Douglas Carswell Warns Against The Allure Of Protectionism

Container Ship - Cargo - Trade - Protectionism

Douglas Carswell makes the short and eloquent case against protectionism:

The prosperity we take for granted today couldn’t have happened without free markets and free trade. That doesn’t stop people – even presidential candidates – saying we’d be better off starting trade wars, and only buying goods made at home. But the fact remains: protectionism is the route to poverty.

Globalisation gets a bad press. When manufacturing moves from Britain or the US to China and India, it looks like we’re losing out. But the result is that we get our clothes, shoes, computers, phones, and televisions much more cheaply. And lower prices don’t just make us better off. They also increase demand, and create jobs.

As Adam Smith and David Ricardo realised 200 years ago, prosperity comes from specialisation. If each of us tried to be self-sufficient, we would all be living in prehistoric penury. Instead, we specialise in what we’re best at, and exchange the product of our work for what we need.

The same applies to countries. Today, Britain’s comparative advantage is in services. Other countries are best at heavy industry or agriculture. By specialising in services, we get more and better manufactured goods and agricultural produce than we would if we diverted our resources into making them ourselves.

Protectionism might seem like the solution for people who have lost out to globalisation. But its effect would be regressive – like the poll tax. It would force prices up, and employment down. That would hit the poorest hardest.

Carswell goes on to argue that protectionism does not bring prosperity, but rather leads to inefficient, monolithic corporations like British Leyland, churning out low quality product that nobody really wants – and even then, only at the cost of massive subsidies from the taxpayer.

The case against protectionism cannot be restated enough at a time when globalisation and free trade is under sustained attack on both sides of the Atlantic – by the otherwise polar opposite Donald Trump and Bernie Sanders in America, and by the worst elements on both sides of the EU referendum debate in Britain, who believe that we should retreat either into mercantilist isolationism or protectionist euro-parochialism.

There is an important debate here to be had among advocates for smaller government. Clearly the state is presently far too involved in our lives in all manner of ways, but surely one of the things that a smart, lean and effective small government absolutely should do is watch out for its citizens when they are impacted by massive changes to the way that the world trades and communicates.

Labour’s solution has been to park people on welfare and then forget about them, which is remarkably immoral for a group of people who love to endlessly brag about how virtuous and compassionate they are. The intelligent Right should come up with something better. And that means doing something more than simply aping Labour policy by raising the minimum (or “national living”) wage to £9 an hour so that the most tedious of low-paying McJobs keep people just out of working poverty.

The new permanent majority will not be secured by the Cameron / Osborne strategy of enacting Tony Blair’s fourth term of New Labour governance. It will come about by radically rolling back the state in all manner of areas where it should be doing less, while also giving citizens the tools and opportunity to prosper in the new economy.

Less protectionism, less pretending that the old jobs will come roaring back if only we leave the EU, embrace the EU or otherwise throw up barriers to global trade. Less shooting for the middle all round, and more empowerment of British citizens to pursue high value-add, high-wage, twenty-first century careers.

Now put that on a bumper sticker.

 

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