Earlier I mentioned the Vatican position paper saying that developed nations should reconsider their farm subsidies and agricultural trade barriers so that those in the developing world won’t be hurt by them.
Unfortunately, protectionism is a perpetual risk for every nation, including those in the developed world.
After all: What politician doesn’t want to be able to please certain segments of his constitutency by offering it subsidies and protectionistic trade barriers to keep the prices it can charge for what it makes high?
Jonah Goldberg has an interesting analysis of how the U.S. has been able to ward off the kind of protectionism that has hurt Europe’s economies, as well as a warning about what may be on our horizon.
He writes:
The beauty of the American free-trade consensus over the last few decades is that it split two outlooks that tend to go together: nationalism and socialism. In terms of economic policy, nationalism is indistinguishable from socialism. When you nationalize an industry, you socialize it. And what is the difference between socialized medicine and nationalized healthcare?
Liberals are naturally sympathetic to socialistic arguments, conservatives to nationalistic ones. But to everyone’s benefit these two outlooks have been quarantined in different parties. Conservatives have been culturally nationalistic but economically liberal (in the classical sense). Liberals have been economically nationalistic — on healthcare, regulation, taxes, unions — but culturally liberal. Although it’s been quite painful for them, this cultural liberalism has kept the Democratic Party in favor of free trade and immigration. Protectionism hurts foreigners and poor Americans, after all.
Indeed, to be fair, the Democratic Party has been heroic in bucking its base — the economically nationalistic labor movement — on free trade. FDR, Truman and Kennedy were all consummate economic nationalists. Free trade was tactically in their interests for a long time because it dovetailed with labor’s interest. When the United States stopped being the manufacturer to the world, the Democratic Party struggled — not always successfully — to stay pro-trade on principle, even at the cost of votes. Meanwhile, the GOP has had the opposite challenge: to stay pro-free trade even as its ranks swell with working-class voters enamored with their paychecks, not Adam Smith.
Now, a win-at-all-costs Democratic Party has realized that this is the perfect moment for it to re-brand all of its economic ideas in the language of patriotism. Many Republicans are determined to fight the Democrats for this turf. So they too are bending their economic policies to fit their cultural conservatism.
And if we let them follow this path, we’ll have the same problems as Europe in no time.
