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Protectionism

Protectionism is when the government pushes it citizens to buy home made products. We have all heard the protectionism slogan “Buy American” before. Governments may achieve protectionism by levying taxes on imports from other countries so Americans are forced to buy cheaper home made products. The U.S. government has enacted many protectionism clauses in the recently passed stimulus bill. The Democrat led Congress feels this is a good way to get the U.S. out of a recession. Once again the politicians that passed this law are making a huge mistake. The first mistake is that we did not learn our lesson when protectionism policies of the 1930s failed to work. The second mistake is that protectionism is a two way street. If the United States places tariffs on imports from other countries, then other nations will do the same on U.S. imports to their countries. The U.S market has 300 million people; the global market has over 6 billion people. Thus, protectionism may cut the potential market share of a company by over 90%. The third mistake is that protectionism breaks many trade agreements. For example, the stimulus bill broke a NAFTA agreement that allowed Mexican truckers access to all roads in the U.S. to deliver their products. Now Mexico is retaliating by taxing U.S. goods and services into Mexico. Many were against Mexican truckers driving our highways when the NAFTA agreement was passed such as the Teamsters Union because it took work away from Americans. As it turns out, over the past 15 years the Mexican trucks and truckers had a better safety record than any Teamster driven trucks. The fourth mistake is to use protectionism as a means to meet a political agenda such as global warming. For example, the U.S. government is considering taxing any imports from China that do not meet carbon emission standards. Once again that sounds great, but getting into a trade war with China will devastate both countries economies. Both China and the U.S. need each other to have healthy economies. Besides, China holds over one trillion in U.S. treasury bonds and they are the main country financing our debt. If they stop buying our treasury bonds it could spell doom for the U.S. economy. Yes, protectionism sounds great, but let’s think this through before enacting it. It really does not make sense. After all, did free trade get us into this global recession? The Democrats may believe so, but the contrary is true. Yes, Democrats wrongfully blame NAFTA or other trade agreements for jobs going overseas. Jobs are going overseas because our corporate taxes are one of the highest in the world. Free trade agreements such as NAFTA have bolstered the economies of the U.S., Mexico, and Canada for many years. Free trade agreements had nothing to do with people racking up record debt on luxury items and homes they could not afford. Free trade agreements had nothing to do with incompetent companies handing out loans to questionable borrowers. Free trade agreements had nothing to do with high government taxes and the collapse of governmental financial institutions: Fannie or Freddie. If protectionism did not work in the 1930s it certainly will not work in this day and age where many global economies such as India and China are much more powerful to fight protectionism policies. Let’s face facts: any protectionism clauses in the stimulus bill are nothing more than counterproductive and will keep us and the world in a recession longer than needed.

 

Blog Site: http://patrickbohan.blogtownhall.com/

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

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