ISOLATIONISM, TRADE WARS WILL FAIL: US FED’S DUDLEY
Despite the protectionist rhetoric of Donald Trump regime, William C Dudley, the president and chief executive of the Federal Reserve Bank of New York, said open markets and expanded trade policies had helped the global economy more than they have hurt the displaced workers.
“Efforts to suppress open markets and globalisation through protectionism will not work,” said Dudley.
He was delivering the keynote address at a function organised by the US-India Business Council, industry lobby CII and the BSE, on ‘Benefits and Challenges from Globalisation’.
Dudley, an influential voice on the US central bank’s policy direction, offered a strong defence of open trade borders and said, “Countries need to compete better, not compete less. Trade barriers are a very expensive way to preserve jobs in less competitive or declining industries.
“While the gains from a liberalised trade regime are not guaranteed, the alternative of trying to achieve a high standard of living by following a policy of economic isolationism will fail,” he said. “Open trade has played a key role in nearly all of the high-growth success stories since the middle of the last century.” Protectionism, he warned, can have “a siren-like appeal”. “Viewed narrowly, it may be potentially rewarding to particular segments of the economy in the short-term but viewed more broadly, it’d almost certainly be destructive to an economy overall in the long-term.
“Though there are many approaches to dealing with the costs of globalisation, protectionism is a dead end, as it blunts opportunities in export industries and reduce the affordability of goods and services to households. Indeed, such measures often backfire, resulting in harm to workers and diminished growth.”
“If support for liberalised trade and an integrated global economy were to suffer a significant setback, the consequence could be slower economic growth and lower living standards around the world,” he said.