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Comment by zozbot234 | Hacker News Reader

The well-known problem with "state meddling to support local industries" is that, as a rule, that kind of policy tends to support the most parasitic and least socially beneficial industry sectors (because they don't have much of an alternative to lobbying for more government meddling), not those with the best potential for success.

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Exactly, the successful Asian nations had very clever techniques for this. One, was to provide subsidy/tax breaks/trade protections only to those firms that could compete on the global market. This means that firms have to find success through actual productivity and output, rather than through rent seeking.

So it isn't so much "as a rule" as "as a rule when the government has been refulatorily captured."

In fact I think you will find that most industries that are built only happen through lots of government "interference." Silicon Valley is an excellent example of this, as the early customers were all defense industry largesse. And without those extremely rich customers with very extreme technological needs, development of Silicon Valley would have stalled, or perhaps not happened at all.

The government is always "captured" by some interests. The meaningful question is what could incent governments to pick the most widely beneficial policies. Trade policy is one of those sectors where it seems especially easy to make socially bad choices, so being extra careful can make sense.

Most successful US industries from defence to medical science to the internet was fully bootstrap funded by the US government. The same goes for the most successful industries in other countries. Without governmental “meddling” rich countries would not be rich.

I'm not sure I buy your logic (why would a less beneficial industry be better at lobbying?), but even so, is it a worse problem than economic colonialism, where no local owned firms can flourish, because the market is saturated by foreign goods by more advanced firms, and the only economic opportunities are working for those firms?

The examples of those successful Asian countries implies that the tradeoff is well worth it.

> The examples of those successful Asian countries implies that the tradeoff is well worth it.

And the examples of many, many countries which used "industrial policy" to implement awful ideas like import substitution (i.e. "developing" towards autarchy, not increased trade openness and market discipline) can imply the opposite.

Of course the state meddling can be done wrong. But unrestricted free trade advocates claim that is cannot be done right - that simply opening up markets is always preferable. That there are zero examples of poor countries that became successful economies following this path, and numerous examples of various forms of protectionism resulting in prosperity, should be a clue to which strategy is better.

> But unrestricted free trade advocates claim that is cannot be done right

I'm not sure that this is correct, the theoretical argument for supporting infant industries is quite old and well known by now. The main remaining question is an empirical one, of whether you think that industrial policy as it's actually practiced in the real world is generally worthwhile. Those who advocate against government meddling argue that it mostly isn't.

What people who are against immigration, especially "economic" migration don't understand that the companies that provide goods in the migrants origin country are in the destination country. If you are in El Salvador and you are buying American trucks, those trucks are manufactured in the US,if you have nothing to export in El Salvador, you have to go where the employer is and that means migration. It is especially absurd in Germany because exporting and never importing means a constant outflow of funds out of e.g. Greece which also means a constant flow of immigrants to Germany.

I don't understand. Do you mean Americans are immigrating to China, given the trade imbalance?

Why does exporting come with the expectation of providing employment to countries who could not build competent industries. I am not anti-immigration, I am an immigrant myself, just trying to understand your argument.

I think economic immigration has nothing to do with trade imbalance, and all to do with quality of life. As an example, India may be exporting more to Greece, but there are many Indians who would rather live in Greece, and none in the other direction.

Saying this while China has adopted a posture of letting the state control which industries to grow before opening it up to competition, soon becoming the wealthiest country in the world kind of reveals your bias for known-to-not-work solutions.

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