Four Perspectives

Pin It Education is a progressive discovery of our own ignorance - Will Durrant

Have I mentioned that I’m in school? I mean, I work at a school, so of course I’m “in” school. But I’m also going to school – to college. So basically I’m paying for the privilege of spending 3 to four hours every weekday and 10 to 12 hours most weekends reading, researching and writing about various and sundry subjects from literature and Reasoning to Constitutional Law and Political Science.

The latest course I’m working my way through is Economics. Before the end of September I have to watch about 100 lectures online (more or less) in the effort to learn enough to pass a test and also write three more papers. So of course I am in the middle of writing one of those papers right now and it’s pretty much all I can think about. It’s also my day to hit the blog and, to be honest I’ve got nothing…nothing at all on the brain but Protectionism vs. Free Trade – and frankly not as much on the brain about that as there should be either. I need some help. I need some free association writing to get the juices flowing - the gears churning - the batter blending because I MUST get this paper finished before the end of the week. So I’ve decided to stop fighting my mental trend, kill two birds with one stone, and send some of my academic thoughts into the void. I promise this is in no way a political statement. At this point I could give a toss about cheap goods from China and I’m not sure what I’m for or against except that I’m FOR getting this paper done and AGAINST wasting my tuition money by not passing the course. I just need to attempt to fill the void with something, anything that gets me going in a direction – any direction. So what do you think? Are you up for a little Academia? Yeah, me neither, but here goes.

As I mentioned this particular evaluation (the official name given to the assignments) asks students to evaluate the justifications either for protectionism economic policy or for free trade. I am supposed to describe the justifications for both of these theories and then defend or support one of the positions, based on both macroeconomic theory and personal opinion (sounds exhausting just talking about it doesn’t it?). Well, of course I have been doing a lot of reading both for and against each position and find that I am having a difficult time attaching my personal opinion to an entirely free trade market or to a strong protectionist system (another reason why I why I would make such a lousy candidate for office – innate wishy-washiness).

Protectionism generally keeps the US out of global markets and keeps foreign products from being imported. Free trade, in a nutshell, is an open market where the best price makes the rules. Most discussions I have read regarding free trade seem to see “protectionism” as a dirty word. However I cannot come to the conclusion that free trade is always good or that protectionism is always bad. Most “free-traders” seem to conclude that global competition is a good and valuable outcome of a free market system. But what are we competing for exactly? Shouldn’t we be competing for a good standard of living for our people? What is the value of competing to lower the incomes of working people? We have options if we truly want to be more internationally competitive, such as moving back to child labor. But didn’t we spend decades implementing policies to reject that type of option? From what I understand there are two basic methods to make products cheaper for the consumer. One is to increase efficiency, which everyone seems to agree is a good idea. The other is to reduce environmental standards and employment standards. Reducing the wages paid for a given amount of productive work is a lowering of standards, not an increase in efficiency. Free trade may encourage domestic industries to work towards the most efficient production methods, but is also creates a competition to lower standards. Of course, there are real gains from trade, but there are also benefits in maintaining a degree of local self-sufficiency. During the course of my reading, I came across the name of John Maynard Keynes quite often. Keynes was a British economist whose ideas or “Keynesian thought “ has enjoyed resurgence in the wake of the most recent economic crisis. In 1933, Keynes wrote an essay on national self-sufficiency. While I do think that the theory is idealism run amuck, there is still an interesting idea at the core. "I sympathize therefore, with those who would minimize, rather than with those who would maximize, economic entanglement between nations. Ideas, knowledge, art, hospitality, travel, these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible. And above all, let finance be primarily national." (Keynes) This quote clearly comes down on the side of protectionism which, as I said, I am not entirely convinced is always good policy. Being raised in the cold war years, anything but straight-forward capitalism conjures memories of communist regimes. But should industry be allowed to fail if it means the loss of thousands of jobs and untold damage to the economy? This is an especially relevant question in the wake of the recent Government bailout of the U.S. auto industry. If we truly believe that free trade is good because it fosters competition and allows the best goods to be sold at the best price – the US auto industry should be a dead horse - so to speak. But one does have to consider, not the trickle down, but the deluge-down of economic impact the failure of that one industry would have on the economy overall. It could be argued if we as a nation had implemented strict protectionist measures and concentrated our purchases on domestic consumption in the auto industry rather than the influx of foreign imports, the bailout would never have been necessary. Once again I realize that this is idealism run amuck because one could also argue that the bailout would never have been necessary if GM had just built better cars.

Is it even possible to be a largely self-sufficient country? Perhaps not an autarky, (a new word I learned in the course of my reading – yes, a real word even though it sounds like some sort of hybrid fowl for holiday roasting), but an economy that spreads the wealth of our nation largely among our own industry rather than competing for the lowest common denominator. Capitalism is at the heart of the United States economy and philosophy. Implementing protectionist measures that would encourage and actualize this kind of internal self-sufficiency is hard to imagine. As things stand right now, I think the debate about and hopefully the balance between free trade and protectionism will be with us for a long time.

Hmmm…some of that doesn’t sound too bad. At some point though, I probably ought to decide what I actually think about all of this. I do drive a Chevy though….so what does that say about me?