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Fake human-centricity

31 May 2021

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Kuanysh Zhaikov

CRC Partner

"Import substitution, protectionism, public procurement, employment support", etc. "All this is to provide more jobs, it is for our citizens!" I, too, am a supporter of industrialization and economic "complexity." Question is - at what cost?
When protecting manufacturers, we forget about consumers. And it affects all of us: we are the ones who import goods and services directly, because they are cheaper or because we simply like them more (utility maximization); we are the ones who import indirectly when local companies buy foreign components and equipment in order to better serve our needs. And nothing is to blame for that, except ourselves.
We do not print money out of thin air. We work - we exchange our labour for those subsidized goods and services. Roughly speaking - on one hand, you have 1,000 car factory workers who are "protected" from competition, and on the other hand, you have 20,000 car buyers who will work an extra year to pay for a more expensive local car. 1,000 man-years versus 20,000 man-years. "But what about multiplicative effects?" First you should prove that a manufacturer will actually produce them - local inner parts, owner's profit-to-salaries ratio. You should also prove that a consumer does not have the opportunity to contribute more to the economy by buying other local products.
Human-centricity is about respect for choice. It means "one does everything by oneself." If you use such phrases, and then lobby for import substitution, it seems rather strange. Non-economists say: "we need to reduce inflation, so let's reduce imports."
P.S. Industrial policy is what our country needs. For example, support for exporters, mirroring measures in response to economic discrimination of our neighbours, transparent customs systems, support for clusters, etc. But people consider this all “boring.”

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