Protectionism Never Works

Protectionism doesn’t work. You had better understand the importance of knowing this and act accordingly. By not adhering to this universal agreement nations will continue to break apart and wither. Not far behind will be those who fail to comprehend the necessity of possessing flexibility.

Recently while browsing the web I came across an excellent post written by Wolf Richter.  For me this post serves as an excellent example of why I say protectionism never has or ever will work for any extended period of time. Simply put protectionism never works. For those who are interested I’ll link it below. Furthermore in the vast percentage of past attempts protectionism tends to produce the exact opposite result of what was expected. For the hosting nation protectionism didn’t achieve growth, profit or power, instead what so often turned out to be the end result was the orphaning of that nation.

I can assure you that if the west continues to pursue down this protectionism path post January 20^th it too will suffer the same fate. It will become isolated it will find itself orphaned. As a nation the west has long past its productive era. It’s become a nation of consumers with the greater percent rapidly running out of disposable income. No longer is the west the biggest economy. Effects of this can easily be witnessed as slowly the west is being left out its being orphaned. The other nations of the world are amalgamating. Together their strength is unequaled. Time and technology changes everything!

Original 1970’s Chevrolet Commercial

If history is to be used as our guide, all nations tend to follow a similar path over time. Whenever any single nation becomes the dominate power it cannot remain there indefinitely. The west is no different. The balance of the world views “Baseball, hotdogs, apple pie and Chevrolet” as a part of history, part of some kind of past culture. An era that’s departed several decades prior and not returning.

Every nation’s tried various forms of protectionism before relinquishing its power to the next. Governments work on the same principle, which serves as an excellent example of why we’re currently witnessing such a poor display of representation. The false claim of election hacking, college safe zones, impossible promises, all these are simply methods governments use to delay the inevitable, a change where we let go of the past and embrace the future. We currently find ourselves at the intersection of these crossroads. We’re entering a new age where the west must cooperate or it too will soon find itself isolated.

The protectionism that Trump is promoting will fail. For the benefit of retaining a few job,s the evolution of natural change, the shifting balance of power is being ignored? For example take the most recent threat placed on the automotive manufactures. GM was recently threatened by a stiff tariff if they build their cars in foreign countries. Watch the video below as Dan Akerson CEO of GM takes the podium back in 2011.

2011 General Motors is Becoming China Motors

Perhaps the first thing to understand is nothing here is new. This paradigm shift has been in the works for decades. It’s only recently appearing in the limelight. America is no longer the largest consumer force for GM China is. It’s these power shifting occurrences that protectionism tends to avoid taking into account and for that reason is why it untimely fails.

I had discussed the remunerations of flexibility in an earlier post. When comparing flexibility to its counterpart rigidity, you’ll begin to have a better understanding as to why some nations flow and others break with the changing times. It’s of little consequence how resilient a nation becomes over time, by not understanding flexibility it will not bend with the changes and things that cannot bend will break. Ancient Rome, Greece and China all serve as excellent examples of past powerhouses that eventually became prey to changing epochs. Three thousand years later it’s only China that’s reappeared as a powerhouse and why is that? It’s because China has learned the value of flexibility.

Protectionism ignores critical aspects of a nation’s survival. It ignores the effects of time, it disregards the trends, the paradigm sways and above all remains oblivious to natural evolution. Many of us are suffering from these same symptoms. It’s no different those of us who cannot bend with the changes will break from rigidity. You might want to be asking yourself will you be bending or will you be breaking? Until Next time this is Barry in DR.

GM’s huge post-bailout investments in China bear fruit. Wolf Richter