Cambodia

Cambodia…basically has one industry, the garment
trade, which employs about 300,000 people (almost all of them young
women), and probably supports about 10% of the population directly and
indirectly.  Almost everyone else makes their living in agriculture,
with a small government elite, a smaller tourism community, and a tiny
small business sector…Cambodia’s garment trade is incredibly dependent on
special treatment from America, where it sells almost all its wares.

In other words, true free trade from China, for the United States, would devastate the Cambodian economy.  If you wish to consider the strongest arguments for protectionism, they usually involve weighing the interests of one poor country against another, and not the interests of a poor country against a rich country.  Here is the full discussion.  Related lessons are that comparative advantage won’t necessarily yield pleasant price and wage ratios and that producing anything of value is truly, truly difficult.  Given Cambodia’s previous problems, one also has to wonder whether mass migration to Vietnam is the best option available, provided of course that is possible.
 

Comments

Mass migration has (almost) always been an option in the USA. Yet it didn't solve the problems of Appalachian poverty. The problems have been significantly reduced by highway building and other government support for economic development.

I'm not sure Cambodia's equilibrium is something we want to fight to maintain.

@Tom Kelly: Hear hear!! See also
Hayek, on engineered economic growth
Schumpeter, on engineered economic growth
Soviet Union, et seq., on growth of planned economy

I've been to Cambodia (and similar places). Their main export is corruption (with a little help from their VN, Thai and Chinese friends). Stop that and we won't be worrying about their future...

The case for selective protectionism of very poorly developed countries against the Asian behemoths is made in The Bottom Billion and, as much of an enthusiast for free trade as I am, I have to admit it's pretty compelling.

If Cambodia is so dependent on U.S. protection, why not simply ween the country off of it slowly, so more people will have time to adjust? And why not extend some form of assistance to them so that there isn't an upsurge in instability?

"I don't know 1 factory there that isn't owned by the Chinese."

The Chinese are natural-born entreprenuers. I cannot say the same for ethnic Malays and other Southeast Asian peoples.

Steve Sailer has suggested for some time that the US shift its textile imports from Asia to Latin America. The jobs created south of the Rio Grande would presumably give folks an incentive to stay home rather than illegally enter the US. In additional, these countries would be considerably more likely to purchase US exports with their textile dollars.

As it is, the US swaps Asian textiles for debt†¦ A trade that can only end in sorrow. Actually, wrong tense. A trade that has already brought us the housing bubble, the subprime fiasco, the SIV debacle, a capital markets meltdown, etc.

Steve Sailer isn’t sure he invented the idea. However, he knows of no prior origin. More broadly countries have been using targeted imports for a long term. During the depression the UK implemented a system of “commonwealth preferences† which appears to have alleviated the depression in both the UK and the colonies.

I rather doubt that Tyler Cower is going to endorse tariff preferences for Latin America. However, it is good to see a libertarian economist advocating something other than “free trade†. A start in the right direction at least.

Mass migration won't work because the Khmer who make up the largest ethnic segment of the Cambodian population despise the vietmamese and vice-versa. The Khmer would much rather slit Vietnamese throats.

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