February 26, 2008
The dangerous protectionism of Barack Obama
Anne Sibert and I have just written a blog for Vox, the economic policy blog of the London-based Centre for Economic Policy Research, criticising the (mostly) dangerous or (occasionally) just plain silly protectionism of Barack Obama. The link is here .
Dear Professor Buitler,
Maybe the Patriot Employer Act can be considered “reactionary, populist, xenophobic and just plain silly” … yet there is a very real problem: the liberal international economic order is not working for a significant proportion on the US population… thus they find hope in Obama. Free trade and the right of companies to maximise shareholder value by following any domestic or foreign employment strategy are in fact very abstract when compared to the very real problem of people losing their jobs, not making ends meet and not seeing any perspective of future employment. The may not count among the “truly downtrodden” like those working in sweatshops of certain developing country, all the same their suffering and fear of the future is real. Your attempt at being constructive “the US might increase its competitiveness by sensible investments in infrastructure and education” sounds rather like the very general, over used and almost self evident propositions that you often criticise …. and part of policies also proposed by Obama. If populist proposals like the Patriot Act, which in my understanding aim to encourage companies to pursue goals other than blind pursuit of profit and maximisation of shareholder value, even at the cost of social cohesion, are stupid and silly, what better alternatives are there? Maybe you could constructively advice Obama for the good of America… he is described as open minded.
Posted by: Edith | February 26th, 2008 at 4:51 pm | Report this comment….Apologies for the typo in your name
Posted by: Edith | February 26th, 2008 at 4:56 pm | Report this commentThe classic American way of life and beliefs are under pressure – just talk to anyone not just in manufacturing but high-tech and even financial services. For the last decade the headlines have screamed layoffs, restructurings, and countless other economic issues that have taken their toll on not just middle class Americans, but even those aging, educated Baby Boomers who failed to understand the shifting global-economic events. Is there a need for change and sentiment? Yes.
However, the fear of the unknowns and media hyped “shock” headlines are not addressing the real root causes and problems faced by America in the evolving economic and social shifts taking place within the world. These competitive pressures are a natural and proven progression of globalization. As most of us know, globalization has been happening in various forms for decades and centuries.
For America of the present, key issues such as advanced education, innovation incentives, energy independence, and net savings (to name but a few) are all components of its future along with problems of its past. If we cannot materially assist those already impacted and deal with the economic root causes while refocusing our workers on continual reinvention and self improvement, no amount of protectionism will save our standard of living. Even the central bankers and treasury department know that government support and bailouts are only band-aids – not sustainable or adaptable solutions in a free-market economy.
There are many politicians that are playing to the fears and realities of America. Their sweeping statements are not implementable solutions, and there is more than Mr. Obama to pick on within the line-ups. If there is to be a lasting reality, we need to move away from simplistic “banners” and name calling and focus our collective energy on the relevance application of innovation for growth – not just survival. We’ve reinvented ourselves before — we must do it again.
Mark Dangelo
Posted by: Mark Dangelo | February 26th, 2008 at 9:02 pm | Report this commentThe US is in long term decline and who gets elected is probably not going to make that much of a difference. But we can limit the short term dammage by voting McCain…
Posted by: domi | February 27th, 2008 at 12:59 am | Report this commentTwo obvious facts pushing U.S. companies overseas:
- Labor is cheaper offshore;
- Emerging Markets growth is higher.
Senator Obama want to win a primary in Ohio and thinks that he needs to say “reactionary, populist, xenophobic and just plain silly” things.
Leaders of Great Democracies need think to think in terms of long-term strategies and act in terms of short-term elections. It’s a real problem.
We all know that the U.S. has to move past tax cuts and consumption to energy independence and infrastructure investment. Senator Obama know this too and at least brings the communications skills and honesty necessary to start the transition. The key thing is to unite the Red and Blue states and move forward together. There lies his essential strength.
Posted by: Norbert | February 27th, 2008 at 7:57 am | Report this commentThe only reason that companies in the US or anywhere else for that matter choose to produce goods or services overseas is simply as Norbet points out, costs there are usually cheaper. Decisions based on these are not inspired by greed or a lack of patriotism either; survival is their main issue.
As for minimum wages, senator Obama should take a look at the UK where the minimum wage has become more a target than a minimum. His proposals regarding the National Guard have a resonance here too, this time with maternity leave. When Alan Sugar went public on this and pointed out that young women are being seen more as a future liability by potential employers, he was only speaking the truth that dare not speak its name.
Posted by: figurewizard | February 27th, 2008 at 10:31 am | Report this commentIt’s a kind of subsidy - voluntarily taken up - that supports better conditions and longer-term security for American citizens (the electorate) - especially those at most risk to lose out in the global market to make cheap consumer products for other people who can afford them.
How is this more protectionist than huge agricultural subsidies?
Posted by: Dave | February 27th, 2008 at 11:23 am | Report this commentThere is a general and growing view, however incorrect, in America that we have long been the world’s leading free-trader, while Europe built up highly protectionist welfare states and emerging markets comparative advantaged US jobs out of existence. I believe the benefits of this creative destruction are well worth it, but don’t be surprised if everyone in Ohio or Texas (let alone Michigan) doesn’t feel this way.
Is it possible to acknowledge a potential solution to growing US doubts about the benefits of trade might be more free trade and less protectionism from the EU? Or is this to be dismissed out of hand? If nothing else, it could defuse Obama’s Old Labour rhetoric.
Posted by: Dave the American | February 29th, 2008 at 10:20 am | Report this comment