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Comment by vovavili | Hacker News Reader

This argument in favor of protectionist industrial policy is almost universally opposed by most modern economists, for a good reason.

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Nations don’t outsource critical national security industries even though economists might say that’s more efficient. The question is whether they should outsource critical tech infrastructure to huge quasi-monopolistic US firms that can turn it off or abuse European data at will. I don’t have the answer to that question, but I have to imagine it’s a worthwhile debate. The data we have cuts both ways: China applied protectionist policies to its own Internet companies, and it’s hard to argue that this has been economically devastating for them.

>China applied protectionist policies to its own Internet companies, and it’s hard to argue that this has been economically devastating for them.

China has 1.4 billion people in one country while the combined population of Europe is around half of that, so that's one difference.

But, yes, both US and Chinese technology companies would likely be better off than they are now without China's protectionism and authoritarianism. To the Chinese state, protecting Chinese citizens from harmful things (like knowing full details about atrocities perpetrated by their government, or organizing to criticize the government) outweighs other concerns.

Disagree. China has had incredible benefits from its own social media and commerce platform growth.

Yeah, the US is missing out.

But the US could have benefitted from China's social media and commerce platforms and China could have benefitted from the US's. That's my point.

I am no economist or even that economics-knowledgeable and maybe I'm wrong and maybe China's protectionism is better somehow, but from everything I know or at least from every trope and meme I've ingested, free global commerce eventually leads to better outcomes for all parties.

What would have happened is the US platforms would have moved into China and stifled the competition.

As we can see everywhere else.

This wouldn’t even be good for the US, just good for the shareholders of these companies.

Maybe, maybe not.

China is a decade ahead of the rest of the world in different kind of use cases (think their super apps or payments).

TikTok is the most popular social media app out there, and it's chinese.

They are also tremendously competitive in AI despite all the limitations they encounter.

Honestly I think that the last century should be a clear statement that protectionism, sanctions and closeness is a failure whose bills are paid by tax payers.

We've been bailing out and protecting non competitive industries (which have further incentives *not* to invest due to protectionism they benefit from) for decades.

When Trump 1 put high taxes on dishwashers and house appliances it hasn't really pushed US companies to do better, it just allowed them to raise the prices and do very little.

But the fact that some countries play dirty (see China and their industrial espionage and lack of respect of patents and intellectual property), while others are obsessed with being #1 even if it means pursuing that via bullying methods have pushed us in this very negative scenario I don't see how can we leave us behind unless we get a new generation of brighter leaders.

Sadly, that's not how you win consensus and elections today.

> But, yes, both US and Chinese technology companies would likely be better off than they are now without China's protectionism and authoritarianism.

I really don't see how Chinese tech companies would have benefited from receiving the diapers.com treatment.

> But, yes, both US and Chinese technology companies would likely be better off than they are now without China's protectionism and authoritarianism.

How would china be better off? All their tech companies would have been bought out by larger foreign tech companies. Kinda like what happened to many european tech companies.

> To the Chinese state, protecting Chinese citizens from harmful things (like knowing full details about atrocities perpetrated by their government, or organizing to criticize the government) outweighs other concerns.

Yeah that's what the chinese state is worried about /s. Not the neverending misinformation, disinformation and propaganda directed against it.. When china does it, it's "authoritarianism". When "the west" does it, it's fighting against misinformation.

>All their tech companies would have been bought out by larger foreign tech companies.

That's not necessarily true.

>When china does it, it's "authoritarianism". When "the west" does it, it's fighting against misinformation.

What's the "it", here?

>Not the neverending misinformation, disinformation and propaganda directed against it.

Talk to any pro-democracy Chinese citizen and I think they will probably agree with me.

> That's not necessarily true.

Yes it is. Why wouldn't larger foreign tech companies gobble up smaller companies if they were allowed to.

> What's the "it", here?

"Protecting" the population against disinformation. "It" was fairly obvious.

> Talk to any pro-democracy Chinese citizen and I think they will probably agree with me.

You mean the "pro-democracy" plants funded by the US, europe, etc. Good one. The ones that always seem to flee to germany, britain, us, etc after each crackdown? You talking about those ones.

Imagine if china was funding "pro-communism 'citizens'" trying to undermine political systems all over europe and the US.

Define "better off". Companies like Meta and Google are enormous behemoths that make their money through advertising. One advantage of their size is that they have lower costs, but a greater advantage is that they have much larger market power: they can purchase competitors and demand higher rents for advertising space. Is society genuinely better off from this kind of concentrated market advantage? One might argue that there are different kinds of 'efficiency' at play here, and not all of them are in society's interest.

This would allow direct, constant competition between companies like Meta/Google and their Chinese counterparts. Americans could choose to use Chinese providers when they're outcompeting the American behemoths, and vice versa. We see that China's companies are very competitive and innovative. Both American and Chinese citizens might be better off if they all could freely choose from different global options.

But that's not at all how things have worked out, even here within the US. Waze does not compete with Google Maps. WhatsApp and Instagram do compete with Facebook, each of these companies were simply acquired. We've learned that new social media companies have a very hard time spinning up the network effects required to make them prominent, and in the rare cases they do, they quickly get bought out or their products cloned by incumbents. There's an excellent chance this would have happened in China without state intervention.

The most prominent recent exception to this rule is TikTok, which spun out of an already-successful Chinese tech company. Its owners resisted acquisition until legislation forced their hand.

"Economists" also love free trade, and we have learned in the last 10 years that it has become harmful to people at middle class and below. Even if GDP does grow, the benefits are not distributed evenly.

Yes, and the reasons why they do so has little to do with why this law exists.

A law whose purpose is protectionism is bad. It invites stagnation, pointless inefficiency, and retaliation.

A law whose side effect is a bit of protectionism has none of these problems.

While I agree with you 100%, I think most modern economists fail to account for bad actors.

If a situation was "China is producing X and having its taxpayers subsidize cars, steel, etc" then it would be their loss and our advantage. We get great products they get pieces of paper. I couldn't care less.

But considering that the real goal of those bad actors is to annihilate the competition and then pull the rug this is ultimately a bad idea.

Especially when those bad actors, at the same time, do their best at playing dirty and ignoring intellectual property.

I couldn't care less if Europe didn't have a shipping industry, in fact protectionism of it has failed miserably in Europe, and made our yards less, not more competitive. So yes, in that world I agree.

But in a world where an elected (or unelected) government, can suddenly blackmail you or create such an immense strain on your economy (as Russia did with Europe) this is not really like that. And suddenly you realize you should've paid way more, but invested way earlier in diversifying energy-wise.

In an ideal market I'd be 100% with you, in the real world, it's really neither black nor white.

Something that is good for a country as a whole isn't necessarily good for the economy. On the flip side, being good for the economy isn't necessarily good for the population of a country.

Which would make sense when everyone is part of open markets.

People are opting for the less efficient options, on purpose now. We live in an era where America is imposing tariffs.

We wouldn't be banning any law abiding company from operating.

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