There are many who say protectionism hurts a country, yet here we see India's protectionist legislation leading to a lot of new, local jobs. Why wouldn't that work in the US?
Edit: to those downvoting me, I'd like to remind you that the downvote button is not the disagree button. I am trying to add to the discussion with this question, not argue for no reason.
Because you need to have something to give back to the companies investing, like for example the world's highest smartphone adoption growth rate. Also tax exemption, special deals on many issues, but mostly the growth rate :)
Profits aren't enough? Often the notion that the company would be "forced" to sell at a higher price when they produce local is baloney. Like the Sears wrench fiasco, where they claimed producing a certain wrench locally would raise prices too much, then started make a knockoff in China which they sold at the exact same price point.
The point is, too often the savings from outsourcing are passed onto neither the consumer or the employee, so there is definitely question as to who is "really" hurt by protectionist policies.
Protectionism also caused India to fall behind in most major sectors for the 60 years after independence. Protectionism generally juices an economy in the short term but leaves it behind in the long term when the trade barriers make it costly to import innovation. Trade barriers are a tool, protectionism is an ideology.
Exactly. India did not have any economic reforms until the 90s which is when industries such as telecom etc exploded. If you compare the economies of China vs India (I know it is a sensitive topic), they were very similar until the 80s. But India did not have "open" trade policies until the 90s which really hurt the overall economic growth. Look at India's growth after the 90s economic reforms and you can see the story.China took off and India has been far behind.
I really think a country like india needs to open up to encourage foreign investments which will drive improvements in infrastructure which India severely lacks compared to other developing economies.
TL;Dr: In case of India, protectionism has hurt it more than it helped.
Adding to your point, something I have thought about India: India really exploded after the development of new industries that basically moved too fast to fall under the "License Raj" mentality that exists. Infosys, Wipro, TCS, Flipkart - these companies simply would not exist if they had to go through the struggles that other companies have to go through.
>Protectionism also caused India to fall behind in most major sectors for the 60 years after independence.
If they had an open economy right after the independence, wouldn't multinationals have completely taken over the industry given almost everyone in India was too poor to start their own business? Wouldn't this basically be "re-occupation " by the west in different garb.
Is it fair to blame India's failure on 'protectionism' when it might as well have been rampant corruption, people divided into caste lines, choosing democracy for a poorly educated/unsophisticated/caste corrupted population? How do you explain china if protectionism is root of all evil.
What about Hindu attitudes of meekness, non-violence that are contrary to aggression of capitalism .
You make some fair points even though I don't agree with you completely. Yes, the corruption and poverty has not helped but then your point about hindu attitue of non-violence being against aggression of capitalism is a bit over the top. There are plenty of aggressive Hindus, trust me :)
The point is that you could blame some of it on corruption, poverty whatever but protectionism has been one of the greatest causes.
> Corruption is again an easy animal to flog in the Indian context. The real issue here is scarcity.
What does this even mean? That it's too easy to blame corruption?
Corruption is exceedingly complex. In a large scale, it could result in policies that are bad for the majority of people, e.g. continued protectionism. Tackling the root cause will take generations until thinking changes.
Scarcity on it's own makes no sense. Scarcity of what? Resources? Opportunities? Basic health care? People?
The whole "it is due to an accepting Hindu attitude" used to be a popular way of framing the situation that is no longer in use because experts have decided that it was indeed the protectionist policies causing this. It's also a bit offensive.
It is an interesting point about what protectionism prevented. I agree. It did prevent something worse. But it didn't need to extend for as long as it did, and it still did cause harm -- as a "lesser of both evils" situation it still is not a good situation to be in (and the discussion is about whether it is a good policy to apply in absence of a "worse evil" like in the US)
> The word "Hindu" in the term was used by some early economists to imply that the Hindu outlook of fatalism and contentedness was responsible for the slow growth. The later economists attribute the rate to the Government of India's protectionist and interventionist policies (see Licence Raj), rather than to a specific religion or to the attitude of the adherents of a particular religion.
Yeah, I get that you don't mean to be offensive there.
Intelligent and nuanced import regulations and taxes are of course good for a nation. Radicalized ideological import regulations and taxes are likely to disrupt healthy trade.
If you've ever been to India, you'd understand why their decisions and ours are and should be very different due to radically different circumstances.
So if you outsource your labor to an Indian sweatshop, that's the progressive "global economy", but if you wanted to do run the same operation locally you are a Luddite. Hmmm...
Note also that there are plenty of tariffs on goods from rich countries to poor countries. For example, India's tax on vehicle imports means cars are manufactured in labour-intensive Indian 'sweatshops' instead of efficient, automated Japanese factories.
If the jobs _couldn't_ be outsourced, wouldn't _somebody_ local have to do them? Even if automation was fast-tracked to swallow those jobs, if the manufacture and operations management of automation solutions also could not be outsourced, wouldn't that at least bring more jobs to the market?
They goods would have to be tarrifed to the point where making them locally made sense. Its possible they jack up prices in the medium term and instead of retooling an equivalent American team spend that time on automating with a much smaller specialized american team.
Here's how it plays out in a protectionist world. Let's say the US government bans smartphone imports and forces manufacturers to set-up shop in the US. What Apple would do then, they would heavily invest in automation. So the number of jobs it could create here won't be at the same scale as in India. Then to maintain the same margins as the current iPhone, Apple will raise their prices. Consumers would probably still buy those phones, but the rates of upgrades and new phone purchase would dramatically reduce. That will mean Apple will not require all the retail locations they have now or the exhaustive supply chain and shipping network. Leading to loss of jobs in those areas. In addition, not all manufacturers can compete at that price point, as consumers are simply not ready to pay that much money for HTC. Which means there will be a gradual move towards monopoly and ultimately Apple and Samsung will be the only players left in the smartphone market with no incentive to innovate but all the incentives to bring their cost down. This is exactly how it played out in India with Hindustan Motors and Maruti being the only two car manufacturers.
If you break down where the parts of a iPhone is made. You have some relatively high wage nations in there. I'd like to see a breakdown of how much of the price of the iPhone actually ends up in the pockets of workers. I'd wager like most other goods it's fractional compared to the cost of materials, taxes and regulatory compliance. I suspect making products overseas is more to do with environmental and labor regulations than wages.
You raise a good point. Protectionism would really hurt countries that depend on exports, like a lot of Eastern Asia. Would it hurt a country like America that depends more on imports and is big enough to have its own industry? I don't think it would, but there are obviously many who disagree with me. I would love it if someone had some data showing me I'm wrong.
>if the manufacture and operations management of automation solutions also could not be outsourced, wouldn't that at least bring more jobs to the market?
I believe these are the jobs people talk about when they talk about "high tech manufacturing". To do manufacturing in rich countries it needs to be efficient, which means skilled jobs. The problem is for people who don't have the skills and want their old unskilled manufacturing jobs back.
