How to Sell Anti-Protectionism

In the face of the worst economic outlook in 70 years, protectionism has crept into many G-20 members’ domestic political debate. While the recent G-20 summit in Washington, D.C., rejected such policies, the protectionist temptation will remain strong unless leaders can win the support of fearful voters.

STOCKHOLM – The looming global recession has brought government intervention to save failing companies to the forefront of economic policy. In a speech just prior to the recent G-20 summit, British Prime Minister Gordon Brown warned President-elect Barack Obama against bailing out America’s struggling Big Three automakers, arguing that global competition has made their decline irreversible. A bailout, then, would simply delay the inevitable at a huge cost to taxpayers.

Such advice is always tough to sell – all the more so in the face of the worst economic outlook in 70 years. After all, according to conventional wisdom, global competition moves jobs to low-cost countries and puts downward pressure on wages everywhere else. As globalization intensifies and accelerates economic change, it affects the lives of ordinary citizens like never before, stoking popular fear. Little wonder, then, that French president Nicolas Sarkozy succumbed to the allure of protectionism during last year’s election campaign, as did both presidential candidates in the United States.

But protectionism need not be the only alternative to fear of global competition. In the Scandinavian countries, as in the US, foreign competition intensified sharply during the past decade. China and India gained considerable economic power, and close neighbors in previously isolated communist states were rapidly integrated in the European economy.

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