Political Compass #15: Protectionism is sometimes necessary in trade.

Prior to WWI trade was not nearly so interconnected as it is today as can be seen in the fact that when war errupted none of their economies immediately collapsed. You are forgetting that most of the major powers had their colonial possessions which they drew a great deal of their wealth and ‘trade’ from (i.e. the colonial posessions were converted into vertical manufacturers producing a very limited set of goods FOR their various masters). Trade BETWEEN the great powers prior to WWI, while it might not have been insignificant, was nothing like it is today between the modern great powers. National economies are completely dependant on trade with each other now. This has never been the case before, to this degree, in history as far as I know.


I suspect I’m more of a free trader than you; I simply believe you haven’t answered the question properly. Not our fault it wasn’t written well.

That is not what the proposition said. If it’s your position that WTO sanctions are necessary sometimes, then you agree with the proposition “Protectionism is sometimes necessary in trade.”

Another good example - actually, a better example - would be the current prisoner’s dilemma situation in agricultural subsidies. I personally think that the West’s absurd level of protection of its agricultural sector borders on a crime against humanity, but looking at it as an individual country - say, from Canada’s perspective - there’s not a lot we can do if all the other countries in the West are insistent upon protectionism. We have no choice at this time but to be protectionist. Hopefully someday we can all agree to agricultural free trade, but Canada can’t go it alone. So protectionism is necessary right now.

Agreed 100%.

It’s not. And I believe the UK’s (or EU’s) farm subsidies are also unnecessary, even if removing them leads to financial hardship.

Sorry, I just realised you referred specifically to WTO sanctions, not just WTO recognition of certain protectionism as legitimate. The WTO agrees sanctions only against those states it deems to have contravened international commercial law. I do not think that this is “protectionism in trade” in any meaningful sense.

If she chooses to do this, however, it means she probably has even worse alternatives…

I think part of the problem with this logic is the conflation of “opportunity” and “necessity”. People have to work sometimes to avoid, say, starvation, especially those in the unskilled labor force. Since jobs are in high demand, and the need for work so dire, it is possible for business proprieters to take advantage of the precarious position of unskilled laborers by imposing inhumane working conditions, for the purpose of reducing costs. This cost reduction usually translates into increased profit margins, but in unregulated markets, often the laborer does not benefit from these increased margins, only proprieters. Hence you create two populations of losers: The offshore unskilled laborer, who does not realise any advantage despite their being highly competative in the global workforce, and the U.S. unskilled laborer, who cannot compete with offshore labor because of the very labor laws they are supposed to benefit from. So, in global economies, labor legislation in the developed world, enacted to protect workers from being inhumanely used, creates a race to the bottom in offshore markets, where regulation is lax or nonesxitent.

The only possible solutions I can think of are to either abandon labor laws domestically, or demand they be enacted in foreign markets with the threat of tariffs. It’s true that American and European markets have been able to adapt reasonably well to global labor climates and economies by shifting unskilled labor to service, say, the tech sector vs. the textile. But the fact remains that the percentage of the high-school-educated labor force in the U.S. involved in manufacturing has shrunken dramatically since the dawn of global economies. The prospects for those in the U.S., then, who do not have a college degree, have deteriorated accordingly. Where before the average American laborer could look forward to a manufacturing job that allowed them to develop marketable skills and earn good benefits, now unskilled labor is being shifted more and more towards, say, fast food, on other forms of menial labor that cannot be easily taken “offshore”. Textile, automobile, paper, even now tech jobs, just to name a few, have rapidly been exported from the US. In the past, these jobs meant a good life for the American laborer. The grand hypothesis of globalization we have been fed is that American labor could be shifted to equally desireable jobs, as economies dictated, and offshore labor would reap benefits due to a greater distrubution of wealth. Unfortunately, the result so far has been fewer good job prospects for labor at home, and the lost jobs being done overseas under appalling conditions. The wealth redistribution has only been upward, not outward, because executives can take advantage of the fact that foreign labor markets are not regulated nearly to the extent that domestic markets are.

Given the choice of either abandoning relatively high domestic labor standards, or encouraging better standards abroad, I would opt for the latter. It’s possible that the lives of foreign laborers could improve incrementally as labor standards abroad improve, they could still remain competative, and the relatively highly-educated and skilled American laborer might still be in demand. The only “losers” would be business owners who are less able to benefit solely from increased profit margins.

I know of no way to affect such changes except by the use of tariffs, which amount to protectionism.

You don’t seem to understand that there HAS to be a large wage differential to attract jobs to 3rd world countries. There are too many other costs due to infrastructure problems, government [in]stability, currency hedging, etc. to support high wages. The most likely outcome to your plan is that the jobs would not go there in the first place, and the woman in Guangdong province would be back out in the rice paddies doing stoop labor 16 hrs/day on someone else’s property.

