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Master Zen
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of naughty
Jan 2003
time: 23:27
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quote:
Originally posted by Arrian
Interesting points by Master Zen.
I think the most important one to note is the fact that many successful economies started out with protectist policies on their local industries (I seem to have hazy memories of some hefty tariffs used by the US back when we were a backwater  ) and later opened up.
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Yes, I always use the Korean and Taiwanese examples since most people seem to believe these countries were always "open" and that is what made them successful. Wrong. Korea and Taiwan had what is called selective proteccionism, i.e. they had various 5-year plans and said, for example, ok, steel is going to be a vital industry, so we'll protect it until it becomes mature, and then we'll open it to foreign competition. So, industry became strong due to the protection and was set to compete later on. The case of shipyards is even more impressive, the government aided Hyundai to set up Korea's first major shipyard and ordered ALL Korean companies to buy only Korean ships. After a while this law was loosed but look at it now, Korea has the worlds largest commercial shipping industry.
The problem with latinamerican industrail countries like Mexico, Brazil and Argentina is that we NEVER opened. Protecctionism gave a huge boost to our industries at first, but leave it for 20-30 years and you end up with inefficient corrupt firms which are too used to government aid to survive on their own.
So, IMO, the best industrial strategy is pick-n-protect, but always knowing that you will open up in the end. That's the only way to compete with the mature economies of the 1st world. This, however, might be more difficult with the smaller countries which have a very small domestic economy. In Mexico we could do it as we have 100 million consumers, but say, Nicaragua or El Salvador would have to rely more on free trade, mind you a fair and just free trade.
quote:
Makes sense to me. However, are the rich nations obligated to not retaliate if a poor nation protects its industries? So if Mexico wanted to really get into steel production, and set up high steel tariffs, should the US return the favor or do nothing (yeah, right, the steel industry here would go beserk)?
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Oh definitely. There's no reason not to retaliate that way, in fact it is perfectly legal to do so. But it would make no difference since steel trade would have practically ceased due to Mexico's initial protecction in this example. For the time the protection is in place, only trade would be in specialized steel products for which each country has a comparative advantage but not much else. I would never expect any country NOT to retalliate under conditions like these. Gotta love those trade wars!
quote:
I'm actually asking, btw. What do you all think about that issue? On the one hand, it is in our long-term interests to see the 3rd world become more prosperous, but in the short-term, protectionism for their local industries would hurt us. Further, if no retaliatory protectionism is used, will those 3rd world nations not come to expect preferential trade deals (think of it in terms of a government entitlement. People get PISSED if the government is giving them something, and then it stops. Doesn't matter if it was "fair" for them to get it in the first place)?
Complex issue.
-Arrian |
I agree but thing is, behavior changes when you now there is a finite length for the protection. In the Korean example, the government made it abundantly clear that it would not protect forever, this was precicesly the incentive to become efficient as there would be a time which they could not count on government support and would have to perform on their own. Thus, firm efforts have that time span to become efficient.
Also, I'm not so sure how much it really is for the 1st world's perspective that the 3rd become prosperous. World power after all is measured in terms of economic ---> tecnological --> military potential. Once economic prosperity is achieved, the rest follows sooner or later...
Anyway, you are right, it is a complex issue and one that deserves a lot of thought and debate.
-MZ
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MichaeltheGreat
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Apolyton Grand Executioner
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mooning the house that Ruth built.
Oct 1999
time: 21:27
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quote:
Originally posted by Master Zen
Agreed, but how does this help the Mexican economy? Not one bit. If anything it's increasing the gap between our two countries. Personal wealth means nothing in national aggregate values if it is spent on goods and services of another country. |
If Pemex made decent gas for anything other than carbureted 1950's Ford trucks, Petalo made toilet paper softer than 360 grade sandpaper, and Hacienda didn't tax every ****ing thing so that it's cheaper to go to the US to buy electric breakers or printer cartridges made in Mexico, then there would be more domestic consumption.
Money circulates both ways across the borders - the gringos make donations to the policia  , (seriously, there's a lot of commerce both directions). However, anybody who can get a border crossing card does so so that they can buy stuff in the US, that's often better quality and cheaper. Or the same stuff, often made in Mexico, but cheaper in the US.
