Neo-protectionism

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Neo-protectionism is an American political movement that supports tariffs on imports produced contrary to domestic laws protecting the environment, a living wage, worker safety, product safety, intellectual property, women’s rights, minority rights, and other constraints that add to the costs of domestic products and make them uncompetitive with products produced without regard to such social goods.

Neo-protectionists believe that such tariffs, once agreed on in principle, may be implemented in a way which will benefit not only the country levying the tariff, but the world as a whole, as the incentives for exploitive business practices are removed from markets.

Traditional Vs. Neo-Protectionism

Traditional protectionists, like America’s Alexander Hamilton, needed no other rational for imposing tariffs than that they benefited American companies. The second law enacted by the newly formed Federal Government of the United States was the creation of tariffs (Hamilton Tariff).

“Us versus them” was the basis for American trade policy for the first hundred years of its history. However, by the middle of the 19th century, the definition of “Us” in America became the subject of debate. The northern industrialized states, which held a majority in government, favored protective tariffs culminating in the Morrill Tariff of 1861 which more than doubled tariffs on durable goods. The South, which traded cotton for these goods, resented paying a premium for, what they perceived, as the sole benefit of northern industry. “Us versus them” became North versus South and historians point to this debate over tariffs as a contributing factor to the start of the American Civil War.

This debate over the definition of “Us” was settled with Lee’s Surrender at Appomattox. Protectionist trade policies in the form of tariffs continued until America instituted a direct Federal Income Tax (Taxation in the United States Sixteenth Amendment). This shift in economic policy was caused by a new theory of trade had emerged from the fledgling science of economics. The theory, “Comparative Advantage”, argued that the vast majority of people are better off if restrictions to trade are removed. The debate over America’s trade policy shifted from “Us versus them” to “Enlightened versus unenlightened”. Protectionists were viewed in the same unflattering light as those denying Evolution. Science, the enlightened argued, settled the question of proper trade policy in favor of Free Trade. Protectionists simply did not understand that Tariffs introduced detrimental drag in the economic engine, and, that that inefficiency hurt everyone.

Neo-protectionists believe that over the next hundred years of America's history the principle of free trade became dogma. Even as America put unheard of limits on domestic industry for the purpose of protecting workers, consumers, and the American market, from the excesses of laissez-faire capitalism, free international trade was considered sacrosanct. The only rational left for Tariffs became to affect political or economic change. Tariffs were relegated to a means to chastise our enemies or as leverage to open foreign markets. But, the “Enlightened” agreed that in an ideal world, there would be no restrictions on international trade. Free Trade became an axiom of economic science rather than a result.

Neo-protectionists challenge this dogma.

The Neo-Protectionist position

Neo-protectionists argue that laissez-faire capitalism is no more appropriate for international trade than it is for domestic trade. They point out that the comparative advantage theory which is the economic basis for free trade policy is itself based on two assumptions which are no longer true.

The first assumption is that capital is immobile. The comparative advantage theory assumes that if a country does not have an advantage in producing a particular good or service, that country will take its capital and invest in another industry where it can be competitive. In practice however, if a company can not operate competitively within its home country, it will simply move its operations to a country where it can compete. Money, free of national boundaries, seeks absolute advantage regardless of nationalistic concerns.

But, money is a store of value, created by the sweat and ingenuity of a country's people and while money may move freely across international boarders, a country's population cannot. Thus, there exists a residual capital represented by a people’s willingness to work which remains immobile. While the stored portion of a nation’s wealth is free to globally seek greatest return on investment, the wealth represented by a nation's people must seek out a comparative advantage. People, fired or laid-off from outsourced jobs, must seek some niche where they may earn a living. The immobility of capital represented by a nation’s workforce might be argued to save the comparative advantage theory and by extension the argument for free trade policies. It may be argued that mobility of capital may make the transition from one industry to another more difficult, but it does not entirely invalidate the theory of comparative advantage.

However, comparative advantageis based on another assumption; one that Neo-protectionists believe invalidates its application to the current global economy. That is the assumption of full employment. Over the past hundred years, man’s ingenuity has elevated his productivity to levels never before seen in human history. Advances in Science, Agriculture and Engineering have made it unnecessary for the entire population to work in order to fill the material needs of mankind. Comparative advantage and in fact economic theory in general, is based on the assumption that more is better. That demand is unbounded. That, if a nation’s population cannot compete in one industry, there is always an unmet demand somewhere else that can be profitably exploited. But, the cornucopia of global capitalism, fueled by human ingenuity, pours out food, clothing, housing, entertainment, and all man’s material needs without the efforts of his entire population. The problem is no longer one of resource allocation. It is one of distribution and capitalism has no mechanism for distributing goods and services to those with nothing to barter.

Neo-protectionists believe that America is on the leading edge of an economic revolution brought about by its own achievements. Western science and technology, which has been freely exported around the world, has altered the basic assumptions of America, that under capitalism any man or woman can, with hard work, create a better life for their children than they had growing up. For those gifted by their parents with an education, capitalism still works. But it's only a matter of time before an education and technical competence will only be a license to compete, not a guarantee of success. Neo-protectionists believe that as the percentage of the world’s population needed to fulfill the world’s material needs declines, competition for jobs will increase, as will unemployment. They believe that capitalism will insure the best and the brightest are rewarded, but that capitalism has no need for the rest of the population. They believe that the gap between the rich and the poor will continue to widen as the middle class is pushed up or down the economic ladder, with the vast majority being pushed down. Eventually, they believe, the unemployed populace will demand the government provide for their needs. America will become a welfare nation paid for by the few who give the unemployed just enough to stave off revolution. The result, they say, will be socialist America with its populace dependant on its government to meet their basic needs.

America has long recognized that its citizens need protection from the excesses of capitalism. Through laws such as a minimum wage, child labor, anti-trust, environmental protection, workplace safety, collective bargaining, product safety, and domestic taxation, America has, with good cause, limited capitalism and imposed inefficiencies on our economy which make us simply unable to compete with products produced in countries free of social, environmental, and moral concerns. In order for America to manage the economic changes brought about by the world’s technological advances in productivity, Neo-protectionists believe that America may well need to introduce further inefficiencies to the capitalist system. Inefficiencies such as laws further limiting the work week, laws mandating mandatory paid vacations, and increases in taxes to pay for social programs for the care of those economically disenfranchised.

But Neo-protectionists believe that America can do none of these things so long as it surrenders control of its markets and our economy to foreign imports; imports produced under forms of capitalism outlawed in this nation. They believe that America must extend the same philosophy that allows us to limit domestic capitalism for social good to international trade. If not, they believe these laws for social good will continue to devastate the American economy by making it unprofitable to manufacture here. Neo-protectionists believe there is simply no other way to preserve American culture in the face of the economic revolution that our advances in productivity have brought about.

Neo-protectionists believe that tariffs on imports produced contrary to domestic U.S. law are therefore necessary to protect America’s economic future. They believe that such tariffs, once agreed on in principle, may be implemented in a way which will benefit not only Americans, but the world as whole as incentives for exploitive business practices are removed from American markets.