If the poor country had the long term potential of producing the cell phones efficiently, I think it's more likely a savvy investor would recognize and support their productivity growth, rather than a gov't bureaucrat accelerating productivity through a tariff.
The United States in the mid 1800s, and Japan after World War 2, South Korea, and most recently China: Benefited from protected markets and in effect predatory or dumping prices in external markets period
I see this as a boundary condition between the 2 extremes period what am I missing?
I agree with you. For instance, in Argentina, there is a production of electronics in one specific province (Tierra del Fuego) under a special incentives program. The result is that the companies working there lobby for more protectionism, and the people in the country pay two or three times more for electronic products than in the US.
There's a way to avoid the resting-on-their-laurels effect, which is to only subsidize producers for successfully exporting on the global market (IIRC South Korea did this). But even then you're really just artificially shifting investment and labor away from where it would have gone to whichever industries the government decides are important. You can't use this formula across the entire economy.
And since governments largely see the same stuff as "important" you end up with dozens of countries all trying to make new car companies, with only a few succeeding and the rest just burning money on it. Meanwhile relatively laissez-faire Singapore still has a big manufacturing sector, but in relatively non-sexy sectors (notably they do not have a native car industry, only a single Hyundai plant that opened recently).
I'm agnostic about the merits of protctionism, but your sports metaphor is exactly the wrong one to use here -- the prevalence of redshirting strongly suggests that allowing athletes to play central roles on their teams helps them develop.
If the poor country had the long term potential of producing the cell phones efficiently, I think it's more likely a savvy investor would recognize and support their productivity growth, rather than a gov't bureaucrat accelerating productivity through a tariff.
The United States in the mid 1800s, and Japan after World War 2, South Korea, and most recently China: Benefited from protected markets and in effect predatory or dumping prices in external markets period
I see this as a boundary condition between the 2 extremes period what am I missing?
I had to think super hard about the income-effect analogy.
The textbook says something like "when you have more $$, you consume more. less, and less.".
What's that have to do with production, though?
I *think* what he's saying is that, when the cost of leisure goes down, the income effect means you consume more leisure by not producing?
I could use some help here.
I agree with you. For instance, in Argentina, there is a production of electronics in one specific province (Tierra del Fuego) under a special incentives program. The result is that the companies working there lobby for more protectionism, and the people in the country pay two or three times more for electronic products than in the US.
There's a way to avoid the resting-on-their-laurels effect, which is to only subsidize producers for successfully exporting on the global market (IIRC South Korea did this). But even then you're really just artificially shifting investment and labor away from where it would have gone to whichever industries the government decides are important. You can't use this formula across the entire economy.
And since governments largely see the same stuff as "important" you end up with dozens of countries all trying to make new car companies, with only a few succeeding and the rest just burning money on it. Meanwhile relatively laissez-faire Singapore still has a big manufacturing sector, but in relatively non-sexy sectors (notably they do not have a native car industry, only a single Hyundai plant that opened recently).
I'm agnostic about the merits of protctionism, but your sports metaphor is exactly the wrong one to use here -- the prevalence of redshirting strongly suggests that allowing athletes to play central roles on their teams helps them develop.