Keep­ing jobs at home doesn’t al­ways make busi­ness sense

The Packet (Clarenville) - - EDITORIAL - Rus­sell Wanger­sky East­ern Pas­sages Rus­sell Wanger­sky’s col­umn ap­pears in 35 SaltWire news­pa­pers and web­sites in At­lantic Canada. He can be reached at rwanger@thetele­gram.com — Twit­ter: @wanger­sky.

It sounds omi­nous: com­men­ta­tors warn­ing that, what­ever else hap­pens in the United States, who­ever’s po­lit­i­cal for­tunes rise and fall, “eco­nomic na­tion­al­ism” is on the rise, and likely here to stay.

Eco­nomic na­tion­al­ism, though, is short­hand for some­thing peo­ple in this re­gion have ar­gued about for years: the need to keep work in the At­lantic re­gion for the sake of em­ploy­ment, even when that work can be done more eco­nom­i­cally some­where else.

Gov­ern­ments in all four At­lantic prov­inces have done their own spe­cial deals and fi­nan­cial back­flips over the years to keep busi­nesses from pa­per mills to fish plants op­er­at­ing. Some of our most prom­i­nent re­gion busi­ness peo­ple talk free trade when they see po­ten­tial for­eign mar­kets where we could have a fi­nan­cial edge, but qui­etly agree with long-run­ning back­door gov­ern­ment sup­port to keep their own busi­nesses both lo­cal and prof­itable. We’re a small enough market for that kind of fid­dle to be vir­tu­ally ig­nored by global com­merce.

In a market the size of the U.S., though, there are dan­gers both in­side and out­side the na­tion for clos­ing for­eign doors.

The Econ­o­mist was warn­ing against what it called the clear dan­ger of eco­nomic na­tion­al­ism in 2009, say­ing, “eco­nomic na­tion­al­ism — the urge to keep jobs and cap­i­tal at home — is both turn­ing the eco­nomic cri­sis into a po­lit­i­cal one and threat­en­ing the world with de­pres­sion. If it is not buried again forth­with, the con­se­quences will be dire.”

They were writ­ing about the de­ci­sion by U.S. to re­quire the use of Amer­i­can-made ma­te­ri­als in fed­eral-funded work done un­der the U.S. Re­cov­ery Act — if any­thing, the risks are greater now, with U.S. Pres­i­dent Don­ald Trump threat­en­ing to tax or tar­iff cheaper for­eign im­ports to cre­ate a false “level play­ing field” for Amer­i­can busi­ness.

Build­ing tar­iff walls, pro­tec­tion­ism and turn­ing away from global trade deals seems to be very much the di­rec­tion the United States is tak­ing — the ar­gu­ment be­ing that it will force com­pa­nies, even Amer­i­can-based multi­na­tion­als, to move more pro­duc­tion to the United States, hir­ing more work­ers in the process.

But while new jobs might seem like a dream come true to em­ploy­ment-starved re­gions, the re­al­ity has been dif­fer­ent, at least in the past. Rais­ing tar­iffs in 1930 to strengthen Amer­i­can busi­ness ac­tu­ally ex­tended the De­pres­sion, and didn’t cre­ate jobs at all.

And then there’s the ques­tion of what hap­pens as low-cost im­ports dis­ap­pear from the mar­ket­place.

It re­mains to be seen what the re­sponse will be from Amer­i­cans when the in­creased cost of pro­duc­ing goods in the United States winds its way down to the daily point of pur­chase at Wal­mart or any other low-price seller.

And it’s not only higher prices in­side closed bor­ders: fur­ther down the road, a much larger dis­par­ity be­tween First and Third World na­tions looms. Na­tions that can’t de­velop in­dus­try based on their cheap avail­able labour won’t cy­cle into stronger economies. Wealth will re­main fo­cused in­stead the walls of rich na­tions, and the gaps be­tween rich and poor will broaden.

As with cli­mate change, the prob­lems cre­ated by closed trade are largely bumped down the road, so they can be safely ig­nored by those who want to reap any pos­si­ble short-term ben­e­fits right now.

The prob­lem? Chick­ens will come home to roost. You can’t have plenty of high-pay­ing jobs, if those jobs are also sup­posed to be mak­ing plenty of low-priced items. And if poor na­tions are per­pet­u­ally fenced out of the abil­ity to have their driven, en­tre­pre­neur­ial ci­ti­zens find a way to get ahead, Third World des­per­a­tion will grow.

You can un­der­stand want­ing to close the doors and win­dows against the tu­mult out­side.

It just doesn’t re­ally fix any­thing.

Gov­ern­ments in all four At­lantic prov­inces have done their own spe­cial deals and fi­nan­cial back­flips over the years to keep busi­nesses from pa­per mills to fish plants op­er­at­ing.

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