Kelvinwright's Blog

postmodern thoughts

Is Protectionism on the way back?

On the 25th of March I published a blog on one way to ease the economic crisis – instead of outsourcing jobs to save money in the short term, at the cost of jobs in the long term, I proposed strategies and policies to in-source jobs from abroad. I even mentioned the possibilities of tax breaks for those companies who returned jobs from abroad.

 

It was then with a smile when I came across an article on the BBC website, written by Robert Plummer, called “Protectionism: Is it on the way back?

http://www.bbc.co.uk/news/business-18104024

 

The article reported that as the global economy continues to go through tough times, governments are increasingly playing politics with trade policies and giving in to protectionism. The article mentioned that one proposal on the “to-do list”  recently presented to Congress by President Barack Obama was a 20% tax credit for firms that relocate jobs to the US from abroad. Protectionism though has not so much made a comeback, because it has never gone away, more it has just become a topic of discussion once again. China has long faced accusations of protectionist policies over continued state control of its currency.

 

However, as unemployment continues to slide, Spain and other countries looking for creative solutions to stop the rot, may look to those firms, traditional national companies that have outsourced to markets offering cheaper labour, as potential savours. Governments could themselves make an offer, just as President Obama has proposed. It reminds me of the Kevin Costner movie, Field of Dreams – build it and they will come: In-source your labour, create local jobs, and customers will come. Customer will come, because you’ll be giving them employment.

 

Of course, protectionist policies can damage growth, as the article warns. French companies do 14 times more business abroad than foreign firms do in France. This is a delicate time for both the global and local economies: they all want to protect what they have, they all want a bigger slice of the global economic pie, but a balance needs to be done. If you become too protectionist, others will not want to do business with you; if you do nothing, you risk being undermined by those who can produce your products cheaper than you do.

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May 26, 2012 - Posted by | Uncategorized | , ,

1 Comment »

  1. Good morning. I have just read, Is protectionism on the way back? your words are so interesting, I read them over and over again. I sometimes wonder if politicians ever read blogs, they should do.

    Comment by iriswrightpoetry | May 29, 2012 | Reply


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