Two columnists are writing about protectionism in the last few days, Patrick J. Buchanan and Ambrose Evans-Pritchard.
Evans-Pritchard writes
We are advancing to the political stage of this global train wreck. Regimes are being tested. Those relying on perma-boom to mask a lack of democratic or ancestral legitimacy may try to gain time by the usual methods: trade barriers, sabre-rattling, and barbed wire.
Russia has experienced a disaterious fall in the price oil and is tightening its control over the economy and the population. ” It has imposed import tariffs of 30pc on cars, 15pc on farm kit, and 95pc on poultry (above quota levels).” It is also cracking down on journalists and subjecting more citizens to laws concerning treason. Because of rioting in a number of cities, “Yevgeny Kiseloyov at the Moscow Times said it feels eerily like December 1 1934 when Stalin unveiled his “Enemies of the People” law, kicking off the Great Terror.”
China is scared to death that the slump in exports and the closing of factories causing widespread layoffs will lead to massive disobedience. Here, in the U.S. Democrats will be putting intense pressure on China to raise the value of the Yuan, which will help our exports, but hurt China.
Buchanan writes that President Bush is abandoning his free trade policies and becoming a protectionist with his bailout of the big three auto makers.
Thus did Bush concede that protectionism, if a critical U.S. industry is in peril, must trump free-trade ideology. For in offering the bailout to GM, Ford and Chrysler, Bush, by omission, excluded BMW, Mercedes, Honda, Toyota, Nissan and Hyundai — though all operate auto plants here in the United States and all are feeling the same sales slump.
[…]
Awfully late in the game, Bush seems to have awakened to an ancient reality. When the tough times come, nations protect their own interests first, free trade be damned.
Expect more conflict between nations as the world works off debt and overcapacity in manufacturing and consumers shift from spending to saving.
Tags: Economics by MoverMike
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