This is gibberish.
Lol. This is a layman definition of “potential GDP.” That you don’t understand this is pretty much indicates that you don’t know what you are talking about.
But, as I have pointed out repeatedly, there are plenty of times when the government can tax/regulate/etc. and have both actual GDP and potential GDP increase. This is why economists talk about the multiplier effect of government actions.
Which are often less than 1. Yes, there can be specific actions that increase GDP, but in most cases restricting economic activity reduces GDP from what it would otherwise be. And policymakers are almost never wise enough to pick the minority of actions that increase GDP. Policymaking is 80% politics, 20% serious policy.
I know that protectionism is historically proven to be bad.
Do you know that?
I know what I said about my views on protectionism. And if you read the thread, you would know that I’m not necessarily a protectionist. And I also know that I gave detailed arguments about my views, none of which you remotely tried to engage with.
If you don’t actually understand the arguments, then ask questions. But read the freaking thread and stop with the strawmen.
And pick up a history book sometime. Plenty of countries experienced rapid economic growth under protectionist regimes. I could explain why that probably won’t be the case nowadays, but given your behavior here, it looks like you just want to spout nonsense as usual.
Nope. Don’t Gish Gallop here. Your initial statement about GDP was completely incorrect. And now that I’ve called you out on it, you are forced to admit it. You are admitting that sometimes multipliers can be greater than 1. If you actually knew that when you made that post, you wouldn’t have posted this: “Whenever we impose a tax, a regulation, or a protectionist measure, or restrict immigration, or decide NOT to produce something we could be(such as oil or coal), then we are reducing GDP.” I’m not going to get into a goal-post-shifting debate with someone like you who doesn’t understand economics. Everytime you post incorrect crap, I’m going to call you out on it though.
I seriously doubt you know anything about the economics debate over multipliers. But this claim of yours that “in most cases restricting economic activity reduces GDP from what it would otherwise be” is laughable, and I’ve got reams of economic data to back me up. But, in any case, passing a tax/regulation/etc. is not necessarily the same as “restricting” economics activity. Again, this is just you using terms in odd ways and posting nonsense.
Can you explicate which industries in which developing countries need protectionist policies and how that won’t lead to a tariff war with global trade partners, leaving ultimately to a net negative?
You are working outside of the modern consensus here, so I hope attacks on the economic literacy of others isn’t the meat of your rebuttal.
Why would I do that, since I never claimed anything of that kind. Again, more strawmen. In fact, here’s what I actually said “Plenty of countries experienced rapid economic growth under protectionist regimes. I could explain why that probably won’t be the case nowadays, but given your behavior here, it looks like you just want to spout nonsense as usual.” Seriously, what is your damage dude? I say that protectionism probably wouldn’t work as a tool for economic growth nowadays, and you decided to make the completely false claim that I’ve advocated for protectionism in developing countries.
Lol. I’m not outside any economics consensus. You keep making up strawmen to argue against.
Prosperity under protectionism tends to exist mainly where other countries didn’t retaliate too much. The US in the early years was a big time exporter, just as Japan was. If the US had actually gone through with all the threats to restrict Japanese imports things wouldn’t have gone nearly as well. And likewise, if the Europeans weren’t so eager to feed their war machines for the first 150 years of the Republic…
How about you admit that your initial statement on GDP was false before responding to me again? Like I said, I’m not going to chase around your Gish Gallop.
This new statement of yours is short on history and long on nonsense.
So there is no good reason to argue in favor of modern protectionist policies and you went on your soapbox to give us a history lesson about why protectionism was good in the past?
And then you reached your climax by calling us all morons for saying what you (truly) believed all along?
We worship at your altar, Mr. Hamilton.
And the fact that you’re arguments amount to Trump-style debating points doesn’t make you any more pleasant to talk to.
Plus you’re exposing your own ignorance with the last argument. Worldwide protectionism is meaningless when considering GDP growth in individual countries(unless we’re talking about sudden bouts of protectionism as in the 1930s). If everyone is protectionist, then worldwide GDP will be less than it otherwise would be(a lot less), but many individual countries will do quite well, especially when they have things other countries want. For example worldwide protectionism would do nothing to inhibit GDP growth in countries where oil is their primary export assuming oil prices are rising.