The "Cliff Notes" version is...
We (Americans) expect certain wages. Producing most consumer goods is a low-wage endeavor. Bringing production back to the US leads to an increase in price and lower sales.
We can force the issue with protectionist policy, but that doesn't change the underlying economic realities. Bringing production of cheap consumer goods back to the US would increase prices for everybody else.
In the long run, we are better off with free trade. We get the low prices we desire. The foreign country gets to develop an industrial base on which to build a large, prosperous economy. China over the last 20 years or so is a prime example - we get $1 t-shirts, they get factory jobs that increase their standard of living.
Protectionism won't bring back the middle class jobs. There has been a fundamental shift from labour to capital in recent decades, this is what has made life difficult for the middle and lower classes.
This. Lower and middle class wages have been stagnant for way too long. If protectionism isn't a good way to realistically raise lower and middle class wages in America, then what is? (Keyword: realistically. Universal basic income is impossible in our current political climate.)
Education. Comprehensive job retraining programs for engineering and construction.
Then follow it up with public works investment to use this labour in the short term.
Protectionism is going to work, but for america's automation industry and a small lucky few who get selected during the transition. The middle class jobs you speak of are not coming back the same way.
But it won't matter because this administration will be able to find one or two Americans who still have their jobs based on their policy ignoring that the cost of goods has gone up across the board and so real wages have gone down, so the average American may not be better off.
If I were capital I would simply invest harder in automation and software. You can still claim made in the U.S.A. with cheaper unit economics than people who actually try and create jobs.
I don't think a lot of those jobs are coming back. We need to invest in education for the new jobs, not try and force coal mining, car riveting, etc to be in demand again.
>We can tax the productivity from your automation.
The types of people who would consider a socialized universal wage are not the types of people you just elected in. So no, protectionists aren't going to do this. They'll just give the spoils to corporations, who they are indebted to to stay in office and who ultimately produce the erroneous talking points you parrot. Trump isn't pulling the Frank-Dodd act or removing environmental regulations for you, your job, your community, or the middle class. He's doing it to please the wealthy elites who will personally benefit. These policies won't "create jobs."
>Failing that, we can replicate it and break the patents for it.
That wont work and then what? This is the path to a command economy that won't work either. You can't just hand-wavey some kind of robotic utopia powered by taxes.
>There are no new jobs coming.
Obama's time in office saw the creation of 15m jobs. We're dying for talent at my employer and constantly hiring. But no, we don't want high school dropouts who think they're entitled to subsidized wages for lazy 'make work' rural jobs. You're not entitled to a job. You have to earn it by being competitive and learning in-demand skills just like everyone else did all through history.
If labor wasn't needed for many manufacturing jobs, then labor wouldn't be used overseas. A problem with requiring all jobs to require an advanced degree is that not everyone is capable of doing so.
Should the less intelligent live in squalor while the smart get by? I don't think so. There needs to be good job opportunities for all classes, not just the upper class.
If labor wasn't needed for many manufacturing jobs,
then labor wouldn't be used overseas.
For most manufacturing you can either use X hours of human time or $Y of machine time. In many cases, at low overseas wages the human time is cheaper, while at higher US wages the machine time is cheaper.
Labour is needed at that price point. It isn't needed at the current American standard of living.
I don't think that the "less intelligent" should love in squalor and I want to involve them economically too. I also think Americans Do Not want to live like factory workers in china or India. They want to live like American factory workers in the 60s. That isn't likely anymore for a variety of reasons.
Labor, at least in manufacturing is also very much down overseas. I agree with your sentiment, but forcing jobs to exist when it's not efficient lowers everyone's quality of life. Instead, tax the gains and uplift the people who lose to innovation.
Indeed. Protectionist trade policies will basically achieve one thing: higher salaries for software engineers. So yeah, go for it. But that's not who voted for Trump.
Cheap good are also usually of inferior quality. Look at the stuff we made in the 50s, 60s and 70s. A lot of it is still usable today if properly taken care of. The cheap stuff we buy today is mostly disposable.
The prices would be higher but the need to replace would be lower.
Unfortunately we're in a downward spiral. Making cheaper products overseas lowers wages. People with lower wages are forced to buy cheap, non-durable products.
People want cheap goods, not high-quality goods. Bringing production to the US at higher cost isn't going to change that. Possibly the opposite; in an effort to maintain low prices, quality will slip.
Manufacturing in the US is UP over the past decade. 88% of manufacturing jobs lost have been lost to robots, not China.[1]
All protectionism will do is increase wages for engineers, who will be tasked with accelerating the pace of automation. Those shirt factory jobs aren't coming back.
It would work for some things, and cause problems for other things.
The question is not whether it would bring benefits, the question is whether the benefits would outweigh the costs. Pointing to a benefit doesn't answer that question.
India was (and still is to a large extent) a very protectionist country. When I grew up, you can only buy between 2 or 3 car models, all built by Indian companies and some with a government partnership. It held back the country severely and expanded poverty. Due to dire financial outlook of the country, India was forced to liberalize it's economy in the 90s. And since then there has been no looking back.
But many years of protectionism meant that India continues to lag behind China in most key indicators. India lost out on the manufacturing boom and an opportunity to lift millions out of poverty. India provides a perfect example of pitfalls of a protectionist economy.
Many reasons in a country like India. Again, we are talking about India here. Huge country with terrible infrastructure but a very young population with hunger for success.
If there are more car companies, it means more businesses who will need to hire more people. More jobs right there. Then, with more competition, prices stay reasonable and more people can afford a car. It means more people can get a job to commute further and perhaps be able to work at places they could not before. They will spend more money on consumption of food, fuel, insurance. It all goes to the economy.
With very few choices, it almost becomes a monopoly and then you can only do so much as a consumer. With more choices, you have more consumers and more producers.
Consumers spending money injects growth in the economy. Producers create jobs and indirectly create further growth in a growing economy like India's.
Car was just an example. It was true in all facets of like - TVs, toothbrush, soap, shampoo etc. etc. Why was it a barrier ? Because these were monopolies (or duopolies) with no incentive to innovate and invest capital. They did not have exports so they had no reason to expand manufacturing. They had no way to lower prices as they had to manufacture all the parts that went on to the car due to import restrictions. Resulting in high car prices that only the very rich can afford. Which in turn resulted in a small car market without the incentive to expand their capacity. If no business is expanding, there are no jobs to be had.
The only problem is sure you can open up your economy, get cheap spare parts, and assemble them here.
But what really happens is in this context. And especially if you are just starting out you really end up being somebody who is very good at assembling things, not really that good making them.
This has to some extent happened with the software industry. While the services industries have done good. Product industries have suffered and continue to. What we really have in India are largely me too products from the Bay Area.
You can open up your economy as much as your want but you will only get as far as your human resources are skilled and trained. Beyond that your human resources are now slave labor to a more powerful economy.
