http://imarxman.wordpress.com/2012/0...protectionism/ A Podmore Review: Competition and Protectionism by imarxman Competition friendly protectionism: how a certain kind of protectionism could temper and improve globalisation, by Ronald Stuart, paperback, 261 pages, ISBN 978-1-908596-73-4, Grosvenor House Publishing Limited, Guildford, Surrey, 2012, £9. This useful and well-argued book proposes that countries should adopt a kind of protectionism. Stuart deals fairly and patiently with opposing arguments, and his proposals are thoughtful and lucidly presented. He writes of “the growing recognition that a wholesale free trade world is an unequal and divisive place.” He notes, “Just as a totally free market with no state would fail to achieve the optimum provision of other common or merit goods such as roads or law and order, the free market could equally be argued to be failing to provide the optimum provision of positive externalities to poor and developing countries.” He cites Paul Collier who noted of poor countries, “Trade is more likely to lock them into natural resource dependence than to open new opportunities, and the international mobility of capital and skilled workers is more likely to bleed them of their scant capital and talent than to provide an engine of growth,” Stuart explains why buying fair trade coffee does little for its growers, and points out, “charity, state benefits or aid to poor countries are no substitutes for home-generated development or the honest, wholesome merit of being a fully contributing member of a well-functioning economic ecosystem.” Indeed, he shows how all the liberal dogmas - free trade, fair trade, the free movement of capital, goods and labour - don’t work. Stuart then turns to what does work. He explains the benefits of manufacturing industry: “a state-of-the-art, professionally-run banana plantation will mostly only produce benefits to that industry, and in twenty years, it will likely still only be capable of producing bananas. On the other hand, a new factory in one of China’s special exporting zones can use its transferable skills and resources to move or ‘jump’ into different products and industries, and be the catalyst for other factories starting up in the area.” So Stuart contends that countries need industry, and an industrial policy, so that we can rebuild our economies to produce more of what we need. We need mass-market, labour-intensive manufacturing, focusing on the home market. Relocalisation, or competition-friendly protectionism, puts production nearer to where its products are consumed. This would reduce damage to our environment and cut poverty and inequality. Stuart urges us to invest in activities previously performed in low-wage countries. This extra demand for low-skilled labour will tighten the labour market, bringing more equality and increasing wages (as long as immigration is controlled). He proposes regional trade agreements, on the model of Latin America’s ALBA, not the straitjacket of the EU. He concludes, “central to the approach of this book is the concept of tightening bottom-end labour markets in rich countries, and this cannot happen if people from poorer countries are entering this same labour market in large numbers. … Providing this example to the world and not requiring a perpetually growing portion of the earth’s finite resources, in the larger picture, will do more to help poorer countries than helping the minority of determined migrants to improve their own circumstances. Obviously, this is not a racial or anti-foreigner issue, but purely practical. In Britain’s case, for the above policies to work, it would have to leave the European Union in order to stop intra-European immigration.”