But in a world where trade is relatively freer than say, during the mercantilist era, as it is today, countries that protect their industries are only going to do well if other countries don’t respond in kind. Devaluing currency works the same way, a country can gain a lot by devaluation, but if everyone does it then the world economy crashes. Same goes for protectionism. It only “works” to the extent that others don’t respond in kind.
It is also true that countries used to be prosperous(by old time standards) with females not working. But idling half your population is never a good idea if you want an expanding economy. The fact that almost every country used to idle half their potential workforce is not an argument that doing so is good for a country’s economy.
Strawman again. I can’t help it if you can’t read the thread. I’ve said what I truly believed since my first post in the thread.
Yes, it is a fact that countries in the past achieved pretty good growth under protectionists regimes and during times of world-wide protectionism. If you are going to make wrong historical statements, then I’m going to call them out. You made a nonsense historical claim and now you’re throwing a tantrum because you don’t know what you are talking about.
Oh, and for the record I did concede your argument that SOME protectionist actions or generally restrictive actions can increase GDP. Economies are complex, human behaviors are complex. But markets sort that kind of thing out better than governments do. Government restrictions are fine if you want a certain result having nothing to do with the economy(a home defense industry for example, for security reasons). But governments do not have the intelligence to use such policies to improve economic growth. Even things that on paper should almost always increase economic growth(tax cuts, spending stimulus) usually don’t because governments don’t know what they are doing and tend to still restrict activities with one hand at the very time they are trying to stimulate economic activity with the other. Subsidizing tobacco while spending money on campaigns to stop people from using it being one small example. Dishing out stimulus money for infrastructure while allowing all sorts of red tape and court cases to inhibit said infrastructure building is a bigger, more damaging, example.
Right back at you.
No, I exposed your own ignorance when I pointed out that you didn’t know what a multiplier was. But, here again, you are now admitting that there are cases where growth can take place under a protectionist regime. Which is what I initially pointed out. So, you post crap, I call you out on your crap, and then you are forced to agree with what I initially said.
Hmm. If only I had said I didn’t think protectionism would work as a tool for economic growth nowadays. Oh, wait, I did.
Seriously, you and Stringbean are completely ridiculous. You both just keep making up arguments and pretending I posted them.
More strawmen.
So I guess we don’t actually disagree on anything?
Sometimes markets do a better job, sometimes they don’t. Economists spend a lot of time trying to figure out how and why market failures occur. If you don’t know what friction is or what an externality is or what an information asymmetry problem is, then you aren’t qualified to be given anyone a lecture on how markets work. And if you did know what these things are, there’s no way you could seriously make this statement.
Oh, geez. Thanks for rewording a point I made earlier in the thread and trying to lecture me with it.
Look, if you don’t like government programs on philosophical grounds, that’s fine. But the idea that government can target spending or policy to cause economic growth is old-hat economics. You don’t want the government to do it, okay. But we have tons of historical examples where the government did exactly this.
And all of this stuff about tobacco and stimulus is completely irrelevant to the debate of this thread. Can you try to stay on topic?
They can in theory. In practice, they do not have the expertise, and even if they did, politics always gets in the way. After all, 535 non-economists get their say before it reaches the President’s desk.
But yeah, I’ll concede that if we made Jason Furman President and gave him power of decree that the government could probably grow the economy.
While protectionism may not be globally optimal it can enrich specific nations. And national governments have primary obligations to self so why not advocate positions that strengthen the nation?
One of the trade offs within a nation to mitigate some of the negative effects of comparative advantage, i.e. a commodity worker being paid a pittance, is wealth redistribution. It’s sort of a social bargain to keep the pie growing due to comparative advantage. But internationally where’s the incentive to be a commodity?
The issue with the command economy is not just non-economists making decisions. It’s that the concentration of power with fact finding, punishment, and regulation creation is too dangerous and that the feedback mechanisms of voting or revolution are not as efficient as pricing.
How are you using the term “command economy?” Nobody in this thread seems to be advocating for a Soviet-style economy, so are you using the term some other way?