Has Protectionism Ever Worked?

Q: Has protectionism ever worked? Are there examples of countries throughout history that have embraced protectionist policies, and did that yield positive results? And what do these examples, if there are any, tell us about the economic plans of Mr. Trump?

A: If I were you, I would go grab Robert Allen’s Global Economic History: A Very Short Introduction <http://amzn.to/2kgt8pj>, and immediately read chapters 8 and 9.

First, chapter 8: Briefly, tariffs–but on the manufacturing goods of the first and early second industrial revolution where learning-by-doing and developing effective communities of engineering practice–is a piece but only a piece of the standard nineteenth century industrialization package: subsidizing railways, schools, banks, and (the right kind of tariffs). They don’t work without the other three components. They do work for a while–for the mid- and late-nineteenth centuries and into the twentieth, with diminishing effectiveness–if the entire package is successfully implemented.

(Note that the British dominions–Canada, Australia, New Zealand–do fine without the tariffs. They become rich in the late nineteenth century. But in the 20th they do fall behind to some degree because they are not strong in the industries where twentieth century productivity growth is initially most rapid. And note that for countries that already have dominant positions in leading edge high tech communities of engineering practice, tariffs are simply a drag.)

Second, chapter 9: After the standard nineteenth-century package is played out, successful rapid development requires a “big push” and a successfully implemented big push: Japan, South Korea, Taiwan, and now China. (The Soviet Union is an interesting case–I am not sure Allen has gotten it right.) And a great many other countries have tried for “big pushes”, and failed. Tariffs on the goods in which your economy is going to have a comparative advantage in a generation are useful, but only those tariffs…

Trump’s plans–whatever they may be, and nobody knows what they are, not even, or perhaps especially, not him–have nothing to do with past successful episodes of the right kind of tariffs as part of a pro-growth or pro-opportunity industrial policy mix.

Sincerely yours,

Brad DeLong

Professor of Economics J. Bradford DeLong
U.C. Berkeley
925 708 0467

January 22, 2017


Brad DeLong
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