The "danger" of protectionism
Sultan Bush, continuing his scorched-earth policy of 100% destruction, said today: "One of the dangers during a crisis such as this is that people will start implementing protectionist policies."
This is, of course, standard autistic economics. As long as the flow of currency units continues to increase, everything's fine. If all the taxpaying units starve, that's an irrelevant variable. Trillions of currency units continue to move from New York to the Swiss bank accounts of the Sultan's Arab masters, so we can drop the taxpaying units out of the equation.
Just look at the tariff policies of the major countries. Who has strong import protection? Korea, Japan, China, India. Who's been succeeding in recent years? Korea, Japan, China, India.
The economoid notion that protectionism hurts a country is clearly untrue today, and I strongly suspect it's always been untrue. The groundwork for the 1930's Depression was laid in the '20s when our farmers overproduced for export, using up dry prairie land that shouldn't have been plowed. When drought hit, the farmers were in trouble, and the trouble spread through other businesses. If export had been less tempting, the farm boom wouldn't have happened. The economoids continue to squawk about the Smoot-Hawley tariff as the cause of the Depression, but the snowball of disaster was already rolling full speed by that time.
On a deeper level, we have Polistra's broken circle.
When imports and exports are too easy, wages drop because manufacturing can be done elsewhere. When imports and exports are too easy, product quality drops because the business doesn't have to face its customers. (Can you spell Melamine?)
Open trade is fun for a while, but sooner or later you pay the price. And the hangover of the bust is far greater than the drunken revels of the boom.
Labels: the broken circle