Protectionism: Past and Future
I rarely agree with the classically liberal (i.e. libertarian) The Economist magazine. But if they can openly agree with Marx on the revolutionary nature of the bourgeoisie (“Two Billion more bourgeois“; Feb 12, 2009), then I’ll concur with them on the dangerous possibilities of a return of American trade protectionism. And that’s where our agreements end.
The democratic left should be against the “Buy American” provision in the stimulus package. Improving the working conditions of Americans rests on not cutting off trade with the rest of the world. Our grandparents might remember the “Hawley-Smoot Tariff Act” during the Great Depression. This bill increased tariffs to Civil War levels. A domino effect followed, with other states raising tariffs. Global trade fell and the economic crisis worsened.
We say “socialism will be international or it will not be.” The same global appeal applies to the living standards of workers. A stimulus bill that advocated for fair trade such as in our Renegotiate NAFTA plan would not only be morally better, but have greater viability. Even though the “Buy American’ provision provides some short-term employment in the U.S., a fall in international trade will inevitability hurt workers elsewhere. What good does a few jobs do if more have no work?
Protectionism is a favorite project of right-wing populists – a political strain that this online magazine has constantly rallied against. Blaming immigrants and global trade for the plight of American citizens is no new trick. Who are the next targets when Obama administration does not stop (or worse, promotes) anti-global trade initiatives? Blacks, Chinese, Jews?
I believe in “market socialism” — an economic system with markets and competition, but which is strictly regulated by the state in the interest of fairness and to secure workers’ rights. The democratic left needs to push for subsidies for failing American industries such as other countries do to keep workers employed. It’s not a “free” market if one side has such a substantial advantage over another. We don’t need to cut off trade to make this happen.
Just as we know truly free markets do not exist, we also understand there are better ways to support American workers by keeping good jobs here and rebuilding our economy. So, yes, we can encourage people to “buy American” through incentives. We should not force people to buy American, just as we should abandon neo-liberalism. We need to embrace fair trade, democratically supervised regulation, and state intervention to assist the auto industry while making it more democratic and receptive to environmental and consumer needs through such strategies as the building of smaller cars.
We should not reward capitalists for their failures nor should we punish workers for their employers’ mishaps. One critical way to defend worker rights is to build grassroots pressure to pass the Employee Free Choice Act. With a stronger labor movement provides a larger constituency that monitors and can rally against capital’s attacks on long-term economic stability. We must fight for EFCA and move towards fair trade – not protectionism.
I’m against trade protectionism and would even say that right-wing populism is more dangerous than neoliberalism. One note though, The Economist is neoliberal, not classically liberal. Old-school classic liberals (in the European sense of the word) were against bourgeois democracy, since they thought that once universal sufferage was achieved the masses would step towards socialism by implementing things like the progressive income tax.
Neoliberals support an income tax (though they don’t like it to be very progressive to say that least), and support democracy, there are more differences between neoliberalism and liberalism than that but those are some.
Neoliberals support competitive elections between at least two factions of the “business community.” That’s about as far as their support for democracy goes. They can handle universal suffrage as along as the working class has nothing to vote for, rather than simply against….
I think I share David’s distaste for nationalist posturing but I have a bit of a different take on this. At the risk of festooning myself in the patriotic regalia, I actually see no real moral, political or economic problems with a “buy American” provision in a domestic stimulus bill.
I don’t think this is a question of trade policy or tariffs, it’s a question of how and where we choose to invest public money. “Buying American” isn’t any more protectionist than subsidizing struggling American industries or investing in domestic infrastructure. If favoring American building materials and other goods is off the table, the U.S. government might as well dedicate stimulus dollars to rebuilding bridges in China or schools in France (not that that would be a bad idea, indeed, we probably need a global stimulus plan and soon).
The cranky Europeans and their trade reps (almost as sanctimonious and self-righteous as our own) could easily make the case that we should coordinate a global stimulus plan, rather pursue than a patchwork of national strategies. But in many cases, the Europeans aren’t even trying to invest enough in their own economies thanks to the pathological inflation-phobia of their elites.
If they consider a “buy American” provision to be an act of trade aggression, they should feel free to take some appropriate retaliatory measures and invest more in their own domestic industries, which they should probably be doing in the first place.
China, apparently, is responding to the recession with some serious money. This will be good for China and good for the world. But we shouldn’t expect China to buy American steel (or Danish legos?) for their public works projects, not unless it’s part of an international arrangement.
This is an excellent article David, and it reminds me of one of the first ones I wrote here on the importance of global labor interaction. It could be the one thing that most directly addresses the negative effects of globalization. http://theactivist.org/blog/irreversible-globalization-or-workers-of-the-world-unite-no-really-these-titles-do-relate