He\’s swallowed the protectionist line….completely, entirely and sadly.
Neoliberal economists claim rich countries got that way by removing their barriers to trade. Nothing could be further from the truth. As Ha-Joon Chang shows in his book Kicking Away the Ladder, Britain discovered its enthusiasm for free trade only after it had achieved economic dominance. The industrial revolution was built on protectionism: in 1699, for example, we banned the import of Irish woollens; in 1700 we banned cotton cloth from India. To protect our infant industries, we imposed ferocious tariffs (trade taxes) on almost all manufactured goods.
By 1816 the US had imposed a 35% tax on most imported manufactures, which rose to 50% in 1832. Between 1864 and 1913 it was the most heavily protected nation on earth, and the fastest-growing. It wasn\’t until after the second world war, when it had already become top dog, that it dropped most of its tariffs.
Sigh. During that period the US was almost certainly the largest free trade economy on the planet (the only one that could have been larger was the British Empire and I seem to recall that there were an awful lot of restrictions on what the colonies could do). This does not go to show that free trade is a bad idea, nor that protectionism makes you rich.
Further, there are two components to trade barriers and costs. There are the tariffs imposed, to be sure, but there are also the transport costs. Such transport costs were falling so fast in that 1864 to 1913 period that they completely overwhelmed the effects of the tariffs. The barriers to trade were falling fast throughout the period….some might say that was part of the cause of the growth.
Protectionism, which can be easily exploited by corrupt elites, does not always deliver wealth; but development is much harder without it.
Interesting argument really….those countries which are not currently developed. Do we think that they are governed by corrupt elites who would take advantage of the possibilities for enrichment? Or by those benevolent and omniscient beings that would be required for protectionism to work even in theory? Ethiopia? Zimbabwe? Equatorial Guinea? Sudan?
There is also the one most obvious point about protectionism. By its very nature it insists that the poor must pay more for their consumption than they would in a free trade world. That\’s the very point, to make it possible for more expensive domestically manufactured goods to find a market.
Even if there were a tension between current free trade and the protectionism required for future development (something which I reject) the argument in favour of protectionism insists that those currently shit poor should pay more to the local capitalists.
This isn\’t an argument which I expect those of a progressive nature to put forward.