You cannot legislate prosperity. If you could, we’d have done so long ago.

I’m not sure why you think this is true. Shortly after the dawn of the industrial revolution, when labor shifted increasingly from rural/agrarian to urban/industrial, a massive differential between the wealth of proprieters and laborers developed. Not only that, the average laborer experienced working conditions that were exploitative and inhumane. A fair amount of turmoil ensued. The upshot, in democracies, was enactment of labor-protection laws that did a pretty good job of redistributing wealth and protecting workers’ rights without totally breaking the free-market system. In totalitarian dictatorships, the revolution led to the rise of Leninist, and more disturbingly, Stalinist communism. The undeveloped world had either long-ago been colonised at that point, and wound up like India, or continued on essentially unchanged from pre-industrial agrarianism.

Markets have become increasingly global throughout this period. The level of globalism now is without precedent in human history. I think, legislatively, we’re in untested waters. It’s hard to predict with certainty what would happen on the most macro level, but the more micro the economic paradigm, the more it seems to me that some level of legistlation, even in relatively laissez-faire economies, can have a profound impact on general prosperity. I really can’t understand how any other conclusion could be reached, given 20th century history.

Put it this way: If you legislate higher wages, better working conditions, more vacations, etc in emerging nations you are going to drive the cost of labor up in those nations…right? So, if you drive the cost of labor up, what benifit is there for anyone to move their manufacturing to your developing nation, in light of the fact they will have to deal with a lot of other headaches like language, possibly poor infrastructure, etc? Why wouldn’t they just keep operations here in the US in that case? Course, thats going to drive up the costs of their products for all of us…and its also going to mean that instead of that person in China, India, etc, are NOT going to have any job at all, instead of a job making 50 cents an hour or whatever. Which do you suppose most of them would prefer?? Also you are imposing OUR standards on them…do you suppose they will love you for it?

The theory is that, eventually, as more capital moves in to these emerging countries and more manufacturing moves in (as well as emerging ‘home grown’ companies), labor will start to become more valuable and companies will have to compete for it. THIS will drive up salaries as well as working conditions. Pie in the sky? Well, explain why this model is whats happened every time in the past. One has only to look at the last generation of ‘up and coming nations’ like Japan, South Korea and some of the other pacific tigers to see the progression (or the previous which included the US). Eventually, as a country moves from being an ‘emerging nation’ to full industrial status the cheap labor oppurtunites will move to OTHER emerging nations where they still have plenty of cheap labor, and the process will repeat.

I see no reason to think that 20 years from now both China and India will be full fledged industrial powers in their own right, comprable to any of the current first world powers from a trade and standard of living perspective…and with consumate standards of labor and wages. As you said yourself, we all went through the same process, here in the US, in Europe, etc. We had our time of sweat shops and 50 cents a day labor, just like Europe and Japan did…and like China and India are having now. No one forced US to better labor practices, nor the Europeans nor Japan…it came internally in every case. Why would you think that forcing others is a good idea?


Er, that should have been No reason NOT to think that 20 years from now both China and India will be full fledged industrial powers in their own right… :smack:


I think the biggest reason was mentioned in my post: In the aftermath of the birth pangs of the industrial revolution, economically advanced countries essentially went two ways: Capitalism as we know it, or Communism as, say, China and Russia knew it. I much prefer the Western paradigm. I’m a fan of capitalism, believe it or not, so long as it isn’t completely unchecked. Everything about world history has taught us that the only way Communism works is through deadly oppression (I’m guessing Stalin and Mao killed about 30 million people between them, based on info. posted right on the SD), and even then, after a while, it falls apart. Russia practically destroyed itself. What will happen to China?

It seems to me capitalism operates very well in democracies, where people have a say in how they are treated, and their concerns can be dealt with peacfully through election or referendum. In totalitarian states, things don’t look so rosy. I can see no reason to have faith in the idea that global capitalism, as it now exists, will eventually lead to prosperity in nations that are not democracies. From what I’ve read about China in places like Buisiness Week, it’s a market frought with peril. The place is truly foreign, from a modern Western commerce perspective, and it’s not entirely an exaggeration to say buisiness prospers there often by dint of piracy, cronyism, bribery, and other forms of blatant corruption. Government is fully culpable in this, and though the higher-ups in the Party pay lip-service to fair-market practices, their behavior clearly indicate that A) They can’t be trusted, and B) They have little incentive to change.

Is it possible to peacfully provide some incentive? And might the side-effect of imposing fair-market practices by holding other nations to some modicum of those standards have any better chance of benefiting laborers than the stewarship of modern-day robber barons operating in conjunction with corrupt and oppresive dictators? I wonder.