Tuesday, May 4, 2010

Something as Simple as Fear


"They will come to learn in the end, at their own expense, that it is better to endure competition for rich customers than to be invested with monopoly over impoverished customers."

He is very clear in his rhetoric that he avidly was supportive of the neoliberal ideology of competitive and free markets. In particular I like his writing on protectionism.

PROTECTIONISM we all know very well how it works and if anyone does not grab a few chairs and Sherri and Daniel can show you ;-)

I think though no matter how agreed on it is that protectionism is foul logic it will always have its place in society. Protectionism is simple as it is based off of the notion of fear. It is still rapid in the economies of the world however, often touted with a new name "security" (food, energy, etc.)Even though history is filled with its Bastiats and currently we have our Wenzels, Powells, and Cowens telling us "yo this is obviously no good" it persists. It's like a junior higher who picks on the girl that they like, each of protectionists know that there not being productive but they don't care they don't want to be the weakest link and will aviod having others believe this by taking down the strong. If they were to take down the competition justly via higher quality or lower price it would be fine but the barriers these groups build are those that are very damaging.

Fear seems to be a simple emotion, but it drives actions that are far more scary than that of what would be expected. The thing which I think is ironic about the whole protectionist argument is that the real dangers which are faced when barriers are applied. As Bastiat puts it, "When goods do not cross borders, soldiers will." Nations that do not trade have a greater potential to be threatened by war a situations far more scary than an influx of imports or what have you. It goes back to the short run vs long run time preference that we were speaking of: short term fears are easy to see but the long run consequences that are not, that occur due to acting on these fears can be deadly.

1 comment:

  1. Every time you use a buzzword like "neoliberal" Milton Friedman kills a kitten.

    I like this bit from Wikipedia on the term:

    "In the 1970s some Latin American economists began using "neoliberalismo" to designate their program of market-oriented reforms. By the 1990s, however, left-leaning opponents had turned the term "neoliberalism" into a pejorative that suggested a plot by the U.S. to globalize American capitalism. Critics dismissed the term as a catchphrase invented by academic radicals to denigrate the ideas of Milton Friedman and Friedrich von Hayek.[2] Libertarian Ronald Hamowy associates the term with nationalists and utopian socialists who oppose free markets.[3]"

    Sounds about right.