« Greenspan's Irrational Exuberance and Asset Price Targeting | Main | More Cassandras »

Friday, December 08, 2006

Protectionism's Winners and Losers

From The Economist:

The perils of protectionism, The Economist: Peter Mandelson is an avowed trade liberal. So it is somewhat embarrassing that as the European Union's Commissioner for Trade, he has presided over the imposition of punitive duties on a wave of Asian imports. ... But on December 6th he had the chance to repair his liberal credentials when he launched a green paper on the EU's trade-defence policy.

The EU's trade-defence rules, which determine when it can impose anti-dumping, anti-subsidy and safeguard measures, were drawn up a decade ago. But they are beginning to show their age. Global supply chains have stretched round the world and many European companies have outsourced production to Asia. As a result, more European companies are being hit by the EU's own retaliation against unfair competition. That has pitted Europe's retailers against some of its manufacturers. As one retail boss puts it, views diverge widely: “They [the manufacturers] see China as a threat and we see China as an opportunity”.

Mr Mandelson's exercise is a chance to rethink what policy would do most good for Europe's economies. He wants the EU to look again at the “community-interest” test—that anti-dumping duties can be introduced only if they are in the wider interests of European business and consumers. Retailers complain that the test is in practice biased towards producers. ...

Here's a question. Many of you favor protectionist measures to protect jobs, and that's understandable. But as the article notes, there are many businesses that benefit from importing cheap goods from foreign countries to sell here, i.e. the businesses all along the import supply chain (which is far more than the employees on the floor at Wal-Mart). And those are benefits over and above the benefits to consumers from lower prices.

If we impose protectionist measures, what about the employees of these businesses? Do their jobs count? Are you willing to tell a dock worker, a truck driver, a rail worker, a worker at Wal-Mart, their managers, the associated support personnel such as accountants, the owners of the import businesses that will fail, etc. that the U.S. would be better off if they were unemployed so that workers in manufacturing could be employed instead? What would you tell these workers if they asked you why you want to take their jobs away? I think the answer might be that the new jobs would be better jobs, but what makes you so sure that if you try to turn back the clock now, the jobs will in fact be better?

    Posted by on Friday, December 8, 2006 at 12:05 PM in Economics, International Trade, Policy | Permalink  TrackBack (1)  Comments (70)

          

    TrackBack

    TrackBack URL for this entry:
    http://www.typepad.com/services/trackback/6a00d83451b33869e200d83462205c69e2

    Listed below are links to weblogs that reference Protectionism's Winners and Losers:

    » Protectionism's Winners and Losers from EconWatch.com

    [Source: Economist's View] quoted: The perils of protectionism, The Economist: Peter Mandelson is an avowed trade liberal. So it is somewhat embarrassing that as the European Union's Commissioner for Trade, he has presided over the imposition of puniti... [Read More]

    Tracked on Friday, December 08, 2006 at 09:55 PM


    Comments

    Feed You can follow this conversation by subscribing to the comment feed for this post.