There were plenty of debates during the last election. And all economist even the ones supporting the ruling party(Surjit Bhalla) were saying that last thing we want is to build Indian economy on the back of its laborer.
Not having adequate competition was an economic barrier to growth, and was cause for few options in car. The situation was similar in other fields too. People used to wait an year or maybe more to get a telephone because of similar reasons.
Barrier of entry for newcomers, motivation for innovation and profit when you get an effective monopoly or undeservedly large portion of the market share.
Also, greater potential by those companies to exploit both customers and workers if those customers and workers have little other choice.
The competition introduced by freer capitalist economic systems greatly reduces abuse and increases innovation by necessity. Complacency and abuse lead to failure in the market (though, obviously, imperfectly and often greatly delayed depending on various factors, which is where regulations and other things come into play).
Most comments don't give you a right perspective. Its really not protectionism, or socialism.
India started out very badly after Independence. It had nothing to show for, infact very little in terms of a trained workforce, quality human resources, industries, scientific enterprise, economy or anything for that matter. By the time British left, they had looted India to the very last paisa.
The first prime minister Jawaharlal Nehru had a great vision and equally good execution abilities. They faced a near impossible task of uniting a already politically, ethnically and linguistically divided nation. They federalized India on the lines of language, thereby uniting it under one union. They set institutions going for sound administration and bureaucracy.
Beyond all these political problems there is problem of nation building. Or Growth as you would call it. To build quality infrastructure you need taxes, to collect taxes you need industries, to build industries you need trained human resources, to get trained human resources you need to build good universities and academic institutions. You realize you are stuck is a chicken-egg problem.
The only solution most post-colonial states employed was to incrementally move upwards by building self reliance and capability. 5 year planning commissions were common.
The corner stone of Nehruvian economics was:
1. Build quality educational institutions.
2. Quality educational institutions build quality human resources.
3. Establish state owned(or partially at-least) industries to develop indigenous, manufacturing, research and production capabilities, in all walks and branches of economy.
4. Use 2 and 3 to eventually build private enterprise.
5. Collect taxes using 4.
6. Build infrastructure and other things in 1. and 2. using taxes collected so far at 5.
We were in the process of 'getting there'. Irrigation networks were laid, nuclear weapons were built, space programs were in motion. In fact India had indigenous presence in everything imaginable. However the politics of India was never stable.
Beyond all this 'capitalism' suddenly got fashionable. Why work and build indigenously when you could just pay and import?
In fact most of India's current predicaments arise out of abandonment of Nehru's path. We can't seem to build anything good. No good roads, no planned cities, no safe drinking water, frequent power cuts... the list just goes endless.
Sure you now have cheap mobile phones and internet. But a city like Bangalore was a heaven to live in during the times of Nehruvian economics. Today you reach home from office with a lot of dust in the mouth.
Ironically the same people who admire freeways, dams and social security in the US, which are the outcomes socialist policies. Hate the same in India.
In fact most people in India have barely a clue what socialism or capitalism actually mean. Except that they know if they hate something that automatically gets classified as socialist or communist.
EDIT: Looks like anything positive about Nehru is a magnet for downvotes.
> We can't seem to build anything good. No good roads, no planned cities, no safe drinking water, frequent power cuts... the list just goes endless
And who to blame for this? Human greed which led to corruption and crony capitalism? There are always funds for everything in India like roads/bridges/housing for poor, but the roads built don't last for a year and the poor doesn't enjoy the housing, rather it's the middle men(dalal).
>But a city like Bangalore was a heaven to live in during the times of Nehruvian economics. Today you reach home from office with a lot of dust in the mouth.
Come on, I mean what was the population in Bangalore in Nehruvian times and now? The growth comes with lots of challenges, it's just that there was no plan by any politician to scale the city needs as per the growth. 7 years back when i visited Bangalore, it was the pleasant city with lots of trees, and now half of them are gone to accommodate metro and other things.
>>And who to blame for this? Human greed which led to corruption and crony capitalism? There are always funds for everything in India like roads/bridges/housing for poor, but the roads built don't last for a year and the poor doesn't enjoy the housing, rather it's the middle men(dalal).
That's at the first level. If you think of it a little deeply, its actually scarcity. Either reduce the population or increase abundance.
>>Come on, I mean what was the population in Bangalore in Nehruvian times and now? The growth comes with lots of challenges, it's just that there was no plan by any politician to scale the city needs as per the growth. 7 years back when i visited Bangalore, it was the pleasant city with lots of trees, and now half of them are gone to accommodate metro and other things.
My friend its not really outsiders. But something called as regulation and adherence to planning. All these regulations that we hate here in India we love it in the west when they say they want parks and broad roads while planning layouts.
Its not like Bangalore saw growth only after IT. We were there long before. And it was attractive destination for jobs decades before IT happened. Bangalore was home to every single industry back then. BAL's, HAL's, ITIs of the world.
But its just that after 90's people wanted everything in a instance order be damned.
Like I said why think, plan and make. When you can just copy, rush through and import.
> ts not like Bangalore saw growth only after IT. We were there long before. And it was attractive destination for jobs decades before IT happened. Bangalore was home to every single industry back then. BAL's, HAL's, ITIs of the world.
Yeah, Bangalore was a big city and sure there were industries, but the thing is the rate of growth from 90's to today is way more than the city anticipated.
>Like I said why think, plan and make. When you can just copy, rush through and import.
I agree with you that there's no plan and that's the major reason of the dismal structure of the cities in general in India, but this has nothing to do with Nehru policies, just human greed and stupidity.
I am not disputing Nehruvian policies. I consider him an amazing visionary, unlike many other people. He had the guts to lay the foundation of a modern secular democracy instead of succumbing to divisions of Indian society. It was impossible to know in 1950 what will work and what won't. And at that Socialism was a model that was still being tried out in various countries. His vision had several pillars that, as you rightly laid out, have benefited India in the long run. And without the population jump from 300M to 1bn in 50 years, things would have slightly better. Fault mostly lies in future generation of leaders who didn't recognize the disadvantages of continuing this policies and failed to adapt.
> EDIT: Looks like anything positive about Nehru is a magnet for downvotes.
> We were in the process of 'getting there'. Irrigation networks were laid, nuclear weapons were built, space programs were in motion.
There are more issues in your post that make it downvote worthy. For example, you consider nuclear weapons and a space program a sign of progress, while many in your country live in abject poverty. Maybe you could use that money for infrastructure, then you wouldn't have to raise taxes? I'm sure the expertise created by these programs is totally worth the investment. Regardless, there are far more important developmental milestones in a country before either of these goals make sense.
> Beyond all this 'capitalism' suddenly got fashionable. Why work and build indigenously when you could just pay and import?
