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From: nrh@inmet.UUCP
Newsgroups: net.politics.theory
Subject: Re: Re: Strange Bedfellows: and a new to
Message-ID: <28200344@inmet.UUCP>
Date: Sat, 30-Nov-85 15:06:00 EST
Article-I.D.: inmet.28200344
Posted: Sat Nov 30 15:06:00 1985
Date-Received: Fri, 6-Dec-85 20:22:21 EST
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Nf-From: inmet!nrh    Nov 30 15:06:00 1985


>/* Written  3:09 am  Nov 29, 1985 by tedrick@ucbvax in inmet:net.politics.t */
>/* ---------- "Re: Strange Bedfellows: and a new t" ---------- */
>>So do any "socialists" out there want to defend shoe quotas against the
>>libertarians (me included)? If not, perhaps you'd like to give a list of
>>what current state interventions you oppose also. Then we'd have something
>>to agree on...
>
>I can conceive of a situation where shoe quotas might be desirable.
>Suppose one country plans to flood the shoe market in the other
>country with cheaper shoes until all shoe producers in the other
>country are driven out of business. 

I'd just like to make a few points that seem to me to be left out of
many discussions of this sort of question.  Let us call these two
countries Flood and Drain.  (Flood wishes to flood the shoe market in
Drain).

	1. If Flood subsidizes the Floodian shoemakers, then at least in
	the short term (until Flood gives up, or until Drain shoemakers
	go under from matching impossible-to-match prices), Flood taxes 
	go up ("No such thing as a Free Subsidy").

	2. Flood shoemakers are liable to grow steadily less efficient, and
	rely more and more on the subsidy.

	3. In the meantime, Drain citizens are buying shoes at the expense
	of Flood taxpayers, meaning that:
		a) The cost of living has gone down for Drainians, and
		   up for Floodians.
		b) Drainian Industry as a whole will experience lower
		   labor costs, at the same time as Floodian industry
		   is experiencing (because of the tax) higher ones.
		c) Labor-intensive Drain exports will go 
		   down in price compared to "all-other-things-equal" 
		   Flood exports.  

	4. Flood must offer the low price to all comers; failure to do
	   so will result in a boost in the Drain economy (particularly
	   shoe-wise) as Drainians buy shoes from Flood outlets and 
	   re-sell them to (say) New Yorkers.  This is particularly likely
	   to occur to Drainian shoe-marketers.

	5. Assuming an unusual fortitude on the part of the Floodian
	   government, and assuming that the Drain shoe industry shuts
	   down its (least-efficient first) shoemaking plants, then as
	   soon as any sign that the Floodian policy will change, the
	   MOST efficient (or most apparently efficient)  Drainian
	   operation will re-open.  In the meantime, the Floodian shoe
	   industry will probably have become *very* inefficient, as it
	   has had no true market feedback for some time.


If Flood is NOT "sponsoring" its shoemakers in this way -- if it simply
is true that Flood shoemakers fairly put out a cheaper shoe at the same level
of quality, even after shipping, then surely Drain citizens should have
the right to buy these?  After all, the Drain citizens shouldn't have to
subsidize THEIR shoemakers, should they?

I'm not saying that nobody gets hurt in a trade war of this sort -- the
Drain shoemakers have had to become shoe-marketers, shoe-repairers,
makers of specialty or luxury shoes, and in other ways shift themselves
to somewhat different (and sometimes entirely different) market niches.

I'm just saying that there's a fair amount not obvious (even after all
this stuff is pointed out) going on here, and missing even one of these
things could result in a '"stupid"' decision.