19%20Agruments%20For%20and%20Against%20Protection,%20Part%202

19%20Agruments%20For%20and%20Against%20Protection,%20Part%202

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1 1 Arguments For & Against Protection The Case against Free Trade – Protectionist Argument #3: The Dying Industry – Protectionist Argument #4: Government Revenue – Protectionist Argument #5: National Pride – Protectionist Argument #6: National Defense – Protectionist Argument #7: Income Redistribution The Politics of Protection 2 Protectionist Argument #3 The dying industry argument states that a country needs to protect domestic production and workers if rising imports threaten the well-being or survival of import-competing domestic firms and industries. Protection is justified on the basis that this production and/or employment avoids negative externalities . 3 Protectionist Argument #3 Negative externalities could exist if the resources used in the industry—the workers, the managers, the capital, the land, etc.— cannot be quickly redeployed to other industries. 4 Protectionist Argument #3 Resource adjustments do not always work quickly or smoothly. If the import-competing industry is geographic- ally concentrated, then labor markets can become “congested”. Unemployed resources lose all of their income, not just the producer surplus that would occur if they could easily shift into their next-best use.
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