted: Thu May 12, 2016 12:55 am
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If you think about it one-dimensionally like this, then your suggestion on its face seems to make sense. The challenge, of course, is that we don't live in a one-dimensional world. There'd be repercussions and implementation of ideas like this would cause more harm than good. Recall that you're doing multi-variable calculus, not simple arithmetic.

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billvon
Post  Post subject: Re: Protectionism as a Job Creation Tactic  |  Posted: Sun May 15, 2016 12:34 am

Joined: Thu Oct 02, 2014 5:23 pm
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kojax wrote:
Seems to me the quick and dirty way is to simply not play fair. Put up some protections. A protected industry is an investor magnet.

That worked back when there was only one country an investor could invest in. Today they just invest in a more competitive market in another country.


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exchemist
Post  Post subject: Re: Protectionism as a Job Creation Tactic  |  Posted: Wed Jun 01, 2016 11:54 am

Joined: Tue May 03, 2016 4:17 pm
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Location: London

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kojax wrote:
I know "protectionism" is a dirty word. However, we have to ask ourselves : where will new industry and all those new jobs come from?

Guaranteed loans? Free donations to startups? Tax discounts (which kind of push that boundary)?

It all basically starts with some entrepreneur(s) getting investors behind them, all excited to invest in and start something. However, investors don't get excited about ventures that aren't likely to be able to pay them back. It's all risk/reward ratios. If the risk is too high, then an unrealistically high interest rate is the only way to counterbalance that. And if the interest rate is too high, then our new venture will soon be strangled to death by its own capital costs. (Especially when one considers just how much capital investment it takes to start a competitive company these days.)

So,... how do we eliminate risk? Seems to me the quick and dirty way is to simply not play fair. Put up some protections. A protected industry is an investor magnet.

It can be, but this only works for an economy that does not rely on external trade. Erecting trade barriers to your market will deny access from foreigners, who will react by denying you access to their market, so that the business with you they have lost will be compensated to some extent by gaining the domestic business of theirs which you used to have. In the end the net effect is less competition and therefore harm to consumers in both markets involved. So it's quick, dirty.... and stupid. Just the sort of thing The Chump would do.


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astromark2014
Post  Post subject: Re: Protectionism as a Job Creation Tactic  |  Posted: Wed Jun 01, 2016 8:04 pm
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Joined: Thu Oct 02, 2014 7:55 pm
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Location: On a hill near a park. The Whanganui National Park, New Zealand.

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Is it that stupidity and greed go together well. I think so..

I can recall a time in this country when a leading politician introduced a guaranteed minimum price for exported goods.
Wool, beef and mutton., and that it created a butter mountain as the foreign country no longer wanted our product..
That it was soon realized that protectionism was just wrong.. In a free market society it has no place. We all want for a free market don't we ?

Does protectionism save jobs... short term yes. Long term no.. restructure your export strategy.
Closing your borders does eliminate your adversaries, but you fall behind because it's that competitive market that drives improvement.

Protectionism is a mistake., always.

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