Sunday, May 17, 2009

A Protectionist is not a Facist

I'm no fan of the BNP, however, due to an unfortunate coincidence of political opinions one of the main policiy positions I take (on protectionism) ends up being lumped in with the BNP. As demonstrated very well by the Tories Nothing British site.

The BNP has a hard line socialist economic policy, more in common with a Communist or National Socialist party than that of one qualified to deal with the current economic crisis. It is well documented that wages rise in a free market, protectionism reduces income and increases unemployment yet the BNP say:

“[T]he BNP calls for the selective exclusion of foreign-made goods from British markets and the reduction of foreign imports. We will ensure that our manufactured goods are, wherever possible, produced in British factories, employing British workers.

“When this is done, unemployment in this country will be brought to an end, and secure, well-paid employment will flourish”


I find it very distasteful because it attempts to tar what are essentially a fairly neutral set of policies relating to the prices of imports and the development of industry with the evils of facism. The Nazi's crime was not the introduction of tarriffs on certain foreign manufactured goods, that should be obvious. What is also problematic are some of the statements the Tories make here, for example:

It is well documented that wages rise in a free market, protectionism reduces income and increases unemployment

It is not well documented at all, for example, from 1875-1913 where Britain maintaned a 0% tarriff rate, per capita economic growth was a mere 1%, way behind the USA, growing at 1.9% and imposing an average tarriff of around 40% on manufactured goods during the same time period. The Tories statement here has no basis in fact, there are numerous examples of protectionism being used to further the economic well being of a nation's citizens.

A Sensible Debate on Protectionsm
Protectionism as a policy has been largely excluded from recent debate, a lot of myths have been built up about it and it has been tarnished by it's attachment to unsavoury political elements, even my comrades in the Labour party will stare at me in disbelief when I start enthusing over protectionism. This is unfair because it fails to take into account the sheer scope of policies that could be considered "protectionism", there is often talk of what's called beggar thy neighbour protectionism, but not all protectionism is like this. While a 50% tarriff might destroy demand for a particular good a 5% tarriff might not, while subsidising the production of a good might undermine foreign competitors, subsidising the development of an improved product is likely to be less distorting. There is also the issue of how we treat international movement of capital.

I feel the need for this kind of debate is vital because of a dilemma that developed nations face, as countries develop they traditionally move up the value chain producing goods with a higher value added (moving from say, textiles to motor cars for example). As other nations hit the top of the value chain we have had more competition in this area of the economy, the UK has adapted to this by moving to a more service oriented economy, but I believe that there are serious questions to be asked about the sustainability of this move, particulary since we have been running a negative trade deficit since 1984 and I don't think this can be ignored.

Another problem with the shift in the economy is that it has left large sections of the population unable to find well paid work. Although unemployment has been low for the past decade, many of the jobs in the service industry are not as well paid as old manufacturing jobs, in addition there is still the worrying figure of 2.7 million (?) people claiming incapacity benefits. The question really has to be asked as to whether continuing to support unrestricted trade is the best route to a secure future for the country.

3 comments:

Shuggy said...

Now why argue with people who seriously suggest that protectionism is a fascist policy? Such are historical and economic illiterates and not worth bothering with. Apart from anything else, protectionism as an economic policy obviously pre-dates fascism.

Having said that, I'm not really a fan. It makes sense in the stage of nation-building and I think some form of agricultural protection is inevitable but beyond this?

for example, from 1875-1913 where Britain maintaned a 0% tarriff rate, per capita economic growth was a mere 1%, way behind the USA, growing at 1.9% and imposing an average tarriff of around 40% on manufactured goods during the same time period.It would be a rather primitive reading of economic history to assume growth is a function of tariffs, to say the least. If the Tories want to be that ignorant, leave them to it - don't join them.

Given your view - which I find ahistorical - what is your position on the EU? It is undoubtedly with regards to agricultural product trade-diverting. Now, while some of this is inevitable, I think, surely you don't think it's tolerable that a French cow receives seven times as much subsidy from the EU as an African child?

Bertie Humbug's Ranto-O-Matic said...

Slightly off topic this but what you lefties need to understand is that the rise of the BNP is your fault.

You see your corrupt adminstration deliberately let in millions of immigrants and funnily enough people have got fed up with it.

Because of the power of your own political correctness movement the Conservative leadership are too wet to talk about the subject for fear of being labelled racist. Then along come the BNP who will talk about it, and lo and behold they get votes.

Any part of this you fail to understand?

Andreas Paterson said...

Hi Shuggy,

On this question:
Now why argue with people who seriously suggest that protectionism is a fascist policy?Cos it gives me something to write and because it's surprising how many people will believe ignorant bull.

On the rest - I don't believe that growth is a function of tariffs, or or protectionism more generally I simply wanted to point out that the claim that wages rise in a free market was spurious. If that wasn't clear then I believe it is now.

The connection between government intervention and growth is more complex but I've got something with a more theoretical approach. Will say more on the EU at another time, need sleep now.