I thought this was worth passing on
Why on Earth---Is Protectionism Still Popular?
And yet, it is not simply a matter of special interest lobbying. In spite of being bad for almost everyone, protectionism is widely popular around the world. Despite some real progress, protectionist measures still exist everywhere, as shown by the stalled Doha round of trade talks. As economist Bryan Caplan tells us in his 2007 book, The Myth of the Rational Voter, the trade liberalization that has taken place in recent decades has done so in spite of voter resistance.
Especially when times get rough, groupthink kicks in and we all seem to go tribal, wanting to secure jobs for our country, our region, our industry. We see only the short-term benefits of huddling close together with "our" people, and to hell with those people over there. This may have made some sense in humanity's evolutionary past. Back then, my survival was intimately tied to the survival of my tribe, which had the nasty habit of being in a near-constant state of war with all other tribes. However, one of the great discoveries of the modern world, though it has yet to be integrated fully, is that we are better off trading with our neighbors than killing them. Objectivism treats other people as individuals, and points out that we are best served in the long run when we deal with others based on voluntary interaction to mutual benefit.
Here We Go Again
The latest protectionist threat is a "Buy American" provision in the gargantuan $819 billion stimulus bill passed by the U.S. House of Representatives last week. As though all of these stimulus bills being passed around the world were not bad enough, robbing the productive and prudent in order to rescue the inefficient and reckless from consequences largely of their own making. (I say "largely" because governments actually promote reckless behavior by, for instance, giving economic actors every reason to expect to be bailed out.) Adding insult to injury, though, the "Buy American" provision blocks the use of foreign-made steel and iron from infrastructure projects funded by the stimulus bill. A Senate version of the bill would go even further, extending protection to manufactured goods as well.
History is filled with examples of expert consensus being shown to be wrong, but in their opposition to protectionism, the economic experts are right. Even as far back as 1930, when the profession was fiercely debating this or that aspect of what would come to be known as Keynesianism, over a thousand economists petitioned President Hoover not to sign the Smoot-Hawley tariff bill. Hoover ignored their plea and signed the tariff bill anyway. This led quite predictably to "retaliation" from other countries and a downward spiral in world trade that contributed significantly to the severity and duration of human suffering during the Great Depression.
Why the scare quotes around the word "retaliation"? Because fighting protectionism with protectionism is like shooting yourself in the foot as revenge for your neighbor shooting himself in the foot. But government leaders around the world in the 1930s were quick to pander to the tribal impulse-and there is every reason to believe they will do so again if the "Buy American" provision remains. In a hopeful sign, President Obama did finally say this past Tuesday, February 3, that he is opposed to "send[ing] a protectionist message" that would "trigger a trade war." Whether this will be enough to expunge the protectionist provisions from any final bill remains to be seen.
The Light of Day
The protectionist case has never held water, but it was neatly demolished over a hundred and fifty years ago by a brilliant French satirist named Frédéric Bastiat. In his famous "Petition of the Candlemakers," Bastiat sarcastically argues that everyone connected with the manufacture of lighting is faced with unfair competition from a "foreign" competitor who can produce light much more cheaply than domestic industries can. That competitor, it is soon revealed, is none other than the sun. The remedy Bastiat proposes is for all windows to be shuttered during the day, leading to a sure stimulus of the lighting industries-and to just as certain an impoverishment of the rest of the population, which would effectively be required by law to double or triple its purchases of candles and lamps, and thus have less to spend on all other goods and services.
What was true for lighting then is just as true for steel and iron today. Humanity's interests are actually in harmony, for every bout of protectionism makes us all poorer in the long run, and in the long run each one of us has a clear interest in free trade. But while the evils of protectionism have been well understood by economists for centuries, they continue to be poorly appreciated by the general public. The problem is that modern economic reality is complex, and understanding it requires careful thought, which does not happen automatically. Our default position is to focus solely on the immediate, narrow results of economic policies, on what we perceive directly before our eyes and feel in our guts, and to ignore the broader, more lasting unintended consequences of those policies, which cannot easily be seen or felt.
It does not have to be this way. We are slaves neither to our evolutionary heritage nor to our current cultural environment. We can choose, in any given moment, to turn on the light of consciousness instead of shuttering the windows of our minds to the practical benefits and to the moral rightness of treating other human beings as free individuals.
