Comment by crdoconnor | Hacker News Reader

Comment by crdoconnor | Hacker News Reader

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>Yes, the car industry in argentina is toast, but now argentinians can get cars at half the price thanks to the generosity of the brazilian taxpayer. The argentinians have become enormously wealthier by such a measure at large.

Temporarily they do. Once the Argentinian car industry is gone, however, they can safely jack up prices again knowing that bringing it back will be very, very hard. That money will leak out of the country, driving down the Argentine peso, making Argentines poorer overall.

>Theres another thought around this topic: that you can destroy an industry, and then increase your profits later on as a sort of monopoly power to recoupe the initial investment. IT would never happen that way: the moment prices rise up, investors would flock again to the argentinian automotive industry and take those profits away.

The flagrant gaping hole in your argument is the presumption that you can build a car industry overnight. It takes decades and requires a lot of investment. The Japanese government threw a not insignificant portion of its GDP at its car industry before it even started showing promise.

Do you have real life examples of a country subsidizing an export to a country damaging is industry, and then jacking up the prices and get that so called monopoly profits?

I dont think you will find a subsidy that ended up being a net monetary gain for the tax payers, let alone a good investment option.

US subsidized grain flooded into Mexico after NAFTA driving farmers out of business. Later the price of grain skyrocketed.

Grain has international prices, there are lots of grain producing countries. I doubt it Mexico farming less grain affects prices.

Pretty much all of Africa, unfortunately. Dumping from both the west and the far east has destroyed large parts of the economy.

To add as well, the free subsidy is definitely a short term thing. If you look at it as an 'education fee' for the subsidized business, it's not really that unexpected. Eg, a student may be paid nothing while he works as an intern and learns skills, but he does it anyway because once he has done so he can earn far more for the rest of his life. Same with subsides.

Also another way to look at it: the people buying the cars for less could probably already afford the cars. So instead of that money going to new workers in your own country, they're going to those in other countries. So the rich benefit in paying cheaper prices, but the poor who needed that income more than they needed a cheaper car suffer. In properly working free trade, this would be a two way street of comparative advantage, but because of numerous 'cheats' it's no longer a two way street.

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