Articles:
Protectionism Can Only Prolong Recession

Everyone knows that this is a global recession, in which virtually all countries are suffering. Certainly, all the rich industrial countries of Western Europe, North America and Japan are suffering badly, and unemployment is rising everywhere. So it is extremely dispiriting for an English advocate of globalization, free trade and even the free movement of people to see English workers going on strike to protest about Italian workers being used at a French-owned oil refinery on the east coast of England. But it is not surprising. In times of economic trouble, it is always easiest to blame foreigners, and we can expect plenty of cases of such nationalism all over the world. Yet that is not the whole story of these British protests.

            To see British trade unions complaining about the employment of Italian workers is ironic, to say the least. During the 1980s, the last time when unemployment was especially high in Britain, there was a popular television series called “Auf Wiedersehen, Pet”. It was about a group of construction workers from North-East England who went to Germany to find work (“Pet” is a north-east English term of endearment for a wife or girlfriend). If German workers had gone on strike in protest at the arrival of British workers, no doubt under-cutting their wages, the series might never have been made. But also, one of the fundamentals of the European Union—the free movement of labour—would have been destroyed.

            The strikers at that Total oil refinery and elsewhere in England do not know about the articles of the Treaty of Rome, and nor do they care. What they do know is that their jobs are insecure, as the British economy enters a severe recession this year. So their union organizers have been looking for some way to put pressure on the Labour government, which is perceived to have rescued the banks but not done much to help workers.  The fact that Prime Minister Gordon Brown made a speech in 2007 at which he promised to provide “British jobs for British workers” meant that this small dispute over a subcontractor´s use of Italian workers could be given wider political resonance. That is why the strikes have spread. Everyone wants to attack Gordon Brown.

            Do they really want to attack foreigners, too? Will this sort of thing spread to other countries around the world? The answer to both questions, unfortunately, is yes. When Mr Brown made his speech, he was trying to deal with a growing controversy over immigration in Britain. Those who think Britain has admitted too many immigrants are not of course complaining about Italians, but rather about Eastern Europeans and Africans. But foreigners are foreigners, which is why governments that pander to this kind of anti-immigration prejudice risk causing much wider and bigger problems of nationalism and, ultimately, retaliation by other countries.

            There is, unfortunately, no doubt that protectionism, both against foreign workers, foreign goods and even foreign capital is going to spread. You can see it in the huge fiscal stimulus bill that has just passed America´s House of Representatives and is now going to be presented to the Senate: it contains “Buy American” provisions demanding that states and local governments should use their extra public money to buy American goods and not foreign ones. You could see it too in Silvio Berlusconi´s election promise to provide “an Italian solution” for Alitalia rather than allowing it to be bought by Air France-KLM, even though now that foreign airline is ending up with a 25% stake bought more cheaply than before. 

            Such nationalism may seem quite reasonable to some people, especially when taxpayers´ money is being spent. Why should “our” money be spent supporting foreign companies, or banks, many people are asking? In fact, it is inevitable that some nationalistic provisions will be introduced. The danger, however, is that these provisions become so powerful and even insulting that they force other countries to retaliate. World trade and cross-border investment are already shrinking. Such nationalistic measures would serve to make the decline permanent.