Or this gem. Because capitalism is such a fad, and not the result of world history/economics. You need something to buy imports with. If imports aren't cheaper, making it "indigenously" makes sense! Otherwise, maybe just import it and focus on something else. You can argue that capitalism isn't great, but so far there's nothing better in practice.
Spare us your simplistic, vague and condescending history lesson. If you have any insight, analysing the situation in more depth and looked at how other countries handled similar situations and why/why not that applies to India would be much more valuable.
>>There are more issues in your post that make it downvote worthy. For example, you consider nuclear weapons and a space program a sign of progress, while many in your country live in abject poverty. Maybe you could use that money for infrastructure, then you wouldn't have to raise taxes? I'm sure the expertise created by these programs is totally worth the investment. Regardless, there are far more important developmental milestones in a country before either of these goals make sense.
The issue isn't space program. Things like the space program are necessary to ensure national readiness for high quality skills. ISRO has explicit goals that their missions involve more than just going to space it is to train people, build in house know-how for larger things. IITs are necessary to build the next generation of trained workforces that will build industries and provide more jobs. Health care spending is needed because you don't want 40% of your population to crawl with polio. Food security is needed because you don't want bulk of you population tilling farm lands just to feed themselves.
When you spend on these things you get a bad quarterly bill for tax payers. But you also build your nation for the next century which pays many times over.
>>Or this gem. Because capitalism is such a fad, and not the result of world history/economics.
In Indian context it is a fad and continues to be.
>>You can argue that capitalism isn't great, but so far there's nothing better in practice.
Sure you should educate us how we can build great capitalistic society without a trained workforce, without education, without healthy people, without able government bureaucracy.
You can't go from 0 to Wall street capitalism in day 1. Nor is it possible.
>>Spare us your simplistic, vague and condescending history lesson. If you have any insight, analysing the situation in more depth and looked at how other countries handled similar situations and why/why not that applies to India would be much more valuable.
Which are those countries? China? 90% of where China is largely manufacturing. And even they took a good 5 decades non-democratic communist rule to get there.
Try reading some history of China and how many millions of people died there due to famine and draughts.
You can get to these fantasy land capitalist figures, if you are ready to kill millions of your population to such things, with non democratic processes along the way.
The crazy thing about protectionist policies is that they've been favored in the US by manufacturing interests for over 200 years while being opposed by just about everybody else. Free trade has actually been one of the long standing tenants of the Republican party in my lifetime, which is why having Trump come along as the nominee while promising protectionist policies...and subsequently landing the entire rust belt...was such a crazy thing politically.
I'm only mentioning this because you said India was forced to "liberalize" it's economy, which is a definition I'd have associated with the protectionist policies.
Not really arguing anything here, just making an observation on language.
The then prime minister of India, PV Narasimha Rao, along with his minister of Finance, Manmohan Singh, forcefully liberalized India's economy and "saved" India. I grew up watching India making tremendous progress under his leadership. http://bit.ly/2kam9x7
Actually we're still protectionist about cars and it has worked to our phenomenal advantage. As the wages started rising, foreign car companies have sensed the market potential and invested in localization of supply chain..... because we still have 100% duty on imports, a high duty on kit imports and ban import of pre owned cars. Now they export from India to smaller markets which do not have as much bargaining power due to smaller markets.
Moral of the story - if you have leverage in terms of market potential, by all means use it to get jobs into your country and develop industrial capabilities.
Has it worked to our advantage? Anyone with enough money to burn drives an import. As far as I know, the only Indian brand that people overseas drive voluntarily is Royal Enfield.
This might be good for a few people lucky enough to get automotive jobs, but it really sucks for people stuck driving inferior domestic vehicles.
The total automobile sector is actually quite massive - it was 8% of the GDP back in 2013 and 7-8% of employment.[1]
Almost all "imports" below 2 million rupees are actually manufactured 70-80% in India from scratch (for instance Toyota and Honda mainly import engine blocks and engine electronics from Thailand) and the more expensive Mercs, Audis and BMWs are imported as kits and assembled in India. It's only the Porches and Ferraris that are fully imported.
Most of the market anyway is below 1 million Rupees and anyway is mostly owned by Suzuki, Hyundai and Toyota brands who manufacture almost 100% locally.
On HN the downvote button is definitely considered the disagree button. Downvotes are private whereas comments are public so it ends up actually being the most common action for disagreement. Also, you must have over 500 karma so it is typically older more conservative viewpoints that downvote.
EDIT: One thing I neglected to mention. You can probably tell based upon my comment being downvoted, you are not actually allowed to talk about downvoting. Its kind of like fight club.
From what I've gathered, there have been some substantial (but by no means wholesale) changes to HN behavior since then. There is a tension between how up and down work. I can't imagine we want a bunch of "me, too" comments to show agreement, so upvotes are a way to express that.
It would makes sense to consider downvotes similarly, however they also grey out the comment, so they aren't symmetrical actions. I've pointed out 'pg's comment myself in the past, but don't consider it a great practice now. As you note, it's useful for historical context.
Some people do use downvotes for disagreement. I don't think that's particularly productive. Members use downvotes more frequently for comments that are gratuitously negative, snarky, unsubstantive, uncivil, inflammatory, or violate the guidelines. I've seen a lot of well-balanced, reasoned comments on contentious topics that don't get downvoted (from what I can tell from the color of the text.
And yeah, there is are guidelines specifically related to downvotes.
If you're wading into contentious discussions, be prepared for them. Take extra care to be considered and civil. If you do receive downvotes, consider them as feedback that you could do more to better express yourself. There's nothing you can really do about those who downvoted for disagreement. Commenting on that will definitely result in more downvotes, from what I've observed.
if you want to see an example of what this looks like, check out brazil - they have very steep import taxes on foreign produced goods, and the result is that yes, they do manage to attract some local manufacturing, but whether things are made locally or they pay the import tax the result is the same: consumer goods cost 3-4x what they do in the rest of the world.
See also Argentina. They've brought in lots of manufacturing to their country, but the high costs on imports has a significant and negative impact on the people. This is also why many middle class Argentines do a lot of shopping abroad, now that the taxing on bringing things back through customs have been relaxed. Which, in turn, will have a negative impact on the economy: less local shopping means local retail (local to the nation, not necessarily "local") will be hurt.
The larger context is that India was a very protectionist economy for many years and that led to economic stagnation. It's called the "License Raj". A more derogatory term that you'll more commonly find in older material is "Hindu rate of growth".
You can't just cherry pick one example and say everything is fine under a protectionist system.
India:
GDP per capita: 1,498.87 USD (China is 6,807.43 USD)
GDP: 2.3 trillion USD. (China is at 11T)
The World Bank, in 2011 based on 2005's PPPs International Comparison Program, estimated 23.6% of Indian population, or about 276 million people, lived below $1.25 per day on purchasing power parity.
194 Million People Starved for Food in India in 2014-2015, Maximum in the World According to UN Report. India is home to the highest number of hungry people in the world, at 194 million, surpassing China, according to United Nations annual hunger report.
