The New Mercantilists?

Scucca · 05-11-08, 06:28 AM

Ludema (2007, Allies and Friends: The Trade Policy Review of the United States, World Economy, Vol 30, pp 1209-1221) wrote:

"The 2006 WTO Trade Policy Review of the United States reveals that national security concerns have become a dominant influence on US trade policy since 2001. This paper argues that direct and indirect effects of this influence have been deleterious to the multilateral trading system. Security concerns have led to an embrace of bilateralism that bears little relation to US commercial interests and will arguably detract from ongoing efforts at multilateral trade liberalisation. Security concerns have also led to a substantial change in customs and inspection procedures for goods bound for the US, which could swamp tariffs in terms of their trade-inhibiting effect. Finally, the unpopularity at home of US military actions abroad has weakened the US President and opened the door for rising protectionism in Congress"

Will national security continue to out-trump multilateralism? Will security become the means to justify higher US protectionism? (i.e. are we becoming more reliant on economic nationalism with its mercantilist backbone?)

aegyptos · 05-11-08, 07:42 AM

[quote=Scucca;1057611808...are we becoming more reliant on economic nationalism with...)[/quote]

We??? You aren't one of us.

Scucca · 05-11-08, 07:54 AM

Quote:

Originally Posted by aegyptos

We??? You aren't one of us.

European policy has always been corrupted by a level of economic nationalism. Regionalism has ironically tended to inflame that, given it provides a means to hide from economic competition. However, I'm more interested in the abuses (i.e. lost economic opportunities) made possible by the "its national security" excuse

donsutherland1 · 05-11-08, 08:46 AM

Scucca,

In the wake of shocks, the affected parties often overreact. Such a tendency to go to excess appears to be an inherent aspect of human nature. It might well be the means by which people and societies recalibrate their risk perceptions through trial and error, with the proverbial pendulum swinging from underestimation to overestimation of risk and somewhat back before it finally settles. One sees the tendency to go to excess both in economic shocks and non-economic ones. In the longer-run, such excesses are not sustainable without inflicting real damage on those clinging to such a posture.

I believe New York Times syndicated columnist Thomas Friedman explained the situation quite well when he wrote last year, "Yes, in the wake of 9/11, we need new precautions, new barriers. But we also need our old habits and sense of openness." In another column in 2006, he argued, "The way you keep good jobs in this country is not by building big walls, but by attracting people with big ideas — and then giving them the freedom to do whatever can be done with anyone, anywhere, anytime."

For what it is worth, I believe President Reagan's Farewell Address summed up how the United States should envision itself vis-a-vis the world at large. In that speech, Reagan spoke of a confident, open, and inclusive America. "I've spoken of the shining city all my political life, but I don't know if I ever quite communicated what I saw when I said it. But in my mind it was a tall, proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace; a city with free ports that hummed with commerce and creativity. And if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here. That's how I saw it, and see it still."

The challenges of the ongoing ideological struggle with radical Islamists do not justify a "wall around America" mentality, even as they require strength and persistence in that struggle. A perspective that seeks to fence off the U.S. border, curb the number of foreign students who wish to study in America, and transform American embassies and consulates into isolated and inaccessible fortresses is nothing more than naked appeasement of fear. It is an approach that is alien to much of post-World War II American history. A confident and strong nation does not run from the world. Rather, it reaches out to the world and proudly proclaims the principles for which it stands. Reagan would never accept an America that retreated in fear behind fences even as he stood his ground against the nation's Cold War foes while fully exploring emerging opportunities for a new relationship with the Soviet Union. Neither should a post-9/11 America surrender to fear. If it does, it will have lost an important part of the dynamism that has helped fuel its long rise to prosperity and strength.

Scucca · 05-11-08, 08:58 AM

Quote:

Originally Posted by donsutherland1

In the wake of shocks, the affected parties often overreact... In the longer-run, such excesses are not sustainable without inflicting real damage on those clinging to such a posture.

My worry would be the definition of the long run. Protectonism tends to go in cycles and it is particularly difficult to force a quick return to the first best of multilateral free trade.

The silenced majority · 05-11-08, 09:29 AM

We currently pay an income tax in this country because globalists zealots 100 years ago thought that tariffs on foreign goods should be replaced by taxes on Americans' incomes as the chief source for government funding.

The idea was that free-trade would usher in the era of no borders and the universal brotherhood of the free-exchange of goods & services.

It's ironic that 100 years later there would be talk about "protectionism" "mercantilism" and the reversing of "free trade" due to security reasons.

I guess some people realize that our ridiculous fear of being tagged "protectionists" has led to the day where we need to appeal to an actual protectionist nation to sell us steel in the case that we may need to build a tank for our own defense.

Scucca · 05-11-08, 09:46 AM

Quote:

Originally Posted by The silenced majority

It's ironic that 100 years later there would be talk about "protectionism" "mercantilism" and the reversing of "free trade" due to security reasons.

I don't see any irony. I see it as dishwater predictable. Economic nationalists have always been capable of polluting trade policy towards the destruction of economic opportunity. Using security excuses as a means to force conservatism is nothing new.

You could also argue that, given the decline in US economic power, the nationalist's hand is strengthened. For example, according to hegemonic stability theory, it is dominant powers such as Britain during her empire days that will encourage free trade. This reduces international instability and therefore reduces the threat to the dominant power. The US, as she becomes relatively less important, will be more open to irrational trade policy

aegyptos · 05-11-08, 10:47 AM

Quote:

Originally Posted by Scucca

European policy has always been corrupted by a level of economic nationalism. Regionalism has ironically tended to inflame that, given it provides a means to hide from economic competition. However, I'm more interested in the abuses (i.e. lost economic opportunities) made possible by the "its national security" excuse

Economic nationalism is vital. The US of course is exceptional among western national in many respects American nationalism tends also to be unique. Unlike the racist and bigoted nationalisms of Europe, the American variety is benign. The US should look more to its national and regional interests.

National security is not an excuse. Its a legitimate expense of government. The US defense budget is not too large for instance given the assignments the rest of the civilized world has shuffled off their backs and on to hers. It would be interesting to see the dismantling of the bloated welfare states in Europe and Japan if the US only looked to its defense needs.

Regional economic blocks are the future. Globalism is a dead letter because their is no such thing as global interest. Concentrated interest always trumps the diffuse interest.

In response do not post any link to some paper or research material.

gunner · 05-11-08, 10:49 AM

Quote:

Originally Posted by Scucca

European policy has always been corrupted by a level of economic nationalism. Regionalism has ironically tended to inflame that, given it provides a means to hide from economic competition. However, I'm more interested in the abuses (i.e. lost economic opportunities) made possible by the "its national security" excuse

A lost economic opportunity is a fair trade of if it results in our country not having to deal with an oppressive regime or one that's at least hostile to our ways and/or traditions. I know we tolerate some governments or military junta but that's generally when there not a direct threat [I'm not saying i agree with that policy].
Regionalism will always be there, as long as you and i have an hole in our ***!!

Paul.

Scucca · 05-11-08, 11:22 AM

Quote:

Originally Posted by gunner

Regionalism will always be there

The economic case for regionalism rests on the notion of trade creation effects, plus the securing of economies of scale by ensuring a larger market. However, those arguments are effectively eliminated by globalisation. We're then in the world of political rationale, such as the silly perception that we need to maximise European power because of our righteousness. The impact on multilateralism will be negative, with politicians getting in the way of economic gains from trade.