Politicians play to their voters. That is a fact of political life. It sometimes means that we are tempted into taking up positions that are superficially attractive to a section of the electorate but which may not be in the best long term interests of the whole nation.
In tough economic times, the temptation becomes more intense as we see industries struggling and voters’ jobs at stake. It takes guts to take decisions which work for the long term health of the national economy and not to give in to the heartfelt pleas of struggling industries.
Protectionism is what happens when you give in. It is what has been happening in the G20 over the past twelve months, despite the avowed support by leaders for free trade. They are all subtly protecting their own industries’ in the short term, to the detriment of long term trade and global prosperity. Researchers at the World Bank say that, since the last G20 leaders' summit in Washington, 17 of the G20 countries have implemented 47 major measures whose effect is "to restrict trade at the expense of other countries".
We have been here before. In the period 1929 – 1932, International Trade fell by 70%, largely as a result of US protectionist policies and the backlash they created across the globe. The Economist Martin Wolf notes that “this collapse in trade was a huge spur to the search for autarky and Lebensraum, most of all for Germany and Japan”. The result was poverty, genocide and a war that blighted a generation.
Advocates of protectionism say that this is all about helping keep jobs, but actually protectionism benefits no one. It damages imports that local businesses rely on and ends exports that bring in foreign wealth. Established economic reasoning, historical experience, and empirical studies have repeatedly shown that protectionism creates poverty, not prosperity. So we are all losers when protectionism rears its ugly head. That’s why we all have a duty to fight it now.
For centuries the evidence has all proved that despite some failings it is free trade that spreads wealth, and gives people a chance to better themselves. Trade saves lives by increasing prosperity and extending it to more and more people. The evidence that freer trade promotes prosperity is simply overwhelming: and so it is not over the top to state that free trade enables ordinary men and women to lead longer and healthier lives.
Without a doubt, free trade increases material prosperity, but its greatest gift is not easily measured with money. That greatest gift is lives that are freer, fuller, and far less likely to be scalded or destroyed by the atrocities of war.
The Atlas Economic Research Foundation and the International Policy Network have put together a petition begging governments of all nations to resist the calls of the short-sighted and the greedy to raise higher the barriers to trade. The petition also calls on policy makers to tear down current protectionist barriers to free trade – and you can sign it online here.
Now is not a time for craven policies designed as temporary palliatives. We need tough love: let's keep our industries fit to compete globally so that our industries emerge stronger from the recession rather than reliant on government subsidies. It is not an easy message but voters recognise common sense when they see it. So lets not cease to remind them that the rewards of winning this argument will be greater prosperity, richer lives, and a greater chance of peace in the world.