According to the World Bank, India's under-5 child mortality rate in 2012 was 56 deaths per 1,000, far short of the country's goal of reducing child mortality to 39 per 1,000 by 2015. By comparison, the child mortality rate in 2012 in Bangladesh was 41; in Brazil, 14; and in the United States, 7.
Infant mortality rate: total: 40.5 deaths/1,000 live births. This is some of the worst in the world and its only 15 in China. 4.2 in EU nations.
As of Nov 2016, India is the second-most unequal country in the world .[1] The richest 1% of Indians own 58.4% of wealth. The richest 10 % of the Indians own 80.7 % of the wealth. This trend is going in the upward direction every year, which means the rich are getting richer and the poor are getting poorer [2]
--
So no, things are clearly not fine under a protectionist system that damns so many to poverty and inequality. Also, the only reason Apple is coming to India is because rural Chinese labor costs more than Indian labor. That's not a good sign for India's economy.
You've already had a lot of replies but I'll try to add some value.
Many people seem to imagine 'Made in China' means that the iPhones were shaped into complete products from unformed raw materials entirely in China. In fact China mainly just does the final assembly of components which (apart from some very low value components) are mainly made elsewhere. For example did you know that many of the Ax CPUs designed by Apple in California were actually manufactured at a Samsung foundry in Texas and shipped to China for integration into the phones? The same goes for several iterations of the Gorilla Glass. Historically the US has actually captured a sizable chunk of the value in iPhone manufacturing (though it varies by model).
Assembling iPhones in India is about very low wage jobs for unskilled labour in order to avoid punitive local market intervention by the government. India's economy is hamstrung by a highly interventionist economic policy which triggers equally punitive economic sanctions from other countries against Indian exports.
Raise an import tax (or other barriers such as subsidies) on phones made elsewhere? Ok, but you'll get hit by retaliatory market interventions when you try to export phone made in India. It's issues like this that's why iPhones for the global market are manufactured in China, not India. If the US starts interfering in trade that way they might win back some low wage assembly jobs in the US, but at the cost of risking retaliatory trade barriers against their own exports such as the high value components in the phones that are made in America, and the high paying skilled jobs that supports.
I see it as a variation of the Broken Window Fallacy. In both cases economic activity has been created (America will have to build it's own supply chains internally), but in both cases it's the opportunity cost that gets overlooked.
Everything at every step of the supply chain will be more expensive. The combination of more expensive goods and a fixed amount of capital means less stuff gets made. And the amount of stuff being made is practically the definition of economic strength.
So in the same manner as the window repair person in the fallacy getting work, local jobs get created in the short term, but at a net negative to the overall system. Ultimately, it's better for everyone if things are efficient (with the GIANT caveat that those economic gains benefit everyone who is in that economy, which clearly hasn't happened in the US since around Reagan's tenure).
To answer your question directly, as just a job creation tactic, I don't think it will work in the medium-to-long term in either India or the US.
Your caveat is key in my opinion. The amount of wealth in America is inarguably larger than ever before, but many aren't benefiting from it. The real problem is wealth inequality.
So the question is: what can we do to redistribute wealth in our political climate without a revolution? UBI would never pass here, but protectionism MIGHT works as a band-aid.
It might but protectionism alone can't make it work. Essentially there still needs to be enough money on the table structurally to make it worth manufacturing even with protection vs. alternative ways to deploy capital. If wages and expenses for instance are so high that you can't make an attractive profit, even protectionism won't bring back jobs.
Last month I wanted to buy protein powder. It cost about $80/tub, as compared to $35 in the US. In the US I drink 3 scoops/day - my (much poorer) Indian workout partner is losing gains because that's too expensive.
I would also enjoy drinking a can of Guinness at my local pub. Unfortunately Guinness is insanely expensive and mostly unavailable. In India I just drink swill - domestically produced Fosters and Kingfisher. Thanks to protectionism, the only good drink available in India is Old Monk, and even that is threatened [1]. (The situation is improving a bit - Birra is new and pretty ok and local breweries are sprouting up for rich people.)
I'm regularly asked to bring various products into the country - a new phone, a laptop, etc, because they are too expensive or just unavailable locally.
I wanted to cook some non-Indian foods for one of my friends. But many of the things I wanted to cook for her were impossible due to lack of ingredients - the import duties make them too expensive, and no local market exists. Another friend of mine is begging for me to bring her a bagel and a bunch of philadelphia cheese next time I come.
Protectionism hurts because we are all consumers.
[1] Something bad happened and now Old Monk tastes bad. It's truly sad - Old Monk used to be a world class liquor.
Sounds like the companies you mentioned used protectionism as a crutch rather than an opportunity to catch up. I can see where that would be frustrating.
Protectionism hurts innovation. If iPhones had been cheaper and easily available in India in the last decade, there probably would have been more software engineers in India building apps and creating new higher paying jobs than manufacturing.
They had smartphones, just not iPhones. I don't see what's special about iPhones that Android phones shouldn't have caused what you said to happen. Besides, no matter how cheap iPhones, you still need a Mac to make the apps.
Manufacturing jobs Indian salaries are lower. But the effect of automation is showing even there as there is hardly any job growth in that area. The biggest problem India is facing is that population becoming old before it becomes a medium income country.
Most reports seem to be focussing on selling price for iPhones in India. More than price, manufacturing iPhones in India lets Apple have Apple Stores, and sell to customer directly.
Currently, Indian customer has no access to Apple Store level of shopping experience. Yet to come across Apple Reseller Stores who are at least 10% as good as the Apple Stores.
Benefits to Apple:
1) Keeps full profits. No margin wasted for reseller
2) Offers world class Apple Store experience / customer service
3) Ability to offer refurbished products (currently they cannot)
4) Educating customers in the regional language about iPhones (will make a huge difference)
5) No Price Anchoring effect (resellers will cross sell android phones at 1/4th the price with higher margins / incentives)
97 comments
[ 3.7 ms ] story [ 187 ms ] threadEdit: to those downvoting me, I'd like to remind you that the downvote button is not the disagree button. I am trying to add to the discussion with this question, not argue for no reason.
The point is, too often the savings from outsourcing are passed onto neither the consumer or the employee, so there is definitely question as to who is "really" hurt by protectionist policies.
https://www.bloomberg.com/amp/news/articles/2014-11-06/india...
I really think a country like india needs to open up to encourage foreign investments which will drive improvements in infrastructure which India severely lacks compared to other developing economies.
TL;Dr: In case of India, protectionism has hurt it more than it helped.
https://en.wikipedia.org/wiki/Economic_liberalisation_in_Ind...
