protectionism
Uploaded by mzdiva on Apr 30, 2008
Protectionism serves a number of political and economic needs/wants. In the current state of world economic affairs protectionism is most often seen as a converse strategy to free trade. On its face protectionism is a tactic by which to shield domestic manufacturers from foreign competition by placing tariffs on imports, or the outright barring of foreign competitors from domestic markets, i.e. the US airline industry. However protectionism is also a useful tool in gaining political and diplomatic leverage, such as the denial of most favored nation status to China over human rights abuses, or, as has recently been suggested, placing tariffs on Chinese products manufactured with environmentally unfriendly methods; a tactic which could possibly more brightly illuminate the mutually beneficial relationship between Chinese manufacturing and American consumerism, and induce the satisfaction of a political goal. Protectionism also serves to attempt and bring into equilibrium an unfavorable balance of trade by making import prices unattractive to consumers and thus bolstering domestic products. Also, protectionism helps to reduce/delay the short-term negative effects of industry shifts, such as the decay of the rust belt. Finally protectionism serves to reduce negative effects of overproduction by offering a larger, uncontested portion of the market to domestic manufacturers unpopular overseas.
Nations employing protectionist methods claim to favor free trade because it is internationally mandated as a surefire way to guarantee friendly relations with foreign trading partners. Free trade also opens up unregulated labor markets to domestic manufacturers, and untapped consumer markets to foreign producers, allowing them, respectively, the ability to import goods with less capital loss than would be incurred by manufacturing at home, and to sell for higher prices and over a wider scope than could be gained through selling only at home or through exorbitant tariffs.