Saturday, March 16, 2013

On Protectionism #907 and other thing

It turns out that it is rather hard for many to see the relationship between restraining supply (such as import quota, or in general, protectionism) and higher price. If the argument for protectionism is to defend domestic producers, as long as they do not/can not  increase production, higher price is inevitable.

That's obvious, you may say. But how do you inform this obvious thing to general public discussion? On beef product, garlic and shallots, soy bean, ...and other in a long list of protected products.

You may then point out: but protectionism, and higher domestic product, is an incentive for domestic producers to produce more. I am not convinced. The basic idea to make producers wealthier is by increasing productivity. How do we reconcile protectionism with productivity? Can we be productive in a sustainable basis without competition?

The other thing I fail to comprehend is how come many expect administration benefited from protectionism measure (import quotas in particular) really care about productivity. Their immediate benefit is to make protectionism to last as long as possible -- and take productivity concern, if any, at the backseat. Why? Because it provides them with rents that can be handily cashed in -- and put them in bottled water card boxes, if you know what I mean.

Another crazy thing I read recently is that Depok local administration is going to levy foreigners 100 dollars per month. I can not find any other sensible (economic) rationale but blatant xenophobia and racism. What do you call a situation when you were an Indonesian working in, say Brooklyn or Jeddah, and the municipality decided to charge you 100 dollars per month only because you're a (legally residing) Indonesian?

And don't get me started with our draft of new school curriculum.

8 comments:

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