Governments Should Use Protectionism

Last updated: March 10, 2017

Should governments favor a country’s industries by means of protectionist measures?

Governments Should Use Protectionism
Yes because...

The first duty of every government is to protect its own citizens; a duty of care is owed to those w...

The first duty of every government is to protect its own citizens; a duty of care is owed to those whose economic prosperity depends upon industrial production.
No because...
It is right that a regime’s primary duty of care is to its own people; but prosperity for all is enhanced most by trade liberalisation and comparative advantage, not by vote-chasing.

Governments Should Use Protectionism
Yes because...

Even the WTO accepts the need for safety-valves when a country is opening up its economy. Anti-dump...

Even the WTO accepts the need for safety-valves when a country is opening up its economy. Anti-dumping measures (which can be tried at law) are more carefully targeted measures than blunt tariffs and quotas.
No because...
The WTO already has mechanisms for temporary protection of industry; but these are rarely used. Anti-dumping retaliation is as unnecessary and economically inefficient as any form of protectionism, and would rarely pass domestic antitrust legislation.

Governments Should Use Protectionism
Yes because...

In times of recession there is pressure to protect declining industries. Some localities, or countr...

In times of recession there is pressure to protect declining industries. Some localities, or countries, are dependent on a single source of manufacturing or agriculture, and allowing the free market to take its course would prolong or deepen an economic depression and drive huge numbers of people out of work.
No because...
Protectionism worsens depressions by cushioning firms from their effects, preventing sufficient diversification of sources of national income, and discouraging retraining to meet the needs of the future. The Depression of the 1930s was in fact worsened by restrictions placed on free trade (e.g. the USA’s Hawley-Smoot measures), as protectionism spiraled downwards into increasing retaliation.

Governments Should Use Protectionism
Yes because...

Developing countries need extra help in building a competitive economy; short-term subsidies to fore...

Developing countries need extra help in building a competitive economy; short-term subsidies to foreign companies are the early stages of import-substitution and economic independence. It is better that governments offer firms subsidies than try to cut corners on labour standards.
No because...
There is a difference between encouragement of foreign industry into a country, and protection of domestic suppliers. Competition will not merely be over the size of national subsidies, but also on wage costs and looser environmental and safety regulations.

Governments Should Use Protectionism
Yes because...

Many developing economies hit a glass ceiling as they attempt to stabilise their economies, as they ...

Many developing economies hit a glass ceiling as they attempt to stabilise their economies, as they are unable to diversify into different markets. Maintaining their former colonial relationships is the only way for them to defend themselves against large trading blocs.
No because...
Companies in developing economies often suffer from poor stockmarket flexibility and political uncertainty, as a capitalist mentality needs time to develop. The solution is not more protection, but for groups such as the EU to dissolve their barriers to trade.

Governments Should Use Protectionism
Yes because...

It is sensible for governments to protect domestic supplies of vital goods, such as oil, food and st...

It is sensible for governments to protect domestic supplies of vital goods, such as oil, food and steel, from the political vicissitudes of world cartels; which is part of foreign policy and not pure economics. To prevent this is to invade national sovereignty.
No because...
Worldwide cartels of producers have recently weakened, especially for agricultural goods. For governments to engage in protectionism merely against international cartels is pure hypocrisy; national security will never be gained by the chimera of economic self-sufficiency.


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