[saint_fiasco]

> The subsidy is already a tit, the tariff is tat

Why is someone else subsidizing the price of a thing you buy bad?

The subsidy is doing you a favor by reducing your input costs, or freeing up your work and capital to produce something else.

[kranke155]

Because they are doing so to erode your manufacturing base through unfair competition.

From a national security standpoint this can be deadly in a hot conflict.

From an industrial strategy standpoint, it’s the same as any other monopolist practice - they will erode your base, take over your market, then raise prices to fleece your population’s wealth while increasing their own.

Industrial bases are economic strongholds that shouldn’t be lost, particularly not to great power competitors.

[saint_fiasco]

> From a national security standpoint this can be deadly in a hot conflict.

What about a cold conflict? How much do the tariffs and protectionist policies cost in the middle to long run?

For example, the Jones Act costs billions per year and has been going on for a lot of years. How many additional aircraft carriers and submarines and so on could the US have bought with that money?

[kranke155]

Tariffs and protectionist policies are unfairly maligned. They are effectively the only way countries build and rebuild industries. The idea that they are bad is an invention of bad economists who don't study history. See the book "How Asia Works" for an accurate economic history of the growth of industrial power in Asia, how it was based on Germany's ascension before it, and how it was al built on the RIGHT kind of policies. https://www.gatesnotes.com/How-Asia-Works

Successful Asian powers studied history, not Milton Friedman. https://en.wikipedia.org/wiki/Historical_school_of_economics

[trashtester]

Tariffs that merely offset subsidies in the other country has zero net effect on competition, and doesn't harm producers on either side unduely.

The net effect is merely a net transfer from the foreign government to the domestic one.

Tariffs that go BEYOND the subsidies in the foreign country has a net protectionist effect. This CAN cause stagnation in the industry in question. But less so if there is still healthy domestic competition.

Subsidies are potentially the most destructive measure. This is especially true for protectionist subsidies, and less so for export subsidies. But in general, subsides sets up a cash transfer facility between a government and local industry, often removing incentives to innovate. In turn, this means that the subsidies need to increase year by year to have the desired effect.

This can lead to the subsidized industry dying a sudden death once public patience for the growing subisides (and so the subisides themselves) come to an end.

[kranke155]

Read “How Asia Works” on how subsidies can be used effectively.

The book calls it “export discipline”, that is, you keep the subsidised firms on their toes by demanding them to be exporters and win the global market, thus making them remain competitive.

[saint_fiasco]

I don't disagree, you can definitely build more industries with tariffs and protectionism. I just don't see the point.

I'm a consumerist at heart. As long as consumers get to consume, it does not matter to me whose industry is doing the producing.

I get that your foreign suppliers can turn on you and raise prices. I think the money you make during peacetime by not putting tariffs will let you buy more weapons and bribe more allies so that the foreign suppliers don't try anything too awful with the supply chains. Stockpiles can buy a lot of time to restart industry in an emergency or at least find a different foreign supplier.

Take a look at Russia, they are sanctioned by half the planet and they still keep going on a reduced industry because they had huge stockpiles of tanks, artillery and so on. Imagine something like that but with a military that doesn't suck. Nobody would even dare try a sanction.

[kranke155]

The point is that unfortunately geopolitics ends up in an eternal competitive state.

Losing your industrial base and giving it away to a geopolitical competitor is almost certainly an error in the long run.

Large industrial bases also are correlated with healthier middle class societies, according to Vaclav Smil, and in my experience, he’s exactly right.

So losing the industrial base is fine for you, a service sector worker, but it’s bad for the country and it’s bad for society, if you want it to have a healthy middle class.

[saint_fiasco]

Most of the country works in the service sector. It's not like I'm some kind of out of touch elite.

The ones who are most hurt by tariffs, most affected by higher prices, are the working class. Sure, the workers of the specific industries that are lucky enough to be protected, the ones with the most persuasive lobbies, will certainly benefit. But every other worker will be a little worse off.

If you are concerned about the people who got hurt by globalization, maybe the government should collect money from people like us and spend it on people like them. They can set up the tax in such a way that rich people pay the most.

But if you use tariffs to help the people who got hurt by globalization, you cannot set it up in such a careful way. It's a blunt instrument that hurts productivity across the board and increases the prices to the end consumer. It becomes an implicit tax that poor people pay the most. An actual explicit tax would hurt much less.

[itsoktocry]

>I don't disagree, you can definitely build more industries with tariffs and protectionism. I just don't see the point.

You don't see the point of building up, say, your domestic chip building capacity? Really?

>Take a look at Russia, they are sanctioned by half the planet and they still keep going on a reduced industry because they had huge stockpiles of tanks

Russia can "keep going" because they have vast reserves of fossil fuels that Europe, currently, can't live without.

[Qwertious]

Tariffs specifically targeting subsidies are good. Tariffs in a vacuum are bad. Protectionist policies are bad.

[heavyset_go]

> Because they are doing so to erode your manufacturing base through unfair competition.

I wouldn't say it's unfair, if other countries actually value domestic manufacturing then they'll provide the subsidies and incentives to cultivate it.

[zamfi]

> …they'll provide the subsidies and incentives to cultivate it.

Incentivize it by…taxing imported manufactured goods, for example, to make the domestic manufacturers more competitive?

[Longlius]

For the same reason we disallow severe product dumping - it's a ploy to build marketshare in an attempt to become hostile to consumers down the road. We don't let companies dump products for a reason.

[mattmaroon]

China subsidizes EV manufacturers. Non-Chinese manufacturers can’t compete with the companies that get tons of free money from their government and go out business. Now only China makes EVs, so they can raise prices.

That’s the plan.

[ac29]

Sure, but if they raise prices, then US manufacturing becomes more competitive again.

Even if the US lost capacity to build, EVs arent such advanced technology that manufacturing couldn't return if the conditions were right.

[lupusreal]

> Sure, but if they raise prices, then US manufacturing becomes more competitive again.

Manufacturing isn't something you can just turn on like a computer program. It takes time develop the infrastructure, talented labor and product designs. For something like cars we're talking about many years. It took China decades of concerted effort and heavy subsidies to get where they are now. Without subsidies, starting this process takes even longer and may even be impossible.

Accordingly, if you already have this industrial capacity it would be mind blisteringly moronic to let it slip away from you. What can be destroyed in a few years will take many more years to build back, and won't be built back at all unless you reverse the moronic policies that let it get away from you in the first place.

[loandbehold]

It's a favor in the short term but a blow in the long term because you lose ability to manufacture. Manufacturing capacity is a use-it-or-lose-it thing.

[roughly]

Because you are a producer, and not just a consumer.