Protectionism is particularly bad for economic recovery because of how intergrated the world economy has become, and how complicated technology is compared to 50 or even 20 years ago.
The National Post has a good story about the problems for US stimulus projects with shortages of materials because of “Buy American” rules.
The fundamental problem is that during the extended period of economic growth that was enjoyed from 1992 through 2007, along with liberal trade rules, companies moved to produce various components of technology wherever made the most sense – be it a combination of cost, raw materials, transportation costs, availability of personnel, or other factors. This is one of the reasons why technology (of whatever sort) became cheaper and more utilized in many industries. But it also meant that no country, not even the United States, is currently capable of producing everything they might need for their own internal economy. And if a country suddenly chose to produce all of these components “locally”, it would almost necessarily be at higher cost and take time to develop.
But such action requires significant and long term trade restrictions – government interference in the economy which has never succeeded in improving the standard of living of a nation’s people. This is just another example of why trade restrictions and government interference in the economy are bad for all of us.
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DigitalFeed.Info » Blog Archive » Why protectionism bites says:
7 August 2009 at 21:44 (UTC -7 )
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Transportation-Technology » Home - TTG Transportation Technology says:
8 August 2009 at 0:06 (UTC -7 )
[...] Why protectionism bites « Musings of the Technical Bard… raw materials, transportation costs, availability of personnel, or other factors. This is one of the reasons why technology (of whatever sort) became cheaper and more utilized in many industries. But it also meant that no country, … [...]