Protectionism vs. Pragmatism

Despite my praise for President-elect Obabm in the post below, the statements from an Obama spokesman that fiscal stimulus language may include a “buy American” provision are deeply troubling.

One element of the plan could be “buy American” language benefiting U.S. industry. “We are reviewing the buy American proposal and we are committed to a plan that will save or create 3 million jobs including jobs in manufacturing,” Obama transition spokeswoman Jen Psaki said by e-mail.

The New York Times on Friday quoted Daniel DiMicco, chairman and chief executive of steel maker Nucor Corp, (NUE) as saying the steel industry was asking Obama to “deal with the worst economic slowdown in our lifetime through a recovery program that has in every provision a ‘buy America’ clause.”

Now would hardly seem to be the time to start withdrawing into a protectionist shell. Partly because we haven’t been shy about lecturing the Chinese about devaluing their currency in order to gain an advantage, and mostly because we should be aware of the perils that competitive protectionist measures hold. I assume they have read the history books.

Mr. Obama campaign was arguably one of the most anti-trade in memory. He can’t be faulted for not knowing the economic circumstances that he would encounter when he started down that road but he most certainly would be faulted if he proceeds with anything that stifles trade. Amid a collapse of commerce, the last thing that is needed are political impediments to whatever flicker of life may be left.

Let’s hope that pragmatism once again rules the day in the Obama camp. Otherwise, this might be a fatal mistake.

More: here

Comments

[baldguy:]

I think we have tried the " Free Trade" route and have run up a great deficit.
There can be imports and exports but they must be on a level playing field. US business cannot compete with someone overseas paying $2 a day wages and no import duties to even it up. We also cannot reward our business community for taking their jobs overseas. I do believe that this is why we do not make much anymore and our manufacturing base has gone away. What does everyone think-thumb me up or down.

Jan 06 01:32 PM

[biomedlives:]

Baldguy - one definite thumbs up here. The free traders need to stop saying that it's obvious free trade is good and make an effort to demonstrate that a large fraction of Americans benefit from free trade.

Jan 06 03:34 PM

[Third Party...:]

There are only 2 Constitutional ways for the federal government to pay for itself: taxes and tariffs/excises. When you hear or see the words "Free Trade" know that it is actually a tax hike. When a tariff is eliminated, the government does not do without that money, they get it elsewhere!


Unnecessary taxation is akin to slavery.

Jan 06 08:12 PM

[Fam62c:]

We should protect our markets to the same degree that other countries do. Sometimes I think that we are suckers for allowing everyone in the world to just load up the ships and send everything they want over here with very few restrictions. Most other countries (especially China and most other Asian countries) are way more protective of their home markets and industries. I've got no problem with allowing foreign companies to compete with US companies but there needs to be a level playing field. I say that every country should be able to send as much stuff to the USA as they buy from the USA. After that if they want additional access to our markets they should have to do what Honda and Toyota do and build product for the US market in the USA.....you want to sell it here you make it here. We would have to make some exceptions for things like oil that we can't produce enough of at home until we can find solutions to those problems. This would result in cost increases on some products but I believe the benefits would outweigh the negatives.

It's our own fault; we wanted to have everything and we wanted things cheap so we could have more stuff. Cheap stuff needs to be made cheaply with cheap labor and that's where it all started. I, for one, would be willing to pay a little more for some items and have less stuff if it meant more decent jobs for my family members and friends.

A little protectionism isn't a bad thing; "free trade" isn't free, it's come at a huge price for the USA. Other countries benefit more than we do from free trade and our wealth gets transferred away. It's a zero-sum game and as the rest of the world begins to have a middle class for the first time we will see our middle class shrink away to nothing. Almost everything that we consume in the USA can be made right here. After WWII we were the producer for the whole world, now all we do is consume all the stuff that's made everywhere else. I welcome competition from foreigh companies ( we don't want to choke off innovation and force people to buy poor quality) as long as they invest in the USA and build plants here, if they are going to take they should have to give as well. We have the most valuable consumer markets in the world and we are stupid to give access way for free with nothing in return for the American people but a large selection of cheap crap.

Jan 08 07:17 PM