Austrian Thought on Tariffs is Outdated

Protectionism has long been considered wrong by many schools of thought, but the Austrian opposition to it is obvious. Why would an Austrian support the state trying to pick winners in the market by taxing external sources? It would just impede natural market forces and remove cheaper parts/products from consumers.

I believe this is outdated, simplistic thinking.

The short answer to this: National Security, and unprecedented levels of global outsourcing.

I have two examples that show the potential necessity of Tariffs in today’s world that I think are impossible to refute. And if you manage to accept that there is a moveable “line” in regards to justified tariffs, I think that’s a start to more reasonable discussion on them.

Example 1: Country A hates Country B, which is protected by Country C. Country C is run by an ideologue Austrian reddit poster, and therefore will not implement tariffs under any circumstance.

A begins to heavily subsidize its steel, gas, food, and medical supply companies, and focuses on exporting to Country C. Consumers in C are thrilled that they get cheaper fill-ups, medical treatment, and the costs of construction and cars reduce significantly. Over time, the wealthier C’s unsubsidized steel, gas and medical companies in C go out of business, or significantly reduce their size.

After a number of years, A invades B. C tries to intervene, but then A puts an embargo on C, causing their economy to go into heavy shock. People can’t afford to get treatment, the auto industry lays off people due to a lack of steel, gas prices soar. C is in crisis. It’s supply lines just collapsed.

Example 2. Country A is the wealthiest in the world, and produces info-tech, cars, retail goods, insurance, pharmaceuticals, steel, etc. Area B has a few countries in it, but has 10X the labor pool of A, and also are very poor. Country A elects an Austrian Redditor to be dictator, and the Austrian opens the country to free and open trade.

Area B immediately gets investment and starts building industry in steel, manufacturing, and other low-skill labor industries. They export and outcompete A’s domestic industries after a period of time spent improving quality. After the infusion of capital and with a new domestic industry providing revenue, the Gov’s of A come together and decide they would like to start that process again. They invest in education, and start heavily subsidizing a new industry that needs more know-how, like automobiles. They commit corporate espionage on a state level, and begin to take over auto manufacturing.

Repeat that and tell me how, without state support, Country A can stop this? Their consumers get the benefit of low wage made products, but now also have less and less jobs. Country A no longer produces nearly the amount it consumes. Doesn’t this imply a wealth drain, and a less prosperous future?