Look at the graph below and pay special attention to the GDP growth comparison. Notice the huge spike for India beginning the 90s.
http://statisticstimes.com/economy/china-vs-india-gdp.php
If they had an open economy right after the independence, wouldn't multinationals have completely taken over the industry given almost everyone in India was too poor to start their own business? Wouldn't this basically be "re-occupation " by the west in different garb.
Is it fair to blame India's failure on 'protectionism' when it might as well have been rampant corruption, people divided into caste lines, choosing democracy for a poorly educated/unsophisticated/caste corrupted population? How do you explain china if protectionism is root of all evil.
What about Hindu attitudes of meekness, non-violence that are contrary to aggression of capitalism .
The point is that you could blame some of it on corruption, poverty whatever but protectionism has been one of the greatest causes.
The real issue here is scarcity.
May we should start looking at the population problem at some point in time.
What does this even mean? That it's too easy to blame corruption?
Corruption is exceedingly complex. In a large scale, it could result in policies that are bad for the majority of people, e.g. continued protectionism. Tackling the root cause will take generations until thinking changes.
Scarcity on it's own makes no sense. Scarcity of what? Resources? Opportunities? Basic health care? People?
Scarcity of everything. You might want to take a break and stay in India for a few years to understand what I'm talking about.
It is an interesting point about what protectionism prevented. I agree. It did prevent something worse. But it didn't need to extend for as long as it did, and it still did cause harm -- as a "lesser of both evils" situation it still is not a good situation to be in (and the discussion is about whether it is a good policy to apply in absence of a "worse evil" like in the US)
I am curious about this. Do you have a reference.
>It's also a bit offensive.
Sorry I didn't mean it to be offensive. I think I got that from Nehru's biography that I read couple of years ago.
> The word "Hindu" in the term was used by some early economists to imply that the Hindu outlook of fatalism and contentedness was responsible for the slow growth. The later economists attribute the rate to the Government of India's protectionist and interventionist policies (see Licence Raj), rather than to a specific religion or to the attitude of the adherents of a particular religion.
Yeah, I get that you don't mean to be offensive there.
If you've ever been to India, you'd understand why their decisions and ours are and should be very different due to radically different circumstances.
It seems to me that technology and free trade have similar effects. If you like one you should like the other.
Note also that there are plenty of tariffs on goods from rich countries to poor countries. For example, India's tax on vehicle imports means cars are manufactured in labour-intensive Indian 'sweatshops' instead of efficient, automated Japanese factories.
If it is the case, it will be no use to make iphones in the USA if they can not be sold.
I believe these are the jobs people talk about when they talk about "high tech manufacturing". To do manufacturing in rich countries it needs to be efficient, which means skilled jobs. The problem is for people who don't have the skills and want their old unskilled manufacturing jobs back.
We can force the issue with protectionist policy, but that doesn't change the underlying economic realities. Bringing production of cheap consumer goods back to the US would increase prices for everybody else.
In the long run, we are better off with free trade. We get the low prices we desire. The foreign country gets to develop an industrial base on which to build a large, prosperous economy. China over the last 20 years or so is a prime example - we get $1 t-shirts, they get factory jobs that increase their standard of living.
> In the long run, we are better off with free trade. We get the low prices we desire.
"I want my consumer excess, f*ck the middle class"
I prefer higher prices and protectionism. Cheap goods are not a right.
Have to hold capital hostage. That's the way to success for labor, and regulation is the way to do it.
There are no new jobs coming. Its time to drop the charade that retraining and hustling will be the solution.
The types of people who would consider a socialized universal wage are not the types of people you just elected in. So no, protectionists aren't going to do this. They'll just give the spoils to corporations, who they are indebted to to stay in office and who ultimately produce the erroneous talking points you parrot. Trump isn't pulling the Frank-Dodd act or removing environmental regulations for you, your job, your community, or the middle class. He's doing it to please the wealthy elites who will personally benefit. These policies won't "create jobs."
>Failing that, we can replicate it and break the patents for it.
That wont work and then what? This is the path to a command economy that won't work either. You can't just hand-wavey some kind of robotic utopia powered by taxes.
>There are no new jobs coming.
Obama's time in office saw the creation of 15m jobs. We're dying for talent at my employer and constantly hiring. But no, we don't want high school dropouts who think they're entitled to subsidized wages for lazy 'make work' rural jobs. You're not entitled to a job. You have to earn it by being competitive and learning in-demand skills just like everyone else did all through history.
Should the less intelligent live in squalor while the smart get by? I don't think so. There needs to be good job opportunities for all classes, not just the upper class.
I don't think that the "less intelligent" should love in squalor and I want to involve them economically too. I also think Americans Do Not want to live like factory workers in china or India. They want to live like American factory workers in the 60s. That isn't likely anymore for a variety of reasons.
We need job training for the new reality
The prices would be higher but the need to replace would be lower.
Unfortunately we're in a downward spiral. Making cheaper products overseas lowers wages. People with lower wages are forced to buy cheap, non-durable products.
All protectionism will do is increase wages for engineers, who will be tasked with accelerating the pace of automation. Those shirt factory jobs aren't coming back.
1 - http://fortune.com/2016/11/08/china-automation-jobs/
The question is not whether it would bring benefits, the question is whether the benefits would outweigh the costs. Pointing to a benefit doesn't answer that question.
But many years of protectionism meant that India continues to lag behind China in most key indicators. India lost out on the manufacturing boom and an opportunity to lift millions out of poverty. India provides a perfect example of pitfalls of a protectionist economy.
If there are more car companies, it means more businesses who will need to hire more people. More jobs right there. Then, with more competition, prices stay reasonable and more people can afford a car. It means more people can get a job to commute further and perhaps be able to work at places they could not before. They will spend more money on consumption of food, fuel, insurance. It all goes to the economy.
With very few choices, it almost becomes a monopoly and then you can only do so much as a consumer. With more choices, you have more consumers and more producers.
Consumers spending money injects growth in the economy. Producers create jobs and indirectly create further growth in a growing economy like India's.
Wait, did I just describe Capitalism ? :)
But what really happens is in this context. And especially if you are just starting out you really end up being somebody who is very good at assembling things, not really that good making them.
This has to some extent happened with the software industry. While the services industries have done good. Product industries have suffered and continue to. What we really have in India are largely me too products from the Bay Area.
You can open up your economy as much as your want but you will only get as far as your human resources are skilled and trained. Beyond that your human resources are now slave labor to a more powerful economy.
There were plenty of debates during the last election. And all economist even the ones supporting the ruling party(Surjit Bhalla) were saying that last thing we want is to build Indian economy on the back of its laborer.
Also, greater potential by those companies to exploit both customers and workers if those customers and workers have little other choice.
The competition introduced by freer capitalist economic systems greatly reduces abuse and increases innovation by necessity. Complacency and abuse lead to failure in the market (though, obviously, imperfectly and often greatly delayed depending on various factors, which is where regulations and other things come into play).
