P is for Protectionism

Why is everyone so shocked and surprised by the “Buy American” clause in the Bill being debated over in the U.S. Senate?


You can be outraged but come on!


Let’s be logical, independent-minded grown-ups for a second. Just because all the attendees at the G20 summit last fall “promised” (with their fingers crossed behind their back) not to go down that route didn’t mean that each and everyone of those delegates wasn’t going to go home and start exploring different scenarios where they might have to re-neg on their word.


When the sh!t hits the fan (and it has been a constant stream for a while now) who do you think politicians are going to listen to? Unless we are dealing with a dictatorship, they will be pressured by their citizens to do something, anything to help them through this. In a democracy, the will of some of the people will rule the day.


I wonder how many of the delegates at the summit are still in office/power? That throws a small wrench into things. You can’t keep your word if you are no longer in the position to do so…and if you are still in power, good money says that you will likely do everything you can to stay there.


Vice-President Joe Biden stated that he doesn’t “view {the Buy American provisions} …as a harbinger of protectionism.” Then what exactly is it? Protecting your own is easy but in a global economy you end up shooting yourself in the foot. Canada has sent a letter pleading asking that the US does not start that ball rolling. The European Union is also speaking out against protectionist measures. 


What the narrow-minded Senators amending the Bill don’t realize is that everyone else can play that same game. It’s a slippery slope- when one goes, the rest goes. Guaranteed.


Think about it. Someone creates an uneven playing field. Would you not endeavour to right it in some way? Even worse for the US is for other countries to maintain free-ish trade and only enforce stricter regulations on US imports in response to that provision. But it won’t stop there. It will be an endless cycle of retaliation.


I won’t bore you over the specific reasons why protectionist measures don’t work or how they can have the exact opposite effect. There is a lot of information and opinions out there. Looking to history can be particularly instructive.


In an ideal world, we would bypass the short-sighted and obvious.


In what industries can we compete and how can we enable them to flourish? Those of us living in mature economies can’t compete against those countries that can get away with paying people 50 cents an hour to make running shoes. It would be foolish to try. With their burgeoning middle class, even China won’t be able to get away with that for much longer.


Looking to the future can be a scary proposition. Most people can only see as far as next week’s paycheck- don’t be one of them and don’t let your political representatives, at any level, make the same mistake.


After all, is it not your tax dollars keeping them in the style to which they have become accustomed?


~ by angryegg on February 3, 2009.

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