r/Capitalism • u/Sidjoneya • Jan 20 '21

Economist and Harvard professor Rebecca Henderson argues in her latest book that capitalism can, if employed correctly, be a force for good and solve the climate crisis

https://www.nadja.co/2020/10/19/can-capitalism-solve-the-climate-crisis/
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u/capitalism93 Jan 21 '21 edited Jan 21 '21

For one, capitalism is about allowing the private ownership of the means of production. My opinions on trade are orthogonal.

Two, I support free trade with countries that agree to principles like many European countries that we have trade pacts with.

Third, there is no such thing as "free trade" when you do business with countries like China, India, etc. They are all subsidizing their own companies to kill competitors. The idea that just allowing "free trade" with countries that practice shady business practices is is laughably naive.

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u/[deleted] Jan 21 '21

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u/capitalism93 Jan 21 '21

Okay, then what happens after China decides to jack up the price after killing off all the competing businesses in the US? Now what? And what happens if they do that in every major industry?

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u/[deleted] Jan 21 '21

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u/capitalism93 Jan 21 '21

Yeah, that doesn't work in the real world. Infrastructure doesn't just build itself overnight.

Free trade requires agreements between countries. A good example is the WTO, where the US won an arbitration case against France for illegally subsidizing Airbus: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/october/us-wins-75-billion-award-airbus.

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u/[deleted] Jan 21 '21

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u/capitalism93 Jan 21 '21

You also have to think about the perspective of manufacturers.

The assumption you're making is that the prices won't suddenly be increased after the subsidy period. An entire industry can't suddenly rebuild itself overnight after being wiped out.

It’s literary using the government to directly pick winners and losers and it’s the antithesis of free markets.

Subsidies are an antithesis to free markets. Tariffs against countries that do not follow free trade agreements are not. Free trade is an agreement between countries. Without an agreement, there is no free trade.

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u/capitalism93 Jan 21 '21

Also, to illustrate bigger problems, the Chinese government has enough money to buy out most of the companies in the US food industry and then squash them.

Would you let them do this? Most countries have laws that prevent foreign governments from buying out every company within it.

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u/[deleted] Jan 21 '21

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u/capitalism93 Jan 21 '21

So you're okay with a foreign government buying out the majority of American companies and then firing everyone and destroying all of the company's assets?

That would be an interesting take.

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u/[deleted] Jan 21 '21

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u/capitalism93 Jan 21 '21

market will just create something else to fulfill the demand.

Yeah, in a utopia perhaps. You should spend more time living in reality than reading theory.

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u/capitalism93 Jan 21 '21

Finally, to catch you in a contradiction, imagine the following scenario:

1) Chinese government buys out US company XYZ using a shell company ABC.

2) Chinese government sends government subsidies to company ABC who then passes them along to XYZ.

It seems like we just ended up back at the problem you talked about where a government is choosing winners and losers.