It is fashionable in these trying times to worry a lot about protectionism. Economists issue dire warnings that hard times must not lead us to clamp down on “free trade”, because inhibiting the free flow of goods will lead to local scarcity and higher prices for everyone, thus exacerbating the current economic malaise. But I wonder if these ideas have been thoroughly thought through in the light of the new economic order that we are trying to build.
To my mind, well managed protectionism is starting to make a lot of sense. One of the biggest ecological problems that we face is the endless flow of goods around the world. Current economic models call for raising lettuce in Chile or somewhere, then shipping it clear to California and undercutting the local farmers with cheap produce. But this model costs a huge amount in resources (see Economic Sense, my previous post), which for arcane economic reasons are severely underpriced in terms of the damage that they do to the planet. The costs of all this movement may be cheap in dollars, but in carbon, pollution, economic injustice, human rights and the rest, the costs are unacceptably high.
It’s hard to change this cost structure in the short run, but one of the best ways to interfere with this ecological disaster is to erect trade barriers that prevent the unnecessary shipment of goods and the damage that it does. The more that we can force economic activity into a more locally based model, the more we can reduce the impact on our planet and at the same time build local economic capacity that is proof against the vagaries of international currency trading and mega-corporate price fixing. The fastest way to do that is to wall these effects out through trade barriers.
Of course, when you do that, prices go up. But that is not necessarily a bad thing, despite what our economic gurus say. We need to stop consuming so much stuff anyway, and higher prices are the best way to make that happen. And of course, while prices do go up, wages do too. The people making the local stuff are getting paid for it, unlike now, so there may be some real benefits to higher prices, including higher demand and a more stable job force. Profits are retained and spent locally, rather than being shipped off to Wall Street.
We have a mini-model of that whole process here on Vashon Island. We already have our own local form of protectionism in place. It’s called the Washington State Ferries. The fact that we are an island only reachable by ferry makes us in many ways an economic island as well, and provides living experience of the effects of trade barriers. Local businesses are able to operate more freely and effectively because the cost and inconvenience of operating on the island keeps much of the competition away. But of course the prices are higher because of the trade barrier, and sometimes businesses take advantage of the lack of competition to provide poor service or overcharge. Options are more limited, and businesses here have a hard time competing outside the island as well. And social services are less available, so local resources are much relied up on in place of them. The benefits and drawbacks of the Vashon system are food for daily discussion and debate among islanders.
When the average food item in our supermarkets has traveled 1500 miles before we purchase it, it might make a lot of sense to look again at the issue of protectionism. With the end of our carbon-based economy, our future is almost certainly going to feature a much less mobile set of goods and services, and building local capacity will have to be a priority for some years to come.