Comments on: Jagdish Bhagwati: Obama is a protectionist http://www.creditwritedowns.com/2009/01/jagdish-bhagwati-obama-is-a-protectionist.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: DemocratsUndressed http://www.creditwritedowns.com/2009/01/jagdish-bhagwati-obama-is-a-protectionist.html#comment-2651 DemocratsUndressed Sun, 18 Jan 2009 23:19:47 +0000 http://www.creditwritedowns.com/?p=3458#comment-2651 I have to question Obama's mettle and whether or not he'll have the backbone to not only stand up to fundamentalist abroad, but in this country. I have to question Obama's mettle and whether or not he'll have the backbone to not only stand up to fundamentalist abroad, but in this country.

]]> By: Denis http://www.creditwritedowns.com/2009/01/jagdish-bhagwati-obama-is-a-protectionist.html#comment-2446 Denis Sat, 10 Jan 2009 06:24:09 +0000 http://www.creditwritedowns.com/?p=3458#comment-2446 I think that a protectionist war ends up hurting the exporting countries, not the importer ones. Importers lose a bit of their market overseas, but they regain a lot of their domestic market, net effect being INCREASED demand and more jobs, at the cost of reduced purchasing power of the consumers. Politically, reduced purchasing power is way better than the massive unemployment which is the alternative. In the 1930-s United States was the big exporter and it was hurt tremendously, but this time around situation is different. It would be wise for Americans to create trade barriers right now. In addition to tariffs one could use subsidies (as you mentioned) but also currency devaluation. This can yet turn into a "I can devalue my currency faster than you" kind of war. In fact there are so many positives to devaluation of the dollar I can't see how it could possibly be avoided now - debt wipe-out for all, housing prices going up, MBS turning from toxic into normal, effective trade barriers. I think that a protectionist war ends up hurting the exporting countries, not the importer ones. Importers lose a bit of their market overseas, but they regain a lot of their domestic market, net effect being INCREASED demand and more jobs, at the cost of reduced purchasing power of the consumers. Politically, reduced purchasing power is way better than the massive unemployment which is the alternative.

In the 1930-s United States was the big exporter and it was hurt tremendously, but this time around situation is different. It would be wise for Americans to create trade barriers right now.

In addition to tariffs one could use subsidies (as you mentioned) but also currency devaluation. This can yet turn into a "I can devalue my currency faster than you" kind of war.

In fact there are so many positives to devaluation of the dollar I can't see how it could possibly be avoided now – debt wipe-out for all, housing prices going up, MBS turning from toxic into normal, effective trade barriers.

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