Again on the Prudent Response of Government A to Government B’s Manipulative Trade Policies

by Don Boudreaux on August 7, 2017

in Seen and Unseen, Subsidies, Trade

I post again here my 2011 answer to the question: Do subsidies [of exports by foreign governments] justify retaliatory protectionism?

It’s child’s play to conjure up hypothetical scenarios in which this economic move today by Jones, or that economic effort today by Williams, threatens future harm to Smith that Smith’s overlord – acting ideally and with an ideal amount of knowledge – can save Smith from suffering tomorrow by obstructing Smith’s freedom of action today.  The questions are, however, these: How realistic are such hypotheticals?  And how realistic is it to assume that Smith’s overlord will act both with better knowledge than is possessed by Smith and with Smith’s best interest foremost in mind?


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