Comment 28459

By Ted Mitchell (registered) | Posted February 05, 2009 at 14:29:42

Protectionism as a response makes the error that the problem is cheap imports, trade deficits etc.

That's the wrong problem. It's just a symptom of the real problem, which is passing the buck by externalizing costs.

This is the engine that drives globalization: in pursuit of lower prices, anything goes, and that includes whatever costs can be externalized, generally by exploitation that would be illegal in the importing country: -wages (artificially low by means of state control, unions not permitted, multinationals throwing their weight around in unfair contracts), -unsustainable drawing on resources (forest and crop practices in underdeveloped countries), -environmental degradation (air, water pollution, soil degradation rampant in the absence of laws limiting this), Don't forget the great facilitator of all this , cheap oil.

Yeah, there will be comments from the free market fairy talers that somehow this benefits the 3rd world countries, but you can guarantee they don't know the half of what really goes on and don't care to know.

So protectionism, if aimed at reducing the harm of externalized costs, while leaving those countries who have similar social and environmental standards as free trading partners, has merit. But it has to be surgical, consistent, and in cooperation with other nations.

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