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28.11.17.

Protectionism

The state is a mechanism to create welfare where the market fails. There is no doubt that markets fail. The issue is how to mitigate those effects. On the overall, global trade enables for the creation of considerable amounts of value for humanity as a whole. No-one that considers looking at facts would deny that trade in these past 100 years has enabled humankind. Economic growth driven by commerce and cultural interlinkages is what brought to fruition the European Union. It is perhaps the most comprehensive and highly sophisticated union of different countries (if they were cultures, I am inclined to favour India). Their underlying framework was the steel union, which set the ground for cooperation in a highly divided and morally destroyed Europe after the Second World War.

Nowadays, neoliberalism is to blame for the belief that diversity and liberty are the bearers of economic demise. Neoliberalism links together both economic freedom and social liberty. In this sense, economic free market, laissez-faire style, can be desirable but is independent of social liberty or freedom. China is a compelling example of pockets of economic freedom with a very tight state grip on liberty and individual, political and social freedoms. Therefore, the issue at hand is more how to detangle the neoliberal economic models, from social and political freedoms. They are not inseparable, although commonplace discourses have them intertwined as amalgams.

Protectionism is an effect, at least partly, of poor distributive state policies. Economic theory does claim that trade creates overall more value, but there are localised winners and losers. Compensation should follow. It has not, but the lack of distribution has created strong opposition not only to trade but all freedom world over. Delinking these two should be a priority. At the same time, protectionism erodes long-term growth potential, yet it, in theory, could maintain certain income distributions in place. Overall, I believe that free trade is a desirable state. Value and wealth are socially created, they are not individual creations, they require society, and therefore the community is implicitly co-owner of any value produced. Precise data on winners and losers in the process of trade enable for social pressure as to distribute the additional value that was created.

December 2019
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