Commenting on this Cafe Hayek post, Max Maz makes a point that I’ve tried to make several times, here at Cafe Hayek and elsewhere, but never with the clarity, vividness, and succinctness achieved by Max Maz. Here’s his comment in full:
So, what about all those cases, thousands or millions of times more common, in which the foreign governments help producers in rich countries, just being your average developing country government? When they steal, regulate and otherwise strangle their economies, when they destroy the rule of law, when they scare away foreign direct investment?
GDP per capita in Switzerland is 70.000$, in some African countries 500$, 140 times less. Even the most despicable racist would likely not believe that one of the habitants of those poor countries is genetically 140 times less productive of a Swiss. He would agree that most of the difference is due to their government actions.
Most of the producers in developed countries would be broke, if those countries had a level of governance comparable to the US, as corrupt and destructive even the US governance is. They had to find out another way of competing, or another industry where to do it.
So, how come that when a government helps a local producer (at most a extremely rare event) it is a scandal, and when the continuos destructive behaviour of the same governments against their own citizens and business is just par for the course?
DBx: I’m pretty sure that the beginning of the penultimate paragraph above is a bit of hyperbole; perhaps not “most of the producers in developed countries would be broke” if many of today’s ‘developing’ countries were, in fact, either really developing or actually developed. But under such conditions many producers in developed countries would indeed be broke if these developed-country producers persisted in producing the goods and services that they now produce (rather than move into other lines of work at which they would then have a comparative advantage).
