What Protectionism Looks Like

Having re-read E.D. Kain’s original post on economic nationalism, I’m struck by the disconnect between his (laudable) concern for preserving US jobs and the real political implications of a protectionist revival. Viewed from a certain perspective, we’re actually quite lucky that the business lobby has internalized the logic of free trade. This is particularly surprising because on other issues – tax credits, subsidies etc. – Big Business is generally enthusiastic about securing as many special favors as possible. Now it may be possible to recreate some benign form of American autarky – I’m not a trade economist, so I really don’t know – but our political process probably precludes this from happening. A more plausible legislative outcome is something along the lines of our awful farm bill, which is not a program I’d care to replicate.

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3 Comments

Filed under Economics, Politics

3 responses to “What Protectionism Looks Like

  1. publiusendures

    Will:

    Good point. If and when ED starts the series on protectionism, you can expect me to have quite a bit to say on it. I look forward to having your support :). I have some pretty good sources on the issue of corruption in Japan, so it should make for an interesting discussion.

  2. Clint

    While I agree with your sentiment, I tend to think there is a pretty strong correlation between industry size and susceptibility to nationalist/protectionist/interventionist tools (from trade barriers to subsidies to bailouts). The truly representative umbrella groups for big business (probably limited to the Chamber, the Business Roundtable, and NAM) are fairly consistently in favor of rational free trade, but also rarely devote resources to individualized handouts. This is probably just due to the many competing interests within such coalitions and the lowest-common-denominator approach they must take. I think the opposition to free trade (and also support for other interventionist tools) usually comes from smaller, better defined constituencies (steel, individual ag sectors). An additional element worth considering is regional/geographic/cultural considerations. Mid-western farmers or rust-belt steel producers lack the exposure to international trade to be willing to accept the competition. On the other hand, you have electronics interests in the Northwest and California who, despite the tremendous challenges presented by Asian companies, have fully embraced reduced trade barriers due to increased regional integration. There are several significant outliers (Caterpillar is perhaps the strongest individual proponent of free trade). It appears similar to the tendency for highly homogenized regions and states to overwhelmingly oppose freer immigration policy; a lack of exposure, rather than careful consideration, motivates much of the disdain.

  3. Clint –

    I’m in near-complete agreement with your analysis (though I tend to think Midwestern farmers rightly fear the effects of global competition). My larger point is that if protectionism ever becomes politically potent, individual business lobbies are likely adjust their political tactics accordingly – ie they’ll push for protectionist measures that suit their particular needs.

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