An (Indomitable) Argument for Protectionism

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Seagate Wuxi China Factory Tour

Protectionism helps us at home and our friends abroad

The expired Multi-Fiber Arrangement left thirty million people across the world unemployed.  These workers were unfortunate victims of globalized free trade.  Free trade leads us to believe that goods should always be produced by the firms competing under pure capitalist conditions.  This idea is not wrong; it is only the dangers of free trade should be mitigated in emerging markets around the globe to give them the opportunity to succeed.  Protectionism, the antagonist of free trade, is the solution to best prepare infant industries and emerging economies anywhere in the world; this policy employees more denizens, produces stronger industries, and cultivates stronger markets than free trade ever could.

Inefficiency creates more jobs.  If the entire world can exploit a market then only those countries with the most efficient industries will be able to sell.  Protectionism erects a wall of tariffs that prevents foreign goods from ever contaminating domestic markets by driving prices up to an inclusive level for domestic products.  Under protectionism, small industries gain a foothold, bloom, and employ more denizens in every country across the world.  There are minor concessions; on a global level less of goods are produced and the cost is driven up slightly as well.  These negligible effects diffused throughout the consumer markets means the world to the now employed workers who can support their families.  Protectionism is more humane than free trade.

Stronger industries are built under the shield of protectionism.  Behind a wall of tariffs the United States built mighty firms of  industry that dominated the world for the second half of the twentieth century.  Preceding the Americans, the British had done the same when the pioneered the Industrial Revolution and built an empire upon which the sun never set.  Since the 1970’s China used numerous protectionist policies, notably keeping its currency artificially low.  It is predicted to have the world’s largest GDP by 2020.  Examples of booming economies that got their start in free trade are scare.  Columbus and Admiral Perry opened up trade to the Americas and East Asia respectively.  In both countries widespread exploitation of natives and complete sterilization of domestic industries ensued following the introduction of cheap free trade imports.  Free trade is a tool of the strong to stay in power and collect wealth; for weaker nations and industries free trade is a poison which cripples.

Stronger markets evolve under protectionism.  Protectionist policies protect infant industries and prevent exploitation of weak economies.  In an international market of free trade monopolies are certain to emerge.  Monopolies are established when there is not industrial competition.  This problem hurts everyone.  Consumers suffer from an inferior product; without the Darwinian survival of the fittest threat the producers have no incentive to innovate.  Marginal producers are harmed.  Any attempts to breach the market are squelched under the monopoly.  The monopoly hurts itself through stagnation.  Protectionism is the best means in a globalized economy to give marginal producers and infant industries the time to create a profitable industries despite the monopolies.  Consumers and marginal producers benefit from better products and pay checks while potential monopolies are broken out of self-defeating cycles of stagnation.  Protectionism helps everyone.

Protectionist protects countries.  It harbors citizens and gives them jobs.  It cultivates infant industries under a cocoon of tariffs.  Better products and firms are brought to market thanks to protectionism.  It seems almost silly to even think about introducing globalized free trade to emerging economies; it corrupts infant industries and kills jobs.  If it were not for multinational corporations, who preach fallacious free trade to all for a better profit margin, protectionism would indisputably hold in its rightful place as protector of firms, consumes, and employees.

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Developing Countries Hoodwinked: Ditch (of) Free Trade

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3rd world work force
While free trade is the optimum interdependence policies of developed countries it does not aid developing nations.

Free trade endeavors to help workers in developing countries; the problem is that it cannot succeed in our cut-throat, capitalist world.  When corporations go into developing countries they are not being philanthropic: they want to make money.  In order to succeed in our globalized world, companies purge themselves of humanity and squeeze every last cent out of their production.  This is not necessarily good or bad, it is just how the world of business works.

Growths of industries in developing countries create working class jobs.  This class of jobs is both rudimentary and menial.  Some examples are textiles, agriculture, and manufactured devices.  They do not build human capital or financial gains; they are effectively powerless to better themselves.  Karl Marx mourns them as: “that class of modern wage labourers who, having no means of production of their own, are reduced to selling their labour power in order to live.”

These laborers in developing countries, who have opened themselves to free trade, are arrested by wage slavery.  Their occupations pay them just enough to live, but not a cent more.  Free trade, cut-throat capitalism, and nations full of alternative workers guarantee that payrolls will be capped at the living wage.  Budding domestic industries, termed infant industries, are unable to thrive because full-fledged foreign competition steamroll over them.  Once infected by free trade developing countries are in an unfavorable position to ever become developed.

Ayn Rand, the most important philosopher on capitalism, believes that free trade is along the optimal path for economics.  However, she also knows that under free trade, “the good of some men takes precedence over the good of others, with those others consigned to the status of sacrificial animals.”  Developed countries are benefited, while developing countries are left by the wayside.

In conclusion, free trade is not the solution for developing nations because it polarizes their populations into numbed working classes, trapped in loops wage slavery and human capital erosion until a new force, perhaps protectionism, stems the drudgery.  If not, developing nations are, “consigned to the status of sacrificial animals.”

Portugal in Recession: Case Study of the Failed Economic Policies of Europe and America

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Today, a prime minister resigned.  He was Jose Socrates of Portugal; he had been valiantly fighting for austerity measures that would have saved Portugal from seeking bailout.  He was denied by the Portuguese Parliament, in reaction he promptly resigned.  Now Portugal is in political gridlock as a new government is established.  With the failure of the austerity measures Portugal prepares to take on 140 billion dollars of bailout in the coming months.  The people are outraged and disheartened that their government has given them this economic headache for years to come.  Surprisingly, the fallout of the demise of Portugal had little impact on the European financial systems.  The Euro has continued to maintain a value above $1.40 dollars.  Spanish bonds, of which 100 billion are invested in Portugal, similarly were unaffected.  Europe will soldier on despite another country being gripped by recession.  However, many analysts agree unless policies are revised the European Union will suffer future crippling disaster across multiple nations.

Europe is an interdependent set of countries, when one is harmed they are negatively effected.  The damage from Portugal was minimal, however if larger countries fail the effects could be catastrophic.  Despite the many statistics that have determined that lower the taxes in times of recession actually hurts the economy, the industrial powerhouse Germany continues to push for sweeping, aggressive tax cuts which they call their “competiveness pact”.  These were the same tax cuts that played crucial roles in the painful recessions in Greece, Belgium, Italy, and Ireland.  This directly relates to macroeconomics; over the next several months we will see several more minor countries, possibly such as Estonia or Latvia, declare a desperate need for bailout as well.  Additional millions will become unemployed, some counties like Spain already have one out of every five workers being unemployed.  Europe will continue to be economic fertile as long as one of the major nations, France, Germany, or Britain, do not collapse.  There is no reason to believe any will at this current date.  There is a rocky road for Europe to climb, but they will pull through.

This financial conundrum that has enveloped Portugal is exasperating.  They are one of the euro-zone’s poorest countries, however at the same time they have no large unnecessary expenses.  They are comparable to America, who is one of the world’s largest countries economically but runs at a ten percent financial deficit.  In both cases harsh actions need to be taken to counteract the gathering storm of debt.  In Portugal they must take this dose of bailout and them strive to run a debt free government.  America, with nearing 15 trillion dollars in debt, has the same issue on a much larger scale.  A healthy government should only have debt if there is a direct threat to the continued survival of the nation, such as a painful recession or war. Portugal and America do not have healthy economies so they are both destined for an economic collapse.  The only hope is that policy makers take action against the tsunami of debt before it annihilates their countries.

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