Friday, May 04, 2007

Are Blinder and Persaud in favour of Protection or Not?

Sometimes I read things that I am not quite sure what the author is actually saying. In this case is he in favour of free trade or not?

First we have this paragraph having a good go at Mr Lou Dobbs, a tv presenter in favour of ‘protection’ on the usual grounds. His intro was about Professor Blinder’s apparent conversion from free trade to some elements of protection (though even his position is a trifle vague, at least for me).

Mr. Dobbs never stops to consider that perhaps the socks he wears, the watch, the microphone, the very cameras he peers into-would be triple their cost without China's low paid workers, earlier Japanese manufacturing process technology and today's highly skilled Indian software engineers. He does not stop to consider what the end of Wal-Mart would mean to U.S. consumer prices and standard of living. He, like the British imperialists before him, wants to have his cake while continuously gobbling it down.”

So says Wilberne Persaud, a financial columnist on the Jamaica Gleaner (established 1834), Kingston, Jamaica, writing “Free Trade and the Right of Protectionism” on 4 May.

Next, we get a piece about Adam Smith:

Adam Smith was perfectly correct. Free trade benefits both parties to it. The benefits of specialisation can be grasped by babes in the woods. But the world has never had free trade, perhaps never shall. The British, when it suited them, when they could benefit most, forced the rest of the world to 'embrace' the model. The Americans have done the same from their founding, more so since the end of the second European war for world resources.”

Wilberne seems to make the case for Adam Smith’s views on trade and then loses me. True, Smith made modifications to a purist free trade position to accommodate certain problems of the transition during the dismantling of protection (note, not imposing new measures of protection to hinder the affects of competition).

But, I am not sure what is meant by the article. Read it for yourself, here, and let me know what you find.

You can read what Smith thought on these issues in Wealth Of Nations, Book IV, chapters ii and iii. At least he is absoutely clear what he meant.


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