Image by Gage Skidmore (License CC BY-SA 2.0)
Once upon a time, I wrote a piece on free trade and the damages that such deals can wreak on the domestic (western) job market. Although I briefly drew a comparison between free trade/free market and its antithesis, protectionism/isolationism, I never really spoke in great depth on these alternate economic policies. So in light of the recent presidential victory of Donald J. Trump, and his promises to “Make America Great Again,” now is as good a time as ever to explore the legacy of America’s past, its hopeful future, and this alternative economic policy which may just become the new gold standard of international relations.
Protectionism…
Protectionism can best be explained this way: when you were a child, I’m sure your dad and mum used a combination of the carrot and stick method to “encourage” you to do the right thing (my parents only used the stick…). Get good grades at school, and you were treated to a reward. Get bad grades? Dad would whip off his belt and reenact the Victorian penal system. Protectionism is very much the same. It’s a combination of the carrot and stick to promote local industry, and to encourage the consumption of locally produced goods.
Aside from outright legislation to prohibit trade and the import of foreign goods, governments may only “encourage” We The People to keep it in the family by offering local industry the carrot, via tax breaks and subsidizing domestic manufacturers. They then offer the stick to those who wish to consume foreign goods by attaching extra taxes to imports. The obvious result of such a policy is a greater consumption of, and a greater preference for, locally produced goods. This also aids in keeping manufacturing jobs at home, where they belong.
I cannot imagine what it must feel like to be an American in 2017. Consistent with human nature, I’m sure you are all probably looking for someone to blame for this mess…
Isolationism…
If I were to sum up isolationism in just a few words, it would be,“that’s none of my business.” For better or worse, isolationism is practiced by very few nations in our increasingly global world. Isolationism is the policy where a nation essentially “minds its own business” by staying away from foreign conflicts, foreign treaties, and foreign people. The free flow of immigration and even information may be restricted.
A modern example of an isolationist country is Switzerland, which to this day still refuses to join the EU. They only joined the UN in 2002, and they control their borders by restricting immigration. Isolationism is pragmatically driven by the desire to reserve employment and education opportunities for the native population, as well as to avoid costly and damaging foreign conflicts. Ideologically, isolationism is driven by a sense of patriotism and national pride.
The relevance…
So what bearing do these policies have (if any at all) on your lives? Well for starters, I would suggest that you do not get too comfortable with the current order of things. The people of the world are seriously beginning to question our open borders, free trade, free market, FREE EVERYTHING (i.e. runaway welfare budgets) status quo. If history has taught us anything, it may be that nothing is set in stone.
During the last 8 years, due to foreign conflicts and economic recessions (caused by those self-serving free market advocates such as CitiGroup), America has managed to add over $9.3 trillion to its debt bill. As of this writing, America’s sovereign debt now stands at an unprecedented $19.945 trillion USD. Guess who has the honour of paying the bills? (Hint: It won’t be CitiGroup) If we divide the debt by every single one of America’s 319 million people, including the unemployed, the retirees, new born babies, etc, we will see that every single American is liable for over $62,500 USD to clear the debt… GOOD LUCK!
So how does any of this affect you, the job seeker? Rogue debt (to the effect of almost $20 trillion USD), will eventually affect interest rates. The Fed cannot artificially keep interest rates on the down low indefinitely, and unless the bills are paid soon, interest rates must go up.
With higher interest rates, comes more expensive mortgages, car loans, student loans, slower economic growth, and a weaker job market. That’s right, even less opportunity to find work. Eventually, the government will also need to raise taxes to cover its own increased interest spending. So forget about paying off the debt for now, as just staying above water is going to cost you, the job seeker, who has trouble just finding a job to pay his own bills.
I feel angry just reading what I wrote. I cannot imagine what it must feel like to be an American in 2017. Consistent with human nature, I’m sure you are all probably looking for someone to blame for this mess…
In the beginning, there was Obama…
Here’s a dumb idea: let’s get an inexperienced, pot smoking, community organizer, who has only been a senator for less than one term, and put him in the world’s highest political office. What could possibly go wrong?
What could possibly go wrong???… Quite a lot, actually
As well as being awarded the Nobel Peace Prize for reasons which still remain a mystery to me, Obama’s other achievements as United States President include being the man responsible for your $20 trillion USD debt, playing in excess of 300 rounds of golf, making more television appearances than Actor-President Ronald Reagan, and essentially handing over executive authority to CitiGroup.
Without going into the details (read the previous article, please), Obama’s economic policy can be summed up as follows:
“Free trade will help the economy!
…but all of your manufacturing jobs will go overseas…
But now you have so many cheap imported goods to buy!”
