Tuesday, December 01, 2009

The practicalities of protectionism...

It's hard enough to get buy-in for open markets when things are humming along economically.  Remember the drawn-out disappointment as ag stalled the WTO talks.  But expecting any career-minded pol to even consider exposing his dstrict to foreign competition is pretty unrealistic.
I think this illustrates one of the reasons why conventional, market-oriented neoliberal types ought to be more concerned about the labor market situation. If you convince people that it’s not possible for monetary authorities to boost employment, and that it’s unwise to use fiscal policy to boost employment, then it starts to look irresponsible for politicians not to use trade restrictions to protect the jobs of people in their state/district. When an economy is near full employment you can say trade makes the pie bigger and people who lose their jobs will get new jobs. But we’re years away from full employment—which both the Fed and the White House seem to think—then getting laid-off is catastrophic.
The trade restrictions put in place as a response to the Depression exerted a small-but-meaningful drag on growth year after year after year for decades. Going back in that direction would have very deleterious long-run consequences. But it’s going to be extremely difficult to avoid if we can’t produce a healthy labor market. [More]

It could be even if you really study history and think you understand what folks did wrong previously, there are powerful forces pushing you to repeat anyway.

1 comment:

Anonymous said...

COOL is classified as what kind of unfair trade restriction -protectionism???...we hurt-destroy canadian markets and cut off supply of weaner pigs too our mid-west producers,,,for what reason?? --regards-and great that your harvest is finished--are you 100 % corn?-regards-kevin