Protectionism

Introduction – popular protectionism

Pre-war protectionism

- Mercantilism- the theory of running a trade surplus and the implications

- Retaliation tariffs – mercantilism proves to be counter productive as more nations retaliate against those who impose restrictions on them

- The Great depression – trade barriers lead to no demand for additional production.

- World war I

o Tariff wars - loss of the gains from specialization

- World war II

o Japanese oil – trade barriers lead to attack on pearl harbor

Post-war revolution

- Breton wood conference – reform of world trade policy

o GATT – General agreement on tariffs and trade

- 7 conferences – progressive trade liberalization

- GDP and trade – strong correlation between a nations wealth and the level of trade it has.

- 1970s protectionist pressures

o Countervailing duties’ and Anti-dumping provisions- despite GATT rules lobbies find innovative ways around them

§ Abuse of GATT rules

o Voluntary export restraints (VER) – “voluntarily” imposing a tariff on the side of the exporter

§ Japanese automakers

General principle of exchange – achieve goods of the greatest value

- Comparative advantage - you don’t need to be better you just need to be different

- Gains from Specialization – resources devoted to the most efficient producer

Exchange of currencies: where value lies

- money has no value unless it is used. And it has to be used in the native economy

Iowa car crop – you can either make cars in Detroit or grow them in Iowa

Exchange through digital mediums (New media application)

- how do you restrict a public good

What is happening in the United States: Running trade deficit

Conclusion