President Obama apparently still has work to do in this regard, however. Obama said he was against "sending a message that somehow we're just looking after ourselves and not concerned with world trade." His reasoning implicitly accepts the flawed notion that protectionism would be in a nation's interests if only others would not retaliate. Worse still, it implies that pursuing one's own interests is wrong. But it is precisely this, the right of everyone to pursue his own rational self-interest, that most needs to be affirmed-along with the fact that no one's rational self-interest is ultimately served by protectionism. Is it too much to ask for a President to understand this and to have the patience, the courage, and most of all the simple honesty to explain it to the public at large? Now that would be a change I could believe in.
-------
Bradley Doucet is a writer in Montreal, Canada, a contributor to Le Québécois Libre and to The New Individualist.
Edward Hudgins, Freedom to Trade: Refuting the New Protectionism. Cato Institute, 1997.
Posted by Bobby Eberle
February 3, 2009 at 7:34 am
I thought the whole idea behind an economic "stimulus" was to provide a short-term "shot in the arm" to the economy. Isn't that what a stimulus is? Just like priming a water pump or hitting the choke on a cold lawn mower engine, a stimulus is supposed to provide a brief, kick-start so that the economy can get going again.
However, listening to the Democrats, you soon realize that "stimulus" is simply their catch-all, code word for liberal spending run amok. What's interesting to watch, and would be funny if this situation weren't so serious, is to listen to Democrats try to justify any new liberal intrusion as "stimulus." Take the fact that in the $819 billion stimulus bill, there is $140 billion in education funds.
That's right... $140 billion for, as Obama's people put it, "an 'investment' in America's future generations. Hello! We are talking about an economy that liberals say is in dire, dramatic, and desperate need of fixing. According to them, we must do something NOW in order to fix it. They say that if we do not pass this bill, which provides "urgently needed" help to the economy, we will all go down the toilet.
So, one might say that repairing a school is a nice thing to do, but it certainly has NOTHING to do with jump starting the economy. As CNSNews.com reports, "Conservatives and tax-limitation groups are raising concerns over whether the federal government should be reaching so deeply into what is typically regarded as an area left to state and local authority."
"This would be the most direct intrusion into fiscal policy making in education ever," said Pete Sepp, vice president for communications at the National Taxpayers Union. "There really isn't a precedent."
Now, here's where Arne Duncan steps in. Duncan is Obama's new education secretary... you know... the guy who oversaw some of the worst performing schools in the country while serving in Chicago.
"If we want to stimulate the economy, we need a better-educated workforce," Education Secretary Arne Duncan told the Associated Press last week. "That's the only way, long-term, we're going to get out of this economic crisis."
Long-term? What is he talking about? A long-term fix to the economic crisis? I thought this was a "stimulus" plan. How does better-educated elementary, junior-high, or even high school students stimulate the economy? They don't. As soon as Duncan uttered "long term," we should all just tune him out. Clearly he doesn't know what stimulus is. He's just another liberal seeking to turn America from its very foundations.
"I don't think there's ever a right time for the federal government to expend hundreds of billions of dollars in education," said Neil McClusky, associate director of the Center for Educational Freedom at the Cato Institute.
"This stimulus package is just a . . . gargantuan version of what has happened for decades, which is politicians spending money in the name of children so that the politicians look like they care," McClusky said. "But it never has any positive academic effect."
We should oppose the stimulus bill at all costs. We need to let the economy work rather than having government officials step in seeking more power and control and spending more taxpayer funds. As added measure if the liberals don't even know the difference between "short term" and "long term," we should oppose the bill simply on the principle that it was drafted by idiots.
++ Click here to contact Congress. Urge your senators to vote NO on the stimulus bill.
The constitution is under constant attack and is ridiculed more and more openly by those it was implimented to control. How is it that our students are being taught to admire people like che guevera? A man who was such a notoriously radical of inflamitory nature that at the end of his "glory days" even inflamatory radicals thought he was to inflamatory and radical? Stalin is widley respscted amongst the educational elite ( a man who made Hittler look like a boy scout) and whose failed ideals are constanly taught as the pinacle of human idealism.
The constant left slant of those who have profetionaly replaced intellect with education is obvious and disturbing to anyone who does not hold to the same ideals as the huddled hordes who just want to go do their jobs and unplug with the idiot box untill it is time to do so again and a new and unchanged day has arrisen. This is the "progressives" view of normalcy. To me it is more firghtening than any horror movie could ever be.
Sory to go off rambling I have my own distrations from this and they are many.
No comments:
Post a Comment