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November 03, 2003

Protectionism

Yesterday I wrote that I was not in favor of protectionism re: off shoring jobs. I expressed that I felt we should spend our energies exploring how to replace those lost jobs. I received a comment from Kristopher John, this post began as a reply to his comment. Unfortunately it grew somewhat long, but then this is not an easy topic and it is highly charged as well. So here then is Kristopher’s comment and my expanded reply (just thinking out loud really) to him.

“The problem with putting the debate in terms of protectionism and globalization merely pits workers against each other. And what?s wrong protectionaism anyway, with protecting your job? There’s a long history of protectionism in our country, even in the face of recent globalization. Take a look at any random agricultural subsidy to get a good idea. Corporations don’t care about us here in the states or the people whom they long to exploit in the third world. Corporations care about one thing and that’s getting the most product for the least outlay. We must start protecting ourselves, since those in DC sure as hell won’t.

Posted by: Kristopher John

There is nothing wrong with protecting your job, but if you are in a job where it can be done far cheaper off shore with little or no loss in quality, then in my opinion, most likely you are fighting a losing battle. The only place that I can see that this may not be the case is if you work for a small or mid-sized company that has roots in a community—where community involvement and better understanding of customers can overcome moderate price pressures.

Does it tick me off that many “American” companies now have much of their manufacturing, support, engineering and programming staff offshore? Sure, like I originally said, emotionally, I very much sympathize with protectionism. When I read about another 2,500 programming and engineering positions moving offshore, my immediate gut reaction is anger and desire for protectionist policies. Once I calm down and think about it though, I also realize that consumers continue to expect and demand lower prices (in part driven by the economy) and stock holders continue to demand higher returns. You are right, corporations will look for and take the most product for the least outlay so that they can maximize returns for shareholders while providing themselves maneuvering room to respond to consumer trends. Jobs are now on the table as a “product”. Will you pay an extra $250-$300 for say a Dell so that Dell can afford to have it’s entire engineering and support structure back Stateside?

As for protectionism in our country, you are right there is a long history of it. However, like the agricultural subsidies you point to, I think that most of the protectionist strategies have had, at best, mixed results. Most have been spectacular failures. We have long used tariffs, duties and trade limits as economic (but more often as political) weapons with our trading partners of the world. Many of them have done and continue to do the same with us. Just because it is historically evident does not mean that it is sound policy either in practice or in principle. In my opinion, it is not sound in principle.

If, as I believe, we as a nation are for free and open markets, then we cannot endorse economic protectionism. The two appear to me to be mutually exclusive. Protectionism can be effective in saving some American jobs, but if the jobs require “saving” from foreign trade then how valuable are they to the economy overall? (Obviously, I am not talking about the individual worker’s value, or the value of that job to the worker and his family—and remember, I am one of those economically displaced, currently unemployed technology workers with a family to support.) A good economy will redirect those who are unemployed to new jobs where they can be productive. Even in my current situation, maybe even more so because of it, I believe that free and open trade is the best economic policy for consumers and for our nation’s economy. Part of the problem, however, is that most politicians pay only lip-service to free trade, usually conditioning it as “fair” trade. For each political group and individual “fair” trade is most often trade which does not in any way harm it’s special interests in the short term. The best example I can think of is military budget cuts. One highly predictable event comes with every round of military budget cuts—base closures and a long drawn out and politically heated fight over which bases will close. No Senator or Representative will allow that the base in his district is the least beneficial to keep open. Special interests and “fair” trade emphasize protection of local existing jobs over improving consumer choice and long term economic growth.

Posted by Eric at November 3, 2003 02:06 PM | TrackBack
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If the direction of our economy is free trade and global markets, leaving many displaced workers in the wake of lower prices and higher stock returns, what will our areas of emphasis be regarding production in order for the U.S. to remain competitive in a world economy? Will we focus on service jobs and or production in other industries, and if so what industries will we focus on?

Posted by: Justin Meredith on December 5, 2003 12:39 PM | Reply to this

That is the question isn’t it? I sure don’t have the answers, but I don’t think that focusing on service to much is the right answer. While services are marketable and even profitable, I believe that for a large economy such as ours we need to have tangible products which we manufacture and supply to other economies. What industries will provide those tangibles and what those tangibles are I have no idea.

Posted by: Eric on December 5, 2003 02:00 PM | Reply to this

semicolon

Posted by: mike on January 5, 2004 04:38 PM | Reply to this

protectionism should be sold to children under 3 due to its acidic nature and its ability to kill a man before he blinks.

Posted by: Robert on January 5, 2004 04:40 PM | Reply to this