India started out very badly after Independence. It had nothing to show for, infact very little in terms of a trained workforce, quality human resources, industries, scientific enterprise, economy or anything for that matter. By the time British left, they had looted India to the very last paisa.
The first prime minister Jawaharlal Nehru had a great vision and equally good execution abilities. They faced a near impossible task of uniting a already politically, ethnically and linguistically divided nation. They federalized India on the lines of language, thereby uniting it under one union. They set institutions going for sound administration and bureaucracy.
Beyond all these political problems there is problem of nation building. Or Growth as you would call it. To build quality infrastructure you need taxes, to collect taxes you need industries, to build industries you need trained human resources, to get trained human resources you need to build good universities and academic institutions. You realize you are stuck is a chicken-egg problem.
The only solution most post-colonial states employed was to incrementally move upwards by building self reliance and capability. 5 year planning commissions were common.
The corner stone of Nehruvian economics was:
1. Build quality educational institutions.
2. Quality educational institutions build quality human resources.
3. Establish state owned(or partially at-least) industries to develop indigenous, manufacturing, research and production capabilities, in all walks and branches of economy.
4. Use 2 and 3 to eventually build private enterprise.
5. Collect taxes using 4.
6. Build infrastructure and other things in 1. and 2. using taxes collected so far at 5.
We were in the process of 'getting there'. Irrigation networks were laid, nuclear weapons were built, space programs were in motion. In fact India had indigenous presence in everything imaginable. However the politics of India was never stable.
Beyond all this 'capitalism' suddenly got fashionable. Why work and build indigenously when you could just pay and import?
In fact most of India's current predicaments arise out of abandonment of Nehru's path. We can't seem to build anything good. No good roads, no planned cities, no safe drinking water, frequent power cuts... the list just goes endless.
Sure you now have cheap mobile phones and internet. But a city like Bangalore was a heaven to live in during the times of Nehruvian economics. Today you reach home from office with a lot of dust in the mouth.
Ironically the same people who admire freeways, dams and social security in the US, which are the outcomes socialist policies. Hate the same in India.
In fact most people in India have barely a clue what socialism or capitalism actually mean. Except that they know if they hate something that automatically gets classified as socialist or communist.
EDIT: Looks like anything positive about Nehru is a magnet for downvotes.
And who to blame for this? Human greed which led to corruption and crony capitalism? There are always funds for everything in India like roads/bridges/housing for poor, but the roads built don't last for a year and the poor doesn't enjoy the housing, rather it's the middle men(dalal).
>But a city like Bangalore was a heaven to live in during the times of Nehruvian economics. Today you reach home from office with a lot of dust in the mouth.
Come on, I mean what was the population in Bangalore in Nehruvian times and now? The growth comes with lots of challenges, it's just that there was no plan by any politician to scale the city needs as per the growth. 7 years back when i visited Bangalore, it was the pleasant city with lots of trees, and now half of them are gone to accommodate metro and other things.
That's at the first level. If you think of it a little deeply, its actually scarcity. Either reduce the population or increase abundance.
>>Come on, I mean what was the population in Bangalore in Nehruvian times and now? The growth comes with lots of challenges, it's just that there was no plan by any politician to scale the city needs as per the growth. 7 years back when i visited Bangalore, it was the pleasant city with lots of trees, and now half of them are gone to accommodate metro and other things.
My friend its not really outsiders. But something called as regulation and adherence to planning. All these regulations that we hate here in India we love it in the west when they say they want parks and broad roads while planning layouts.
Its not like Bangalore saw growth only after IT. We were there long before. And it was attractive destination for jobs decades before IT happened. Bangalore was home to every single industry back then. BAL's, HAL's, ITIs of the world.
But its just that after 90's people wanted everything in a instance order be damned.
Like I said why think, plan and make. When you can just copy, rush through and import.
Yeah, Bangalore was a big city and sure there were industries, but the thing is the rate of growth from 90's to today is way more than the city anticipated.
>Like I said why think, plan and make. When you can just copy, rush through and import.
I agree with you that there's no plan and that's the major reason of the dismal structure of the cities in general in India, but this has nothing to do with Nehru policies, just human greed and stupidity.
P.S: your post doesn't deserve the downvotes
> We were in the process of 'getting there'. Irrigation networks were laid, nuclear weapons were built, space programs were in motion.
There are more issues in your post that make it downvote worthy. For example, you consider nuclear weapons and a space program a sign of progress, while many in your country live in abject poverty. Maybe you could use that money for infrastructure, then you wouldn't have to raise taxes? I'm sure the expertise created by these programs is totally worth the investment. Regardless, there are far more important developmental milestones in a country before either of these goals make sense.
> Beyond all this 'capitalism' suddenly got fashionable. Why work and build indigenously when you could just pay and import?
Or this gem. Because capitalism is such a fad, and not the result of world history/economics. You need something to buy imports with. If imports aren't cheaper, making it "indigenously" makes sense! Otherwise, maybe just import it and focus on something else. You can argue that capitalism isn't great, but so far there's nothing better in practice.
Spare us your simplistic, vague and condescending history lesson. If you have any insight, analysing the situation in more depth and looked at how other countries handled similar situations and why/why not that applies to India would be much more valuable.
The issue isn't space program. Things like the space program are necessary to ensure national readiness for high quality skills. ISRO has explicit goals that their missions involve more than just going to space it is to train people, build in house know-how for larger things. IITs are necessary to build the next generation of trained workforces that will build industries and provide more jobs. Health care spending is needed because you don't want 40% of your population to crawl with polio. Food security is needed because you don't want bulk of you population tilling farm lands just to feed themselves.
When you spend on these things you get a bad quarterly bill for tax payers. But you also build your nation for the next century which pays many times over.
Eg: http://www.isro.gov.in/pslv-c25-mars-orbiter-mission/mission...
>>Or this gem. Because capitalism is such a fad, and not the result of world history/economics.
In Indian context it is a fad and continues to be.
>>You can argue that capitalism isn't great, but so far there's nothing better in practice.
Sure you should educate us how we can build great capitalistic society without a trained workforce, without education, without healthy people, without able government bureaucracy.
You can't go from 0 to Wall street capitalism in day 1. Nor is it possible.
>>Spare us your simplistic, vague and condescending history lesson. If you have any insight, analysing the situation in more depth and looked at how other countries handled similar situations and why/why not that applies to India would be much more valuable.
Which are those countries? China? 90% of where China is largely manufacturing. And even they took a good 5 decades non-democratic communist rule to get there.
Try reading some history of China and how many millions of people died there due to famine and draughts.
You can get to these fantasy land capitalist figures, if you are ready to kill millions of your population to such things, with non democratic processes along the way.
That is not what we want here in India.
I'm only mentioning this because you said India was forced to "liberalize" it's economy, which is a definition I'd have associated with the protectionist policies.
Not really arguing anything here, just making an observation on language.
