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From: radford@calgary.UUCP (Radford Neal)
Newsgroups: comp.sys.amiga,comp.sys.atari.st,comp.sys.ibm.pc,comp.sys.mac,sci.electronics,comp.arch
Subject: Re: GATT declares U.S. - Japan chip pact illegal
Message-ID: <1519@vaxb.calgary.UUCP>
Date: 1 Apr 88 20:25:30 GMT
References: <2441@unicus.UUCP> <1259@hubcap.UUCP> <1641@ncsuvx.ncsu.edu> <1813@ihlpm.ATT.COM>
Organization: U. of Calgary, Calgary, Ab.
Lines: 46

In article <1813@ihlpm.ATT.COM>, seorcutt@ihlpm.ATT.COM (Sam (not Samantha) Orcutt) writes:

>    1.  The Japanese government selects some new industry that they want
>        to develop.
> 
>    2.  A number of start-up companies are established within Japan.  In
>        order to allow these companies to get a foot-hold in the market
>        place they are given massive economic support from the government
>        in the forms of tax incentives, import tariffs, price support,
>        etc.
> 
>    3.  This gives these companies a built-in competitive advantage in
>        the global market-place.  Using this "unfair" advantage, they are
>        able to undercut the competition and force them out of business.
> 
>    4.  Now that they are the "only" player in the game, the Japanese can
>        raise prices to whatever they want and you have little choice but
>        to pay it.  The money made from these now secure ventures can be
>        used to build up the next industry the government wants to
>        develop.
> 
> I understand that this is part of an "official" Japanese national policy...

The Japanese may indeed by trying this. They may indeed have accomplished
steps (1), (2), and (3). But have you ever heard of them accomplishing 
step (4)? Do we now see $50,000 compact Japanese cars? Has the price of
cameras shot up now that they are all made in Japan? I certainly haven't
noticed this. 

The fact is that this strategy does not work. The money spent in step (2)
cant' be recovered in step (4), especially if the world investment 
markets have an ounce of sense, and finance the preservation of some
manufacturing capability elsewhere as a speculative investment.

Protectionism seems to be based on an attitude of spiteful moral 
superiority. You want to punish those "unfair" Japanese despite the
fact that the punishment hurts you just as much as them. Try thinking
of the Japanese as a natural phenomenon. If vast reserves of oil were
discovered in Vermont, would it be necessary to "protect" the rest
of the US from this windfall? If the Japanese government chooses to
tax their citizens to subsidize chip exports to the US, the effect is
much the same. The rational thing to do is to exploit this idiotic
Japanese policy for all it's worth - i.e. buy as many cheap chips as
they'll sell.

    Radford Neal