Yes, I know what protectionism is and I know what the stated intentions behind it are. The problem is that it doesn't work overall. Yes, you can maybe "protect" an industry but at a greater cost than that of not protecting it. This can be reasoned from basic economic principles but there is also a lot of empirical evidence for it.
The essential problem, and probably the reason why so many people fall for it, is that the cost of protectionism are hard to perceive and diffuse but its benefits are visible and concentrated.
Its cost often manifest through consumers unknowingly paying higher prices or having a reduced standard of life. It's also difficult to know what productive economic activities might have been unlocked if workers of a protected industry had been working in more productive or innovative industries.
On the other hand, the groups that benefit most from protectionism are concentrated and therefore have a greater ability to lobby for it. There's always a concentrated group of winners and a large, diffuse group of losers.
To your "critical industries" argument, I have issue with that labeling. It seems a bit arbitrary and hard to justify. Aren't they all critical? The vast majority of countries seem to be doing fine without much of an industry that some other countries would consider "critical". The fact that there is such a great interdependence between our countries' economies is a good thing, not a bad one. Trading partners don't go to war with each other.
Finally, the Asian tigers are some the freest economies in the world. Hong Kong does not have any import tariffs. China is still lagging behind but caught up a lot since the late 80s... when it largely liberalized its trade policies. Regarding the civil war, it's quite a leap to think that the North's protectionism had any hand in their victory.
I agree with you that permanent protectionism is usually a sign of regulatory capture and cronyism. The "default" should be to let free market competition do its work. Protectionist policies should ideally be temporary, targeted measures; for example, as a response to the policy of a rival, or to build up a specific industry.
Again, there is no sacred doctrine here. Market competition usually produces some good incentives, but the invisible hand of the market is not the hand of God and from time to time it needs a nudge.
The essential problem, and probably the reason why so many people fall for it, is that the cost of protectionism are hard to perceive and diffuse but its benefits are visible and concentrated.
Its cost often manifest through consumers unknowingly paying higher prices or having a reduced standard of life. It's also difficult to know what productive economic activities might have been unlocked if workers of a protected industry had been working in more productive or innovative industries.
On the other hand, the groups that benefit most from protectionism are concentrated and therefore have a greater ability to lobby for it. There's always a concentrated group of winners and a large, diffuse group of losers.
To your "critical industries" argument, I have issue with that labeling. It seems a bit arbitrary and hard to justify. Aren't they all critical? The vast majority of countries seem to be doing fine without much of an industry that some other countries would consider "critical". The fact that there is such a great interdependence between our countries' economies is a good thing, not a bad one. Trading partners don't go to war with each other.
Finally, the Asian tigers are some the freest economies in the world. Hong Kong does not have any import tariffs. China is still lagging behind but caught up a lot since the late 80s... when it largely liberalized its trade policies. Regarding the civil war, it's quite a leap to think that the North's protectionism had any hand in their victory.