We often hear in every nation that it needs to be "self reliant".
Of all the countries in the world Russia would probably be the best able to pull this off, but it would be bad for Russia and its people would be stuck.
I see where Putin is coming from though: deny it or not (usually countries subject to sanctions deny that there is any effect while blaming it for economic troubles). Still, when a country adopts such a policy, the long-term effect is to gradually, and sometimes not so gradually, weaken the country's economy relative to the rest of the world. The reason isn't hard: if you can buy something cheaper elsewhere in the world, a country is better off doing so and using the money saved in other ways.Of course almost everyone puts up trade barriers, and so they harm themselves, usually in response to special interest agitation. Sometimes the excuse is to allow domestic industries time to get on their feet, sometimes the excuse is to protect local jobs, sometimes the excuse is to protect the local economy from better technology elsewhere. Very often the excuse is fairness, the other country is restricting the country's ability to sell things there.All these excuses are really special interest and so help the few and harm the many. Of course successes can be pointed to, a given enterprise was rescued. My thought there is that this weak firm will go on being a drain.
You've laid out the core argument for free trade pretty clearly, and it's one of the more robust findings in economics — comparative advantage means that even if one country is better at producing everything, specialization and trade still leaves both sides better off.
A few thoughts that add nuance without really overturning your basic point:
Where the standard case is strongest: For consumer goods, raw materials, and commodities, the case for free trade is very hard to argue against. Protectionism there is almost pure wealth transfer from consumers to a privileged industry, exactly as you describe.
Where it gets genuinely complicated:
- Infant industry arguments — these are mostly abused, as you note, but there are real historical cases. South Korea's industrial policy in the 60s-80s produced globally competitive firms that didn't just become permanent drains. The problem is distinguishing winners from losers in advance, which governments are generally terrible at.
- Strategic industries — there's a legitimate national security argument for maintaining some domestic capacity in things like semiconductors, pharmaceuticals, or defense components, even at economic cost. The COVID supply chain crisis made a lot of economists quietly more sympathetic to this view.
- Adjustment costs — free trade is net positive in aggregate, but the losses are concentrated (a factory town) while the gains are diffuse (slightly cheaper goods for everyone). The political economy of that distribution is genuinely difficult, not just special interest noise.
On Russia specifically — your instinct is correct. Russia has more natural resource self-sufficiency than almost any country on earth, and sanctions have forced a kind of involuntary autarky experiment. The result has been inflation, technological stagnation, and substitution of worse domestic goods for better imported ones. It functions, but at a real and growing cost.
The deeper irony is that the countries most loudly proclaiming self-reliance — whether Russia, India historically, or the US today with certain industries — tend to be large enough that the costs are spread thin enough to be politically invisible, while the beneficiaries of protection are loud and organized. It's a nearly universal political dynamic, not a uniquely cynical one.
Your point about the weak firm continuing as a drain is particularly sharp. Protection doesn't fix the underlying problem; it just socializes the cost of it.
Association does not prove causation. The South Koreans did well for a lot of reasons.
That's a fair and important methodological point. The infant industry success story is probably the most overused argument in development economics, and the causal attribution problem is serious.
South Korea had a lot going for it that had nothing to do with industrial policy:
- Exceptionally high savings rates and a cultural emphasis on education that predated the industrialization push
- American security guarantees and aid that freed up resources and provided market access
- A relatively clean, capable, and disciplined bureaucracy compared to most developing countries — which is itself enormously rare and hard to replicate
- Geographic and demographic factors — a compact, ethnically homogeneous country that was relatively easy to administer
- Good timing — they industrialized during a long global boom with open Western markets hungry for exports
The industrial policy advocates pick the winners after the fact. For every South Korea there's an Argentina, which had every apparent advantage in the early 20th century and pursued active state direction of the economy into stagnation. Or the countless African and Latin American import-substitution experiments of the 60s and 70s that left behind inefficient protected industries and debt.
The honest position is that we don't really have clean natural experiments here. You can't run the counterfactual — would South Korea have done just as well, or better, with less intervention? Some economists think yes.
It's a case where the narrative is compelling and the evidence is genuinely weak. Which is exactly the kind of situation where motivated reasoning — by governments wanting justification for intervention — tends to fill the gap.
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