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Friday, May 22, 2009

Why America Should Resist Protectionism...

Recession's winds are blowing and America's strategic position is uncertain.A period of relative peace the world enjoyed from World War 2 up to the 90's wasn't due to America's military might. Squables over markets , expansion of empires to build markets , prowling for resources and raw materials had plunged the world into World Wars.Following the last war America began to stand up for and encouraged a world that respected sovereignty , a culture which rewarded work and fair exchange of goods and services.The Europeans were pressured to de-colonise and GATT was established alongside a stable system of currency exchange.These actions led to huge growth in world trade,finance and banking.Through the 50's and 60's the US was the dynamo that hastened economic development and many countries received US investments. By the early 1970's South East Asia became seething with it's own economic engines.These economic waves changed the views of other nations.China which used to be a spoiler slowly realised that closed doors for her would only lead to stagnation and financial backwaters.Much of the Third World began to rethink their policies.Once infatuated with socialism more and more Third World nations began to open their doors to trade and investment.Thus the US became a catalyst for these countries to slowly move towards modern societies with technological and other skills.But troubled voices out of Washington have been decrying trade imbalance , job losses , budget deficits and a clamour to put up barriers to America's markets.This would be fatal and halt the advancement of the free-market oriented developing nations.It would signal that the model provided through the 50's and 60's that made for peace and growth is no longer an available option and trigger a downward spiral of the world economy.Is America to abandon the contest between free market democracies versus controlled and alternate ideologies ? This will have disquieting consequences for the rest of the world.For forty years peace and political boundaries were possible because peoples have achieved a better lot through trade.If these oppoturnities are choked a return to the traditional ways of of conquest such as war becomes more attractive.Protectionism and dwindling trade means less growth for the developing countries.National debts will pile up , defaults will become common with heavy consequences for the international banking system. Developing countries may abandon democratic freedoms and severe and repressive governments may ride in.America has been the anchor of the of the world's free-market economies.It is encumbent upon America as the pre-eminent powerhouse to uphold the rules for progress and growth and not to put up tariff and limitation walls as these would then cause others to retaliate similarly and thus a replay of past depressions and even a return to wars to settle things.