I can believe you on the slavery thing but that's not really protectionism. Without being moralistic about anything I'm still skeptical that protectionism, as in restricting imports, works particularly well for a country as a whole.
Well, let's do the standard mathematical thing and take the extreme case. Imagine that some country sucks so much that all its industries are less efficient than those in other countries. Since capital is free to move between countries nowadays, Ricardian comparative advantage doesn't apply, and the end result is that no one ever invests in the country's industries, so it just stays poor forever. You might try to use government investment to prop up domestic industries, but the government doesn't have too much money because the country is poor to begin with.
It seems like protectionism would help in this case, by creating a market that can only be satisfied by domestic industries. And since there's a spectrum from this case to more realistic cases, there's also a spectrum of usefulness for protectionism. Does that make sense?
> Since capital is free to move between countries nowadays, Ricardian comparative advantage doesn't apply
Ricardian comparative advantage always applies when ignoring transaction costs; reducing transaction costs for any given set of transactions (e.g., by eliminating formal restrictions on capital movement) increases (rather than reduces) the likelihood that Ricardian comparative advantage applies.
(If you want an extreme case in which Ricardian comparative advantage to fails to apply, you need to assume extreme transaction costs -- one of the canonical hypothetical examples where this is argued to the case is an interstellar civilization without FTL travel.)
I don't see how that's true. Let's run through the standard example from Wikipedia.
1) England can produce a unit of cloth for 100 units of labor, and a unit of wine for 120 units of labor. Portugal can produce a unit of cloth for 90 units of labor, and a unit of wine for 80 units of labor. Portugal has absolute advantage in both goods, but England has a comparative advantage in cloth. By the standard Ricardian argument, we get lots of trade and happiness.
2) Now let's change the situation slightly. Replace all occurrences of "units of labor" with "units of capital", and assume that capital can move freely between countries. We've lost the key component of comparative advantage, the idea that producing a good forces you to "forgo" producing some other good. Everyone just produces everything in Portugal, and England dies. Whoops!
3) Now allow England to set up protectionism, so that all wine consumed in England must be locally produced. This way it can survive. Not very nicely, but between (2) and (3) I'd choose (3) every time.
You are missing that for capital in England to move to Portugal, something has to move the other way.
If you look at actual neoliberal trade, a lot of production of goods (and even services, to the extent that they can be provided remotely) moves to the peripheries, but the core's comparative advantage becomes in renting out surplus capital (which produces even more surplus capital to rent out). That is, the developed world in actual neoliberal trade with free capital movement are the countries that are like England in your example.
> You are missing that for capital in England to move to Portugal, something has to move the other way.
Why? Because nature abhors a vacuum? :-)
As far as I can tell, production doesn't really move to the poorest countries like the one in my example. It seems that it moves to countries that have an absolute (not just comparative) advantage in manufacturing costs.
Well, because "England" and "Portugal", on the level that Ricardian comparative advantage really works, aren't really countries, but sets of people (and, really, the comparative advantage really exists on the individual level, its existence between sets of people is simply an aggregate of its individual existence.)
Absent an external actor using force to compel an involuntary transfer, productive capital moving from person E to person P requires some item(s) of value moving to E such that the value to E justifies surrendering the capital.
I suppose the real thorny bit is what happens after that. You've used protectionism to raise a number of national industries that have incubated in a shielded market. At some point, they need to be exposed to the world.
I'd imagine, if they provide something unique, they can succeed. However, if it's (for example) a commodity industry, they're unlikely to have faced the same pressure to become efficient that their new competitors have.
Although, on the flip side, that timeline sounds excellent for growing a monopoly-busting competitor. (E.g. what my understanding is that the French do from time-to-time)
Ricardian comparative advantage always applies’s simply because domestic land/workers are going to be doing something. The economy might end up being based around running internet scam's or gold farming in MMO’s, but compared to substance farming that's still a step up.
Protectionism works like this. People in business worried that they're not making enough dough convinces fellow citizens that the way for the nation to prosper is by wasting additional money to produce those goods and services on one side of a line instead of on another. These local businessmen makes extra cash, tout their high-visibility success. Individuals and families who pay for this and spend less on other things (harming every other sector of the economy) are conveniently ignored.
