What I wonder about is the scenario where it's not a militaristic empire paying for subsidized goods with newly printed fiat, but rather a peaceful free market nation trading with a protectionist regime.
Clearly subsidies will mess with the balance of production, by sending a false signal about comparative advantage. Also clearly, the importing nation will have a reduced cost of living at the expense of the foreign tax payers who fund the subsidy. Why does this mean a loss of human capital, though, or a shift towards a consumeristic economy?
It seems like the new, distorted, comparative advantage could just as easily be in making goods that people find more satisfying to make and the reduced cost of imported goods is essentially the same as a technological innovation. I suppose people say many of the same things about cultural effects of labor saving technologies.
My broader point is that it's hard to know if adverse effects of free trade in our society are about free trade or if they're the result of other pathological institutions.
Yeah, agreed. I think some of my presupposed assumptions are indeed the existence of a pathological welfare state and warfare state.
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Result of pathological institutions
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