Keeping jobs at home doesn’t always make business sense

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 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 Americanmade 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 U.S. is taking – the argument being that it will force companies, even American-based multinationals, to move more production to the U.S., 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 U.S. 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 inside 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.