Quote Originally Posted by Dayuhan View Post
Vast majority? I doubt that. Based on what empitical evidence?
It's such a non-controversial thing usually that I merely had to do a quick google search to come up with an examples study:
http://www.ncbi.nlm.nih.gov/pubmed/2732771

Quote Originally Posted by Entropy View Post
You are talking about subsidies, right? Subsidies produce deadweight loss.
I had to look it up initially (languages...) and so far found it to be similar to "Wohlstandsverlust" (at least deadweight loss marks the areas on diagrams which we would mark as "Wohlstandsverlust".

Subsidies are transfers, and I do not remember a theoretical basis for claiming that a transfer itself means a Wohlstandsverlust. There are transaction costs, of course - administration, enforcing of revenue, distortions caused by tax dodging etc.


Even if there was a deadweight loss; I pointed at the output loss by closing the factory and sending a fraction of the workers to marginal jobs, a small fraction to decent jobs and a large fraction into unemployment.



Finally, there's a macro level to the problem: Contrary to antiquated free trade theory, it's simply stupid to believe that everything should be produced by the fittest ones. This would inevitably leave some unfit ones without the exportable output to afford a decent material standard of life.
Mali et al have no choice, but countries with industries (for technically export-capable products, that is; at the very least suitable as substitutes to imports) should not give them up easily and de-industrialise, for they would move to join Mali.


Relatively inefficient industries can very well be good industries and vital to a countries' material standard of life.