In blue-collar terms, this is called a “sh*t sandwich,” and we have all been forced to eat it. Free trade and free market are being advocated by big business and big banks because they are the only ones who benefit from such deals. Free trade is a mugs game. It is a con job. Only those at the top have anything to gain from their deals.
Those on top who advocate free trade do so only to benefit themselves. They don’t think about you, they don’t care about you. To them, you are nothing but a dollar to be made, the cash cow to be milked dry. To these people, you are nothing but lower class, plebeian scum who must “learn his place,” and come to heel.
The face of every greedy, self-serving banker who advocates for free trade
If Obama were more concerned about the American people than his “legacy,” then we may have avoided this mess. But alas, in terms of GDP growth, Obama will now literally go down in history as the 4th worst U.S. President, and the only President to never deliver even a single year of +3% GDP growth. The effect of Obama’s appalling economic record can be best summed up in the labour force statistics graph above (remember the $20 trillion USD and the weaker job market that inevitably follows?). The damage is definitely done, but is it permanent? Dawn is, after all approaching.
In the end, there was The Don…
Love him or hate him, he WILL be the 45th President of the United States, and his effect is already being felt across the world. President-elect Trump has promised to implement an economic policy, which today has branded him a racist and an extremist. That policy? Put America first. 50 years ago that policy would have been considered common sense:
Trump exhibits some inclinations of isolationism. Wanting to build a wall across America’s southern border to control immigration (just as Kenya, Israel, China, Zimbabwe, South Africa, Saudi Arabia, and many, many others have already done), and wishing to invest a lot less of your tax payer money into NATO.
Although he has some isolationist tendencies, Trump is by no means an isolationist. Before even having his election ratified by the electoral college, Trump had already displayed his natural diplomacy skills by healing eight years of Obama’s bumbling incompetence by saving America’s military interests in the Philippines.
So although Trump still maintains a sense of America’s previous internationalist policies, he has definitely made clear his intentions to implement a new protectionist economic policy. Swearing to Make America Great Again by putting American products and producers first, and reinvigorating that sense of patriotism that once made America one of the highest achieving nations in modern history.
Protectionism and Isolationism:
The good
-Under a protectionist economic policy, domestic jobs and production are prioritized. Protectionism is a far more inclusive and patriotic economic policy as it favours local goods and producers, opting to “keep it in the family.”
-Jobs are secured, local industry is supported, and new/young industries won’t be wiped out by foreign competitors.
-When goods are produced locally, governments have full legislative control over production standards, and factory work conditions. This in in contrast to cheap imported goods, which may be produced in less than favourable work conditions (to put it lightly), and to a much lower quality standard.
The bad
-Cost of material goods become more expensive as there are no cheaper, imported goods to buy.
-no ethnic restaurants… And that’s pretty much it… learn to cook if you really want that falafel.
The ugly
-America has received a lot of bad publicity over its “imperialism.” There are no shortage of European nations complaining about Americas’ large military presence within the borders of their respective nations.
Although the U.S. has made serious blunders, such as bombing Serbia, and then giving half of that nation away to Muslim terrorists, America does have the moral obligation to continue down this same imperialistic path. Trump is wrong for wanting to invest less of your money in NATO… at least for the time being. European nations are incapable of defending themselves. They have drastically slashed their defense budgets and poured the savings into ridiculous and unsustainable welfare programs. As controversial as it may sound, Europe needs America, and Europeans have no one but themselves to blame for this undesirable situation. If America decides to go full isolationist right now, slash their NATO budget, and withdraw their military presence on the world stage, then something (China) will immediately fill the power vacuum.
So what now?
Watch this space! Trump has made a lot of crazy promises and has given very little explanation as to how he is going to fulfill these promises. These are exciting times. Liberals have always advocated for “change,”and change is exactly what they got. Bought and paid for cronies like Obama and the Clintons are finished.
Now we have an outsider to reign from Washington. Let’s just hope and pray that Trump is able to deliver on his election promises to create jobs, protect domestic manufacture jobs, and help pay off Obama’s $20 trillion USD credit card bill. Let’s hope and pray that Trump may truly Make America Great Again.
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Harrison Stamoudis is a freelance writer from Melbourne, Australia. After a lifetime of being praised for his intellect and being told “you can do anything you want”, he was doomed to grow up without guidance and direction (it’s difficult to pick a door when they are all open for you). Aimlessly wandered from one job to the next, he struggled to pick a path and stick to it. Harrison often had to work multiple jobs just to make ends meet and the work history list on his resume is a little longer than he cares to mention. Harrison is currently in the process of completing higher education (for a third time) so that he may make his next major career change, this time civil engineering.