Myriam on why protectionism sucks:
Protectionism is bad because it makes everyone poorer.
And while you might think you’re happy being poorer if you get to help a factory worker keep their job, by helping your neighbour you’re hurting both the poorest in your society (those who can no longer afford manufactured goods) and the poorest in the world (who would have a manufacturing job paying wages several times higher than those they would get otherwise).
All in all, protectionism for reasons of social equity has a lot of unintended consequences, which leads most economists to think it’s generally a bad idea.
But that consensus doesn’t seep down into the broader political discussion. New polling by Essential Research finds most support some form of protectionism for Australian manufacturers, with the most popular methods being partial nationalisation (joint ventures with government), and commitments on a personal and government level to buy Australia-made products. More than half (66%) support “protection from overseas competition” (which, despite the question asked, isn’t really a method of protection rather than its definition, but anyway).
This isn’t really surprising. Free trade is one of those policies that do vast amounts of good for the world, that also go against people’s basic instincts. Free trade grows the economic pie (see: comparative advantage) when most people see the global economy as a zero-sum game. And anyway, the out-of-work manufacturing worker in front of you is a lot harder to ignore than the millions living in absolute poverty overseas.
Nobel-prize-winning economist, NYT columnist and general leftie Paul Krugman wrote this excellent piece a few years back about what trade economics students need to know about international trade. He’s as relevant now as he was then.
