Export bans are very crude trade policy, and it seems unlikely that they are in the country's interests very often. Indonesia's first nickel export ban looks clearly harmful for the country. The second export ban, on this showing, may have been successful and it's goal of capturing more of the nickel value chain, but at what cost? Traditional free trade models to give a good reason to presume that the harms exceed the benefits. To refute that conclusion, some sort of market failure would need to be demonstrated. For example, do industries downstream of nickel mining have positive externalities, perhaps through creation of good jobs that facilitate upward social mobility or reduce welfare dependency? Until that's demonstrated, the presumption has to be that the nickel export ban appeased the government's arbitrary preference for more manufacturing, but made the country as a whole worse off, albeit the downsides maybe too diffuse to capture and setting the balance against the benefits.
But let's suppose for the sake of argument that a comprehensive cost-benefit analysis of the nickel export ban would reveal that it's a good thing for Indonesia, taken separately. Is it a good thing for other countries? Almost certainly not. To take away theit option of buying Indonesian nickel almost certainly hurts them. And if Indonesia benefits but other countries lose out, are Indonesian nickel bans a good thing for the human race as a whole? Again, almost certainly not.
So it would be nice if export bans were prohibited somehow. That's the old logic of trade deals, and of wonderful old organizations like GATT and WTO, but unfortunately, good behavior in trade policy has gone somewhat out of fashion, which is probably a contributor to the global trend toward violent chaos, aggression and fascism and all that. I'd be delighted if Global Prosperity Institute took that as a provocation to prove me wrong!
There's also the question of justice. By what right does Indonesia forbid its citizens from exporting unprocessed nickel? The question seems antiquated somehow, maybe because it has an aura of moral realism which is out of tune with our morally relativistic age. Not that people are ultimately all that serious in their moral relativism: in the face of genocide or naked aggression or rape, they tend to assume that their moral intuitions are authoritative. But they're moral relativists in small matters. The irony here, as in many places once you start to look for it is that utilitarian ends would be best served if people believed that export bans were unjust.
Free trade is a global public good. And one of the best things that rich countries could do is to launch robust and generous foreign aid programs conditional on free trade. Then pretty soon developing countries would feel they couldn't afford to institute export bans, because of all the foreign aid they would lose.
Thanks for a very informative post!
Export bans are very crude trade policy, and it seems unlikely that they are in the country's interests very often. Indonesia's first nickel export ban looks clearly harmful for the country. The second export ban, on this showing, may have been successful and it's goal of capturing more of the nickel value chain, but at what cost? Traditional free trade models to give a good reason to presume that the harms exceed the benefits. To refute that conclusion, some sort of market failure would need to be demonstrated. For example, do industries downstream of nickel mining have positive externalities, perhaps through creation of good jobs that facilitate upward social mobility or reduce welfare dependency? Until that's demonstrated, the presumption has to be that the nickel export ban appeased the government's arbitrary preference for more manufacturing, but made the country as a whole worse off, albeit the downsides maybe too diffuse to capture and setting the balance against the benefits.
But let's suppose for the sake of argument that a comprehensive cost-benefit analysis of the nickel export ban would reveal that it's a good thing for Indonesia, taken separately. Is it a good thing for other countries? Almost certainly not. To take away theit option of buying Indonesian nickel almost certainly hurts them. And if Indonesia benefits but other countries lose out, are Indonesian nickel bans a good thing for the human race as a whole? Again, almost certainly not.
So it would be nice if export bans were prohibited somehow. That's the old logic of trade deals, and of wonderful old organizations like GATT and WTO, but unfortunately, good behavior in trade policy has gone somewhat out of fashion, which is probably a contributor to the global trend toward violent chaos, aggression and fascism and all that. I'd be delighted if Global Prosperity Institute took that as a provocation to prove me wrong!
There's also the question of justice. By what right does Indonesia forbid its citizens from exporting unprocessed nickel? The question seems antiquated somehow, maybe because it has an aura of moral realism which is out of tune with our morally relativistic age. Not that people are ultimately all that serious in their moral relativism: in the face of genocide or naked aggression or rape, they tend to assume that their moral intuitions are authoritative. But they're moral relativists in small matters. The irony here, as in many places once you start to look for it is that utilitarian ends would be best served if people believed that export bans were unjust.
Free trade is a global public good. And one of the best things that rich countries could do is to launch robust and generous foreign aid programs conditional on free trade. Then pretty soon developing countries would feel they couldn't afford to institute export bans, because of all the foreign aid they would lose.