The tendency to greater protectionism has been building for a while now -- and may be put on steroids in the months to come. How much, if at all, depends on the depth of the economic downturn. As Michael Sesit writes in his new Bloomberg column:
While the burden of preserving globalization falls largely on major industrial countries, emerging-market nations, especially in Asia, must also do their bit. For years, they pursued mercantilist strategies of maintaining cheap currencies to boost exports. This has to stop before developed nations retaliate with trade barriers.
Globalization's benefits -- including world growth, the emergence of new consumer markets, the emancipation of millions from poverty, product innovation and reduced geopolitical conflict -- are just too valuable to squander.
Agreed.
From my admittedly libertarian perspective, the problem with trade agreements is that they are "managed trade" -- and not really free trade. My recollection is that the NAFTA agreement was as thick as the New York City phone directory and was to be phased in over 15 years. Who knows what favors and other rubbish the agreement contains.
That said, the benefits of trade far outweigh the negatives. The last thing we need to do in the US is enact a 21st century version of Smoot-Hawley. And that goes for other nations as well. Let's hope we've all learned something since 1930.
Just wondering, since America doesn't make anything anymore, we do finance. Who is the next sucker we sell too? It seems to me we have nothing to trade. We have already traded away our IT industry, manufacturing industry, chemicals, pharmaceuticals, and now the entertainment industry. So what do we actually do?
As an example, IBM sent my IT to job India. Now free trade would say I could go to India and build a Walmart. Opps, no free trade in India, As a matter of fact, very little trade with protectionist India. Nor can I buy sugar or ethanol at world market prices. WE will never see FREE TRADE in our lifetime.
Posted by: me | October 17, 2008 at 10:36 AM
Tariffs supported our country until the bankers/traders were able to overcome reason with greed around 1913 when they instituted the Federal Reserve and the income tax.
Why don't we print our own money instead of borrowing it from the FED and paying them interest? Why don't were put tariffs on imports so that we protect our own citizens and industries. Traders basically steal from the poor to sell to the rich.
Read THE HARMONY OF INTERESTS by Henry C. Carey (1851). It documents the benefits of non-free trade.
Posted by: Aldon Maleckas | October 17, 2008 at 12:02 PM