Hacker News Reader

Comment by sidkshatriya | Hacker News Reader

What you’re saying is correct but a tad bit theoretical. If a country is flooding your market with goods your manufacturers cannot possibly compete with, it leads to the destruction of your manufacturing capacity. So while the consumers are better of in the short/medium run in your country they are left vulnerable in the long run. The issue is balancing the short term positive impact of trade with the long term strategic impacts on your economy. Customs duties can help level the playing field a bit and allow local manufacturing to adjust. Sometimes local manufacturing can never adjust and as a country you need to make the tough decision that it’s ok for those factories to close permanently.

View on HN

Comparative advantage is a thing, an economy can function perfectly fine without a local source of steel manufacturing. I don’t understand why people fetishize manufacturing of cheap consumer goods as a sector that is more essential than anything else.

Because if that trade partner unilaterally shuts off trade with you due to a dispute or war, then you are hosed. They can probably find other buyers for their steel, but you will have to pay a lot more, if you can find enough at all.

This problem seems completely unrealistic because then you simply buy through the countries they haven't banned? What you're suggesting will only work if said country is a global superpower that can bully every country to tow the line. At the end of the day, no country can produce all the "critical" things it needs so this national security defence of restrictions on trade seems like a very unwise insurance to buy in almost all cases except maybe your millitary supply chain.

Very strange watching you call the current situation “completely unrealistic.” Then again reality is not realistic I suppose.

secondary sanctions

Tariffs, which each country can apply, limit any trade it doesn’t believe are in its interest

> without a local source of steel manufacturing

Good luck when the war starts and you can’t build weapons anymore because your source of strategic ressources are not under your direct control.

There are good reasons modern economists are so critical of Ricardo. You need to take what he wrote with a major grain of sand. The actual situation is a lot more nuanced.

Comparative advantage is a thing but in some cases those comparative advantages are an ability to turn a blind eye to the environment or the ability to repress your population. Also, if there were no strategic implications there would be no nations that perused mercantilist policies and no need for WTO dispute resolution over things like dumping and subsidies.

Reply on news.ycombinator.com