Macroeconomics – Protectionism

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Macroeconomics – Protectionism Video 05/01/15
T. Taylor – Macalester College
Protectionism: Laws or rules that reduce or shut out import
The intent of such laws is to protect various industries * Import Quotas * Taxes/ Tariffs * Voluntary Export Restraints * Non-tariff Barrier
Protectionism def protects those it is intended to protect, however; Consumers pay the cost of protectionism.
Firms that are protected can earn more money and consumers will pay more for the good.
Just a way for a government to provide an indirect subsidy, creating higher consumer prices.

Direct Subsidy:
Indirect Subsidy:
Both cause consumers to pay more so firms can make more money.
How can it benefit workers?
Poss. effects * Total # of jobs * - avg level of wages * Prevent job switching * Change quality of wages

Zero evidence that international trade effects the total number of jobs.

Trade should have little to do with employment level.
Siclicale : tide to inflation
Or Natural Rate of Employment

If all trade was stopped it would not solve the unemployment problem.
Protectionism can help redistribute jobs, but can not
Shutting out imports to keep wages high?
Can help in the industry being protected, but not all industries as a whole (or the rest of the economy)
Wages will be effected by productivity. (Not immediately, but over time)

Inequality reduced with more protectionism?
Consensus seems to be that globalization seems to be….

Most US trade is with high wage economies.
Trade is not the main cause of inequality.

Growing gap between rich and poor countries of the world?
(AKA divergence of the GDP gap)
This is no effect of globalization, it is because these poorer countries are not participating at all.

Infant industries need to be sheltered until they are ready to compete in the global scale?
Concern that foreign…...

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