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Comment by missedthecue | Hacker News Reader

"People like to pretend that protectionism is such a bad thing"

David Ricardo mathematically proved it was a bad thing over 200 years ago. It absolutely befuddles me that people, especially in scientific communities, continue to support its implementation. Hong Kong has always been free trade and their GNP per capita is now greater than all of western europe, barring Norway (which is equal to HK). Protectionism makes yourself poorer.

Isn't interesting concerning tariffs that what we do to our enemies during wartime we do to ourselves during peacetime.

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> David Ricardo mathematically proved it was a bad thing over 200 years ago.

Ricardo’s proof applies to comically simplified conditions which fail to consider a number of factors that exist in real world trade and resulting shifts of specific industries between countries including:

(1) potential impacts of current activity on future production possibilities, and

(2) strategic impacts of different production patterns and how that effects non-trade international relations, including war.

That's not to say it's not an important result that has massive implications for policy, but it is far from proof that protectionism is a bad thing in every case. It does prove that it always comes at a short-term cost, so you'd better have a specific long-term strategy that justified the short-term cost, though.

Politicians have always befuddled economists.

Economists have always befuddled politicians.

Unfortunately, the collision of the two typically leads to the worst of all outcomes without the benefit of any. E.g. Implementing protectionist policies without a low term plan for their withdrawal.

Because it's a small city with zero resources that acts as a gateway to the Chinese economy as a whole. If China didn't use HK as its economic entry, HK would be absolutely worthless with Singapore relatively nearby and in a much better geographical position.

Larger, independent countries with resources that open themselves to the extent of city states end up selling their resources to the lowest bidder (after the proper hands get a little extra) and having their industries siphoned off to places that'll work for less.

If economics were so easy that the optimal way was mathematically proven 200 years ago, I think economic difficulties would be resolved by now.

"If economics were so easy that the optimal way was mathematically proven 200 years ago, I think economic difficulties would be resolved by now."

I think you underestimate the market failures of the political system. Politicians are not interested in doing what's best for society, but what gets them votes and donations to help reelection. Sometimes the two align. Other times they do not. Like it or not, that is how the incentives are set up. This is why rent control for example keeps getting passed time and time again despite economists unanimously agreeing that it does not work.

http://www.igmchicago.org/surveys/rent-control/

> their GNP per capita is now greater than all of western europe

What if Shenzhen didn't exist across the river? HK is part of a unique economic environment with significant externalities making it prosperous.

Approaches that make small countries like Singapore, Taiwan or Hongkong succesful are not easily scaled to a large one like India. Using them as examples in arguments is very disingenuous.

Just because India has 1 billion people does not mean that they would be better off buying inferior goods at higher prices.

Hong Kong is equal or larger than Austria, Switzerland, Denmark, Finland, and Ireland.

Taiwan is larger than all those, plus the Netherlands, Portugal, Belgium, and many others.

They are richer because of their adoption of free trade.

Then the capital accumulated in HK would build Shenzhen, again.

> What if Shenzhen didn't exist across the river?

I think you have this backwards. Milton Friedman was already raving about Hong Kong leading the world back in 1980.

https://www.youtube.com/watch?v=m0dfiWM-rsE https://en.wikipedia.org/wiki/Free_to_Choose

The first special economic zone was created in Shenzhen in 1980, coincidentally. It's population at that time was around 60k according to this link:

https://worldpopulationreview.com/world-cities/shenzhen-popu...

Hong Kong's population was in the millions at that time. The SEZ was created specifically to imitate HK and other successful neighboring economies.

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