Sunday, 8 February 2009

Protectionism? What's That Then?

Protectionism Bad, Free Trade Good. That’s the line, isn’t it? Even left wing economists seem to believe this.

Except, of course, (almost) everyone is just a wee bit of a hypocrite. Splinty rhetorically nails it:

“...everybody is pretty realpolitik on this issue, but most people just don’t like to admit it. The free traders in government are all in favour of the free movement of capital, but, largely for electoral reasons, oppose the free movement of labour. One of the endearing things about the Economist is that, being in favour of genuinely open borders, it likes to twit the political class about this. On the other hand, the socialists also have an inbuilt contradiction in favouring the free movement of labour in the form of abolishing immigration controls, while wanting to restrict the movement of capital. Since movements of labour generally follow movements of capital, you’ve got some tensions either way.”

Protectionism is unjustified tariffs/subsidies, or unfair trade restrictions (including restrictions on access to migrant labour). & you can quote the authority of The Wealth of Nations as much as you like and still not be able to express ‘justice’ or ‘fairness’ in econometric equations. The case for free trade is a a technically pragmatic one : the principles involved are not reducible to marginal economics. They are matters of political economy. The Theory of Competitive Advantage might well have many strengths but it can't tell you what sort of activity thing you might want to develop a competitive advantage in. That's a political matter.

I just mention this because there have been two recent events which seem to me to be emblematic of the unravelling of the previously almost universally agreed view that 'Globalisation is Good , or At Least Unstoppable'. The Lindsey Refinery Strike was seen by the mainstream media, incorrectly in the end as it happens, as a nationalist reaction to migrant labour in the teeth of a recession. It was actually about 'fairness' - including fairness to the migrant workers.

On the other hand, the question of the incipient payment of multi-million pound bonuses to bankers is seen by both right , left and centre as unjustified. Nonetheless, these payments are defended by various people who claim that, without them, all the talent would simply either leave the country or, let's make no bones about it, just rob the institutions that employ them. ( & ,yeah, 'rob' is an emotive term, used deliberately).

So ,OK, let's accept this as fact rather than the smoke blowing I strongly suspect it to be. Let them go. I don't want my country to have a 'competitive advantage' in generating inequality. In fact, I'd be prepared to institute a 'negative subsidy' - a wealth tax - to ensure we didn't.

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