From the TUC

Protectionism: Peston provokes but gets it right

10 Mar 2009, by Guest in Economics, International

In a recent post I wrote that the view, as espoused by Stephanie Flanders, that protectionism did not cause the Depression would be used by those seeking to promote protectionism today.  And so it has proved.  I have heard this argument now made a number of times in meetings I have attended and, most disappointingly, it was made by The Guardian’s Larry Elliott in a rare off-form moment. And the economist Ha-Joon Chang makes a similar if more considered appeal for “limited protectionism” also resting on the same historical argument.

Most worryingly, there is a real confusion emerging between the understandable call for developing countries to be allowed to nurse their infant economies to maturity behind barriers before exposing them to the harsh world of global competition and the far more dangerous belief that protectionism is an appropriate response by advanced economies to the current crisis.

So it’s good that Robert Peston has today challenged the current perilous flirtation with protectionist measures with a blast of open-minded sense.  Rejecting the notion that protectionism played no part in the problems of the 1930s, he makes it clear that free trade between advanced economies can not only break down national prejudice but offers a way out of this crisis if done right.  By contrast, he rightly asserts that protectionism and nationalism are close bedfellows.

His conclusion that we should open our doors to Chinese ownership of Western assets is provocative but should also give genuine progressives some food for thought.  Definitely worth a close read.

5 Responses to Protectionism: Peston provokes but gets it right

  1. Owen Tudor

    Owen Tudor
    Mar 11th 2009, 12:51 am

    Regarding Robert Peston’s argument that the Chinese should buy up western assets: when Rover was faced with complete closure a few years ago, the then TGWU mounted a campaign precisely to persuade a Chinese motor company to buy the marque to save jobs (in the end, a different Chinese car company bought Rover, with far fewer jobs saved). So this is not completely groundbreaking new thinking….

  2. Charlie Marks
    Mar 11th 2009, 5:21 am

    But hang on a minute: are we really saying that the aim of this great movement of ours is to have foreign rather than domestic capitalists owning large swathes of the economy? Trade, like markets, should be regulated. To parrot the capitalists defence of free trade is to do a disservice to the union movement – they have plenty of money to hire propagandists of their own, let them harp on about free trade and free markets.

    We should be looking to popularize cooperative forms of ownership by workers and consumers. The building societies haven’t had to be bailed out by the government – the ex-building societies have; workers cooperatives don’t union-bust or get involved in blacklisting workers…

  3. Adam Lent

    Mar 11th 2009, 10:50 am

    But Owen hits the nail on the head. When thousands of jobs and livelihoods are at risk, this great movement of ours can be very pragmatic. And rightly so.

  4. Big economy protectionism is the “lump of labour” fallacy gone global | ToUChstone blog: A public policy blog from the TUC
    Mar 12th 2009, 6:37 pm

    […] of labour” fallacy gone global Posted at 6:37 pm on 12 Mar 09 by Nigel Adam’s opposition to big economy protectionism has proved controversial in some quarters. Yet it seems to me that protectionism is the mirrow image […]

  5. Charlie Marks
    Mar 12th 2009, 11:25 pm

    For sure, if a rescuing jobs means Chinese ownership – fine. But cooperative ownership? Finer!