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Protectionism Is About Much More than Nationalism

January 13, 2018 in Economics

By Ángel Manuel García Carmona

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By: Ángel Manuel García Carmona

Freedom fighters around the globe are aware of the rise of new and serious attacks against free trade. There are bilateral agreements that “harmonize” regulations and may favor crony capitalism, European agrarian policy tariffs that protect farmers, alt-right and populist nationalists claims against delocalization of companies, and so on.

This short list of examples, reminds us though that protectionism is not only an issue of populist nationalist parties that stem from rivalry among nation states and fear of foreign “enemies.” They do not necessarily stem from nationalistic concerns, but may simply be a result of ordinary special interst politics as with the Common Agricultural Policy which which subsidizes European farmers to produce crops which are often grown more cheaply in developing countries.

Unfortunately, many people continue to be unaware of the multitude of lesser cases of commercial protectionism, based on regulations that are designed to benefit guilds or some specific type of commercial interest.

What Is Prtectionism?

A protectionist measure has the aim of shielding a business or indistry from the spontaneous changes in the market that could affect it.

Unhampered markets, as Mises pointed out in The Anti-Capitalist Mentality, rely on market “democracy” because consumers and companies are free to exchange products and services. Thus, each market action is a referendum on the value of each business or industry.

There is no top-down effect, but pure spontaneity built on voluntary actions. However, consumers can change their minds about any specific business at any time. The reasons are diverse: there may be a more cutting-edge product offered elsewhere. Consumers may perceive quality to be higher with competitors. New entrepreneurs may be able to offer lower prices. Some companies may response to these challenges with new innovations of their own. Though others may prefer to do nothing mroe than demand government “protection.”

Business “guilds” — to use a European term — have evolved from the status of pre-Christian Roman mutual aid networks to groups of people dedicated to the same craft who seek government-granted monopolies. These government-granted favors gant them a reprieve from teh discipline of the marketplace.

This is the way it works:

First, consumers might become keen on services like BlaBlaCar, AirBnb, Uber, Chicfy, Amovens, SocialCar and Cabify. These services provide what consumers perceive to be less expensive, and often higher-quality, services.

But taxi drivers and hotel owners feel threatened by …read more

Source: MISES INSTITUTE

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