Moral of the story - if you have leverage in terms of market potential, by all means use it to get jobs into your country and develop industrial capabilities.
This might be good for a few people lucky enough to get automotive jobs, but it really sucks for people stuck driving inferior domestic vehicles.
Almost all "imports" below 2 million rupees are actually manufactured 70-80% in India from scratch (for instance Toyota and Honda mainly import engine blocks and engine electronics from Thailand) and the more expensive Mercs, Audis and BMWs are imported as kits and assembled in India. It's only the Porches and Ferraris that are fully imported.
Most of the market anyway is below 1 million Rupees and anyway is mostly owned by Suzuki, Hyundai and Toyota brands who manufacture almost 100% locally.
[1] https://www.google.co.in/amp/wap.business-standard.com/artic...
EDIT: One thing I neglected to mention. You can probably tell based upon my comment being downvoted, you are not actually allowed to talk about downvoting. Its kind of like fight club.
https://news.ycombinator.com/item?id=117171
Based on your green colored name, you may not know that pg is Paul Graham http://www.paulgraham.com/
It would makes sense to consider downvotes similarly, however they also grey out the comment, so they aren't symmetrical actions. I've pointed out 'pg's comment myself in the past, but don't consider it a great practice now. As you note, it's useful for historical context.
And yeah, there is are guidelines specifically related to downvotes.
https://news.ycombinator.com/newsguidelines.html
If you're wading into contentious discussions, be prepared for them. Take extra care to be considered and civil. If you do receive downvotes, consider them as feedback that you could do more to better express yourself. There's nothing you can really do about those who downvoted for disagreement. Commenting on that will definitely result in more downvotes, from what I've observed.
Brazil isn't doing too bad, and they have the 7th largest economy in the world, and perks like universal free healthcare.
Hard to say for sure if import taxes and more expensive consumer goods are hurting more than the increased number of jobs are helping.
India:
GDP per capita: 1,498.87 USD (China is 6,807.43 USD)
GDP: 2.3 trillion USD. (China is at 11T)
The World Bank, in 2011 based on 2005's PPPs International Comparison Program, estimated 23.6% of Indian population, or about 276 million people, lived below $1.25 per day on purchasing power parity.
194 Million People Starved for Food in India in 2014-2015, Maximum in the World According to UN Report. India is home to the highest number of hungry people in the world, at 194 million, surpassing China, according to United Nations annual hunger report.
According to the World Bank, India's under-5 child mortality rate in 2012 was 56 deaths per 1,000, far short of the country's goal of reducing child mortality to 39 per 1,000 by 2015. By comparison, the child mortality rate in 2012 in Bangladesh was 41; in Brazil, 14; and in the United States, 7.
Infant mortality rate: total: 40.5 deaths/1,000 live births. This is some of the worst in the world and its only 15 in China. 4.2 in EU nations.
As of Nov 2016, India is the second-most unequal country in the world .[1] The richest 1% of Indians own 58.4% of wealth. The richest 10 % of the Indians own 80.7 % of the wealth. This trend is going in the upward direction every year, which means the rich are getting richer and the poor are getting poorer [2]
--
So no, things are clearly not fine under a protectionist system that damns so many to poverty and inequality. Also, the only reason Apple is coming to India is because rural Chinese labor costs more than Indian labor. That's not a good sign for India's economy.
$233/ month.
I don't know if bringing in protectionism in the US when unemployment is under 5% makes much sense.
Many people seem to imagine 'Made in China' means that the iPhones were shaped into complete products from unformed raw materials entirely in China. In fact China mainly just does the final assembly of components which (apart from some very low value components) are mainly made elsewhere. For example did you know that many of the Ax CPUs designed by Apple in California were actually manufactured at a Samsung foundry in Texas and shipped to China for integration into the phones? The same goes for several iterations of the Gorilla Glass. Historically the US has actually captured a sizable chunk of the value in iPhone manufacturing (though it varies by model).
Assembling iPhones in India is about very low wage jobs for unskilled labour in order to avoid punitive local market intervention by the government. India's economy is hamstrung by a highly interventionist economic policy which triggers equally punitive economic sanctions from other countries against Indian exports.
Raise an import tax (or other barriers such as subsidies) on phones made elsewhere? Ok, but you'll get hit by retaliatory market interventions when you try to export phone made in India. It's issues like this that's why iPhones for the global market are manufactured in China, not India. If the US starts interfering in trade that way they might win back some low wage assembly jobs in the US, but at the cost of risking retaliatory trade barriers against their own exports such as the high value components in the phones that are made in America, and the high paying skilled jobs that supports.
Everything at every step of the supply chain will be more expensive. The combination of more expensive goods and a fixed amount of capital means less stuff gets made. And the amount of stuff being made is practically the definition of economic strength.
So in the same manner as the window repair person in the fallacy getting work, local jobs get created in the short term, but at a net negative to the overall system. Ultimately, it's better for everyone if things are efficient (with the GIANT caveat that those economic gains benefit everyone who is in that economy, which clearly hasn't happened in the US since around Reagan's tenure).
To answer your question directly, as just a job creation tactic, I don't think it will work in the medium-to-long term in either India or the US.
So the question is: what can we do to redistribute wealth in our political climate without a revolution? UBI would never pass here, but protectionism MIGHT works as a band-aid.
Last month I wanted to buy protein powder. It cost about $80/tub, as compared to $35 in the US. In the US I drink 3 scoops/day - my (much poorer) Indian workout partner is losing gains because that's too expensive.
I would also enjoy drinking a can of Guinness at my local pub. Unfortunately Guinness is insanely expensive and mostly unavailable. In India I just drink swill - domestically produced Fosters and Kingfisher. Thanks to protectionism, the only good drink available in India is Old Monk, and even that is threatened [1]. (The situation is improving a bit - Birra is new and pretty ok and local breweries are sprouting up for rich people.)
I'm regularly asked to bring various products into the country - a new phone, a laptop, etc, because they are too expensive or just unavailable locally.
I wanted to cook some non-Indian foods for one of my friends. But many of the things I wanted to cook for her were impossible due to lack of ingredients - the import duties make them too expensive, and no local market exists. Another friend of mine is begging for me to bring her a bagel and a bunch of philadelphia cheese next time I come.
Protectionism hurts because we are all consumers.
[1] Something bad happened and now Old Monk tastes bad. It's truly sad - Old Monk used to be a world class liquor.
Currently, Indian customer has no access to Apple Store level of shopping experience. Yet to come across Apple Reseller Stores who are at least 10% as good as the Apple Stores.
Benefits to Apple:
1) Keeps full profits. No margin wasted for reseller
2) Offers world class Apple Store experience / customer service
3) Ability to offer refurbished products (currently they cannot)
4) Educating customers in the regional language about iPhones (will make a huge difference)
5) No Price Anchoring effect (resellers will cross sell android phones at 1/4th the price with higher margins / incentives)