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Protectionism: The Lesser of Evils

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Having just been subjected to more ivory-tower drivel on “the wonders of free trade”, I couldn’t stand it any longer. It’s time someone stepped forward to denounce this idiotic mythology.

As always, analysis begins with definition of terms. “Free trade” is the unfettered competition of businesses in free and open markets. It has never existed in all of history. “Globalization”, the bastardized proxy for free trade which has been foisted upon us by large, multinational corporations (and the political lackeys who serve them) doesn’t bear the faintest resemblance to genuine free trade.

With a nearly infinite list of flaws to choose from, let’s begin with an easy one. You can’t have fair-and-unfettered competition in markets if any of the participants are being subsidized by one or more governments. Thus the necessary precursor before any “free trade” agreement could ever be implemented is the complete elimination of corporate subsidies. Given that the multinational corporate parasites who spearheaded this process are the recipients of $trillions per year in corporate welfare (in one form or another) is it any surprise that this step was ‘forgotten’ as this pseudo-free trade was rammed through?

However even this criticism puts the proverbial cart before the horse. Free trade is all about companies competing with each other, not just across countries, but around the world. Unfortunately the corporate servants running our governments have allowed virtually the entire global economy to be hijacked by a few dozen (gigantic) monopolies and oligopolies.

As a matter of definition, none of these companies competes – ever. So here is a question for all of the vacuous free-trade zealots: how can (so-called) “free trade” bring competition to the global economy when (essentially) none of the components of this global economy ever compete?

In fact, we must back up still further to get to the crux of the matter. Once beginning economics students have been introduced to the fundamentals of supply and demand, and the virtues of competition, virtually the next principle presented to these students is how oligopolies and monopolies are unmitigated evils – which should never be allowed to exist in our economies.

What this means is that not only would we have to eliminate/abolish all forms of corporate welfare before any (valid) free-trade agreement could ever be established, but we must also take a political hammer, and smash into little pieces every one of the oligopolies and monopolies which currently pollute the global economy, while parasitically impoverishing each and every one of us.

It is only after all these corporate parasites have been smashed into little pieces that competition can (finally) be restored to our (individual) economies. And obviously it is only after we once again have competitive economies individually that it becomes theoretically possible to enjoy the benefits of free trade. Unless and until these corporate abominations are abolished, it could never be theoretically possible for genuine free trade to exist.

It is equally obvious that given their enormous political power (and the spineless nature of our present governments) that these corporate mega-parasites are not about to be eliminated overnight. As a practical matter then, what is the best means of coping with a global economy completely poisoned by the influence of these oligopolies and monopolies?

The obvious answer (the only answer) is protectionism. Cynically, knowing that these oligopolies and monopolies are our mortal enemies, the simple fact that they are pushing their pseudo-free trade with all of the (corrupt) influence they can muster tells us by itself that protectionism must be a lesser-of-evils. Looking at this issue from a theoretical perspective leads us to precisely the same conclusion.

Note that when the free-trade zealots gush about the infinite wonders of their cherished dogma that increased competition is only one aspect of this mythical economic utopia. By erasing borders, this allows corporations to expand in size, which (supposedly) brings us the economic advantage known as “economies of scale”. By this same logic, as our governments get larger and larger they should also get more efficient. Don’t hold your breath.

In fact, at some very finite limit, all benefits from creating economies of scale vanish beneath the inertia and bureaucracy inherent in any and every large institution. Instead of “bigger being better”, we rapidly reach the state of bloated behemoths – which are completely incapable of efficient competition.

Fortunately we have a near-infinite body of empirical evidence to substantiate this principle, supplied to us by the oligopolies and monopolies themselves. What do these corporate mega-parasites spend most of their time doing (when they’re not pushing their political servants into some new “free trade” deal)? Buying-up smaller more efficient corporations, because these corporate giants cannot match their quality, their prices, their service, or some combination of the three.

Protectionism means once again partitioning the global economy according to national boundaries. It automatically opens up new niches in all of these economies (presently being serviced by multinational oligopolies). Thus it also means creating a lot more of these smaller, more efficient, better corporations, while seriously reducing the power/influence/control of the oligopolies by making it much more difficult to dominate markets by brute force alone.

Referring again to basic economic theory, it is another maxim of business that smaller businesses tend to be more labour-intensive (i.e. they hire more workers) while larger corporations are more capital-intensive (i.e. they use far fewer workers).

Western economies are currently in the grip of the worst structural unemployment in history. Much of this structural unemployment is a direct consequence of (a) allowing the oligopolies and monopolies to exist, and (b) the illusory free-trade agreements they have been able to ram through. Surely even the free-trade zealots can comprehend that with the worst unemployment in our history that we would be better off with economies filled with companies which hire people rather than companies which buy machines (and lay-off people)?

In fact, our corporate overlords love to see this horrific unemployment. When there is suddenly ten people lining-up for every job rather than five, wages go down – as desperate workers under-cut each other. When there becomes twenty workers looking for each job rather than ten, wages fall further. At some point we cease to have “workers” at all, and only have serfs. Thus not only would protectionism ease unemployment, it would put upward pressure on everyone’s wages.

As I have noted frequently in past commentaries, in real dollars average wages for U.S. workers (and most of the Western world) have been falling steadily for the past 40 years. It is time the pendulum began to swing back.

[courtesy of http://nowandfutures.com/inflation_long_term.html#housing]

Ordinary readers must always be on guard for the dogma of zealots. Fortunately we are often warned that we are about to be exposed to more of such drivel because it is preceded by the phrase “economist says”.

For example, one would be hard-pressed to find an economist anywhere on the planet Earth who doesn’t regularly rant-and-rave about the evils of “big government”. Yet not one of these clueless hypocrites is ever seen bemoaning “big business”: a global economy filled with nothing but (grossly inefficient) oligopolies and monopolies.

Literally nothing could do more to make the world a better place than to start hacking these oligopolies and monopolies down to size. Protectionism won’t solve that problem – but it’s a good start.

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Earl
...
written by Earl, March 01, 2012
Jeff,

I, think Brian said it all.
The BBC "community" has helped me heal the one in the mirror.
Plus, taught me what and how to defend.

Humble, I proceed on-

Thank You
Earl
Brian Boutilier
...
written by Brian Boutilier, March 01, 2012
So, when we as a people, beings, on earth have sufficiently integrated greed in favour of harmony and equity, these oligarc entities will disapprear. Until then, heal the one in the mirror, and be defensive with your money. My 2 pence sir. Nice article Jeff.

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