Example: China subsidizes solar panels to the point where all US solar panel companies go bankrupt. The US solar panel industry is badly hurt, even if the rest of us get 40% cheaper solar panels.
> Example: China subsidizes solar panels to the point where all US solar panel companies go bankrupt. The US solar panel industry is badly hurt, even if the rest of us get 40% cheaper solar panels.
What is the end game in this example for China? Do they expect to subsidize now and raise prices to exorbitant levels once there is no competition? That can't possibly last for a long time. If prices go high enough, surely the industries in the US will spring back up. The pain is temporary at worst.
I think what it shows is a fatal flaw in democracy. I think I read somewhere that if there is an issue that at least about five percent of the population care deeply enough (I don't know the numbers but for example the fanatical religious people in the middle east or pro-birth or pro-gun people in the US) to be single-issue voters, they will have an outsize effect on policy even though their position is bad for a majority of people.
Solar first, then electric batteries, ...
Soon, the tech is out of our hands and we have no option/big competitors left anymore. They already have a head start with a 1 billion market without any of our competitors
How many economists would argue today that China's independent home-grown software / internet ecosystem was a bad decision?
How many of those same economists were saying 10 years ago that China was only shooting itself in the foot with its protectionist software / internet policies?
But trade wars have always relied on demagogy and plain nationalism, and saying stuff like “we should build our own solar panels” when it has been rationally proved that the best course of affairs is to take the money handed on a silver plate to your own consumers/tax-payers and move on to other economic tasks is plain nationalism bordering on isolationism.
https://en.m.wikipedia.org/wiki/List_of_semiconductor_fabric...
While capitalists might have other, better, opportunities, what about American workers who have seen decades of stagnant or declining wages? American workers being constricted to service and tech jobs, and losing the opportunity for manufacturing work? Surely these people are losing over Chinese anti competitive behavior.
In the short term it seems we benefit from cheaper goods. In the long term, the risks are that we lose industries, make ourselves reliant on unfriendly foreign powers, and lose entire categories of productive labor for our workers.
Your comment looks down on nationalism in a way that I think is a bit naive. Why shouldn't Americans be concerned with the wellbeing of Americans? Are the Chinese working for our best interests? Are they working neutrally for the good of all? Or are they working in their own best interests, or the interests of their rulers?
The Chinese leadership should try to do what's best for the Chinese as American leadership should try to do what's best for Americans.
US antitrust law is motivated by the idea that it will last for long enough to hurt. That's why monopolies are specifically broken up.
After killing all of the competition, a monopoly could threaten to drop prices again if anyone else sprung up. That is enough to act as a deterrent, if you want to find out about the economic arguments before or against, research the history of anti-trust.
If we want to introduce tariffs, why not wait until we see China PR actually show monopolistic behavior? My gut reaction is that because the US is such a big customer, China PR will not be able to do that.
To paraphrase the quote "the market can remain irrational longer than you can remain solvent", the pain can remain temporary for a long time.
To go along with the example, it could take decades of subsidies in US solar panel research before the US has anything that can compete with or out-compete contemporary Chinese solar panels on a more-or-less level playing field, in the international market.
Because of US's unwillingness to match subsidies and allowing Chinese solar panels to out-sell them, in this example, they concede decades of industry dominance and the simultaneous ability to acquire state of the art advances (bright minds and new knowledge).
It might be helpful to not think about people becoming single-issue voters this way. People become single-issue voters because they see something as crucial, single-issue voters are supremely justified in voting. Also probably not ideal to think of people in terms of partisan dogwhistle labels, but that's a separate issue.
I remember our 60-year old mom being discontent about my brother still wanting to be in the business of selling cows (my brother was a peasant) even though that wasn't economically rational anymore, as my brother had to fight against agri-business (he's a sole cow breeder) and against farmers from other countries whose governments are more generous towards them (our government it's not that large-handed when it comes to small farmers, I live in Eastern Europe). My mother correctly pointed out that there was a lot more money available for my brother if he had only wanted to accept other job opportunities (like being a truck driver) and give up what was essentially an economically dead end.
So, if a 60-year old woman from Eastern Europe with no formal education in economics can still intuitively see what the best economically rational move is given a set of inputs, then I fail to understand how come a democratically elected government like the US one cannot do the same, but instead it chooses to go down the economically dead end road, and all that only because of stubbornness and misguided pride.
While this may be true for individuals, it seems perfectly reasonable that it could also be due to things like poor strategic planning, poor salary/trade negotiation, an unnecessary willingness to roll over when resistance is encountered, etc. The #1 economic and military superpower of the world has vastly more resources and options at its disposal than an individual farmer.
> but instead it chooses to go down the economically dead end road
Just to be clear....you are claiming that you can "intuitively see" that this economic road is certain to be an economic "dead end" (I'm not sure of the exact meaning of that in an economic context)? And you can also "see" that the motives of those who disagree with you are limited only to stubbornness and misguided pride?
Chinese aren't dumb. They aren't subsidizing exports because they like helping foreigners.
The best explanation I can give is an inversion of the saying "Give a man a fish, and you feed him for a day. Teach him to fish, and you feed him for life."
If you give a man who can feed himself free fish until he loses those skills, he'll become dependent on you and you'll have power over him.
> And while the Chinese are kind enough to help us pay for their products with their own money we can focus instead on other stuff which we’re really great at building/providing as a service.
The Chinese don't seem to be interested in buying any of that (except farm products and raw materials). They're working on domestic substitutes for high-tech things they do by from the US [1]. Maybe the US pursue a "back to the countryside/back to agriculture" movement to adapt to the export subsidies?
[1] https://en.wikipedia.org/wiki/Comac (state owned) is working on https://en.wikipedia.org/wiki/Comac_C919, for instance.
We see similar behavior with Uber and Lyft today (trying to subsidize the riders to get people on their platform). But this is a government doing it, which tends to have much deeper pockets.
USA benifits from this arrangement.
There are some more details of course and that adds complexity. But fundamentally it is a simple story.