It's pretty ridiculous when the same Home Depot or Office Depot or Costco store in Tijuana sells the same products for 15-25% more than they cost in the US at those same stores. Is that the greedy multinationals? If so, why is it that local stores are even worse?
A big part of what's holding the Mexican standard of living back is the ****ed up "tax everything to death" system that was put in place by the PRIistas, and the do-nothing-but-lick-Bush's boots Fox doesn't have the huevos (or the willingness or ability to work with Congress) to address. You get punished for making money in Mexico, unless you can find a way to hide it from Hacienda.
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Master Zen
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of naughty
Jan 2003
time: 23:27
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quote:
Originally posted by MichaeltheGreat
Sloww's not on my immune list, I've banned his ass a few times. So has Ming. It just has no effect, he's like Paul Newman in Cool Hand Luke - no matter how many times you put him in the box, he doesn't get his mind right for very long.
Besides, I had to commute north. If he's running amok in this thread, feel free to respond at the same level, I'm too busy with work for the next little while to read the whole thread.
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[/QUOTE]
Ok, good to know that, just that lately during the Iraq war threads it seems I'm always the one threatened with "toast" while he's the one who is just threatened to "chill".
As to responding at the same level, tempting but no, I do not stoop so low and if all people like him just try and provoke, they ain't accomplishing it here... .
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Master Zen
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of naughty
Jan 2003
time: 23:27
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quote:
Originally posted by MichaeltheGreat
If Pemex made decent gas for anything other than carbureted 1950's Ford trucks, Petalo made toilet paper softer than 360 grade sandpaper, and Hacienda didn't tax every ****ing thing so that it's cheaper to go to the US to buy electric breakers or printer cartridges made in Mexico, then there would be more domestic consumption.
Money circulates both ways across the borders - the gringos make donations to the policia , (seriously, there's a lot of commerce both directions). However, anybody who can get a border crossing card does so so that they can buy stuff in the US, that's often better quality and cheaper. Or the same stuff, often made in Mexico, but cheaper in the US.
It's pretty ridiculous when the same Home Depot or Office Depot or Costco store in Tijuana sells the same products for 15-25% more than they cost in the US at those same stores. Is that the greedy multinationals? If so, why is it that local stores are even worse?
A big part of what's holding the Mexican standard of living back is the ****ed up "tax everything to death" system that was put in place by the PRIistas, and the do-nothing-but-lick-Bush's boots Fox doesn't have the huevos (or the willingness or ability to work with Congress) to address. You get punished for making money in Mexico, unless you can find a way to hide it from Hacienda. |
Petalo is pretty decent actually... . Either that or I don't mind wiping my ass with sandpaper! 
But I agree 100% especially on the tax issue, our VAT is incredibly high, 15% although it's 10% at the border is it not? Still, 10% can't compete with the 5% or much less sales tax of most US states. Problem is, without an effective tax collection agency like the IRS, there's no way we can hope to get as much from income tax as the US. Its is much easier for tax evasion (income tax evasion) here, precisely because the SAT (our IRS) is a piece of total ****. VAT is much easier to collect because there is no way to escape it, for that reason it is so much higher... I call it the poor man's tax because poor countries can get much more out of it than rich ones. Unfortunately it is a very regressive tax since poor people spend proportionaly more of their income on consumption, VAT hits them harder than rich people even if rich people on the aggregate pay more.
So, sadly there's no easy way to get rid of the tax problem, unless there's a complete overhaul of SAT and not only that, a complete overhaul of the legal system to hit hard or tax evasion. But an overhaul of the legal system is at this moment politically unacceptable as to many powerful people have A LOT to lose. Sad, but I see this country going nowhere until that is done. You, who has lived here will probably agree that the legal system is a load of crap.
My issues with foreign goods is that is that it does not contribute to national wealth. It is different to buy an imported product than to go to a foreign country and buy it. When you buy an imported good, government gets some cash and it also pumps money into the local economy as the import dealers/distributors/transport co. etc. are usually local firms. So, at least some of that $$ goes back. In the end, however, the price problem is much deeper than just taxes or greedy multinationals. It would take a huge post for me and try to explain it and I'll still leave much of the issue unresolved. Sadly, it is not only a Mexican problem, this sort of thing happens in most 3rd world countries, at least the ones I've visited.
(at least the beer is cheaper... )
-MZ
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08-05-2003 00:48
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