Tuesday, 28 August 2007

Education and globalization: the case against protectionism

Protectionism is all the rage in the United States nowadays, fueled by xenophobia from nativists (because of hot topic of immigration, especially from Central America), isolationists (partially because of foreign policy fiascoes like Iraq), and, most of all, anti-free-traders (anti-China; those seeking an enemy to blame for the loss of US manufacturing jobs).

America cannot stick its head in the sand just because of some foreign policy screw-ups, a trade deficit and loss of blue-collar jobs to places like China, and the influx of immigrants — many to do jobs Americans probably wouldn't. Pretending a problem doesn't exist or enacting a quick 'fix' isn't the answer. Politically, the Republicans are more anti-immigration; the Democrats more protectionist. But, as many financial experts warn, protectionism or xenophobia is not the answer to America's economic woes. Globalization isn't something new, and don't expect it to go away either.


Southern U.S. states should improve workers' skills to compete in the global economy rather than look to trade restrictions for protection, three Federal Reserve bank presidents said.

Barriers to commerce can backfire and hurt the economy as overseas partners retaliate by imposing their own restrictions against U.S.-made goods, the Fed chiefs from Dallas, St. Louis and Atlanta told a meeting of the Southern Governors' Association in Biloxi, Mississippi, today. The Fed presidents didn't discuss the current economic outlook or monetary policy.

``The answer is not protectionism,'' Richard Fisher of the Fed Bank of Dallas said in his speech. ``Rather than labor fruitlessly to protect your constituents from foreign competition, you and your legislatures must prepare them for it.''

Fed officials have been touting the benefits of free trade as members of Congress call for restrictions on imports from China, accusing the world's fastest-growing major economy of keeping its currency artificially cheap to benefit exporters.

The officials' comments don't just apply to the American south, but the whole of America and numerous other developed countries seeing the effects of globalization on the industrial workforce, and the economy in general.

The importance of people of developed countries to learn
As China and other emerging economies are using the mostly-positive forces of globalization to scoop up manufacturing jobs, America and other developed countries are in more need as ever for educated, skilled workers. If jobs are being lost, more need to be filled or created. Since many people cannot afford or achieve a high-level college education, there should be at least some government-run instructions.

More and more people seem to not be prepared for the real world. And as economic globalization increases the US and others are in need of innovative thinkers and service industry workers. Education has to start from childhood and continue through adulthood — from primary school to job training.

For a developed economy like America's, tariffs are counter-productive. They hurt the consumers because they raise prices, and lower competition and quality. They do, however, help the businesses they affect; but, in general, strong tariffs are not a good thing. In addition they are almost always politically-motivated (special interests) and are very rarely used appropriately. Ironically the pro-business politicians in the United States that used to support tariffs now favor their own brand of 'free trade' (e.g. Bush), like CAFTA, but bend the rules now and then.

Fair is (often) free
Note: Just because I believe in free trade, that does not mean I am against regulation, including in the case of fair trade. The exploitation of the poor by the rich is not what the free market is about. Sadly, that's what it has become. On economic issues I am somewhere to the left of the centrist weekly The Economist. Protectionism and idiotic tariffs are not the equivalent to fair trade; the protection of third world workers sorting through our trash is.

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